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State Responsibility for Employees as Members of Corporate Bodies - International Law Office

International Law Office

Company & Commercial - Czech Republic

State Responsibility for Employees as Members of Corporate Bodies

October 30 2006

An act due to come into force at the start of 2007 will make the state responsible for damage caused by its employees serving as members of company corporate bodies.

Act 309/2002 on Amendments to Acts Connected with the Adoption of the Act on Service of State Employees in Administrative Authorities and on Remuneration of Such Employees and Remuneration of Other Employees in Administrative Authorities modifies, among other laws, Act 513/1991, the Commercial Code.

The amendments, which add new Sections 66(12) and (13) of the Commercial Code, address situations where a state employee is assigned to work as a state representative for a corporate body (eg, as a member of the supervisory board or board of directors) of a legal entity. Such state representatives shall not be personally responsible for any damage that they may cause to the company; rather, any liability for such damage is assumed directly by the state.

However, the state may in turn demand compensation from the responsible employee(s) for the amount covered by the state up to the maximum amount allowed under the Labour Code. The amendments to the Commercial Code and the new State Service Act will come into force on January 1 2007.

For further information on this topic please contact Lucie Vožehová at Salans by telephone (+420 236 082 111) or by fax (+420 236 082 999) or by email (lvozehova@salans.com).

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