In principle, the members of management boards of joint stock and limited liability companies are not liable for the debts of the company. They manage the company's assets, while the company itself is a distinct entity with separate legal personality. However, there are several important exceptions to this principle. The most acute may be the board members' liability for the company's debts in the event of the company's bankruptcy.

Insolvency of the company and liability of management board members
Within 30 days of the company becoming insolvent, the members of the management board are obliged to file a declaration of bankruptcy against the company. This deadline results from Article 21(1) of the Bankruptcy Law of 28 February 2003. A failure to file this declaration within the deadline allows the company's debtors to pursue their claims directly against the members of the management board. 

Individual members of the management board may free themselves from this liability by showing that the failure to file a bankruptcy declaration was not their fault. This may be the case if the board member in question was unable to file it himself due to representation rules and a lack of cooperation with other board members. A special case may arise if the company has become dysfunctional – its articles of association or statute provide for a multi-member board and representation, but a decision-making paralysis results in only one board member acting. 

In many cases, members of the management board can also absolve themselves of liability by pointing to the internal division of responsibilities. For this defence to apply, the internal division should be formalised (e.g. a board resolution establishing rules of procedure or appropriate job descriptions of the board members). 

Failure to file for bankruptcy is a criminal offence
The company's creditors do not have to pursue their claims in civil proceedings, which entails considerable costs and the need to prove a number of prerequisites. A failure to meet the deadline for filing a bankruptcy declaration against the company is an offence under Article 586 of the Commercial Companies Code. It is punishable by a fine, the restriction of liberty or imprisonment for up to one year. However, other consequences of a possible conviction for this offence are much more severe. A criminal conviction establishing an offence is binding on all courts, including in civil litigation. In addition to the penalty, the criminal court may impose on the offender, among other things, an obligation to remedy the damage. Furthermore, anyone convicted of an offence under Article 586 CCC is prohibited from performing functions on the bodies of capital companies, or being a liquidator or proxy.  

A conviction for the offence of failing to timely file a bankruptcy declaration opens the way for further criminal cases. The conclusion of binding agreements by a member of the management board after the occurrence of insolvency may be treated as fraud (an offence under Article 286 of the Criminal Code, punishable by up to 25 years' imprisonment).
 

Find more in the PRO HR March 2025.