Lawsuit against a managing director for damages: what the company and the director must prove

New shareholders go through the bank statements and find tens of thousands of euros withdrawn in cash. The former managing director claims the money went on running the business, but no longer has the documents. The answer to who has to prove what in such a dispute often decides the whole case. We explain how a managing director’s liability for damages works, how courts divide the burden of proof, what to watch out for with limitation, and how to prepare for a claim against a director from both sides.

When a managing director is liable for the company’s damage

The liability of an s. r. o. managing director is governed by § 135a of the Commercial Code. Directors must perform their office with due professional care and in line with the interests of the company and all its shareholders. In particular, they must obtain and take into account all available information relevant to the decision, keep confidential information secret, and not prefer their own interests, the interests of only some shareholders or of third parties over those of the company (§ 135a(1)).

Directors who breach these duties are jointly and severally obliged to compensate the damage they thereby caused the company. The law expressly mentions damage arising where directors provided performance to shareholders contrary to the Commercial Code or acquired assets contrary to § 59a (§ 135a(2)).

The relationship between the company and its statutory body is governed by Part Three of the Commercial Code (§ 261(6)(a)). Liability for damage follows § 373 et seq. by analogy (§ 757), not the Civil Code. Both actual damage and lost profit are compensated (§ 379), and damage also includes costs the injured party had to incur as a result of the breach (§ 380).

Liability does not require fault. The Supreme Court of the SR (judgment of 18 May 2016, ref. 3Obdo/30/2015) confirmed that a director is liable for the damage regardless of fault. He therefore does not escape liability by showing he did not cause the damage through fault, but only by proving the facts under § 135a(3).

Liability for conduct, not for the outcome

Strict liability does not mean the director guarantees every success. If he proves he acted with due professional care and in good faith that he was acting in the company’s interest, he is not liable (§ 135a(3)) — even if the decision later turned out to be disadvantageous. The law ties due care to the information available when deciding, so a director cannot be blamed for what could not have been established at the time.

In practice this means a disadvantageous contract or a loss on a deal is not enough for a successful claim. What matters is the information the director had and the reasoning behind the decision.

Typical breaches of a director’s duties

• Unexplained withdrawals and payments. Cash taken from the account or payments with no apparent business reason — this is where the split of the burden of proof shows most sharply.
• Conflict of interest. Deals with related parties or transfers of assets to a company in which the director has a personal interest.
• Acquiring assets from a shareholder without § 59a. For consideration of at least 10 % of the registered capital, the value must be set by an expert opinion; within two years of the company’s formation the general meeting must approve it in advance (§ 59a(1) and (2)).
• Breach of the non-competition rules. The company may claim the profit or a transfer of rights and, in addition, damages; the right to the profit lapses if not claimed within three months of learning of the breach, and at the latest within one year (§ 65(2) and (3)).
• Inaction. A breach may also be an omission — for example letting a company receivable become time-barred or failing to react to imminent damage.
• Performance to shareholders contrary to law (§ 135a(2)(a)).

On conflicts of interest, the Supreme Court’s decision of 27 March 2025, ref. 2Obdo/24/2024, is important. A director contributed the company’s real estate as a non-monetary contribution to another company; the court assessed the conflict of interest under § 135a of the Commercial Code. A company therefore cannot automatically assume that a director’s act in a conflict of interest can be reversed as invalid — the Commercial Code links a breach of these duties to liability for damage.

Who may bring a claim against a managing director

The company

The claim for damages belongs to the company. It is asserted on its behalf by a director — often a new director after a change in management or after the sale of a business share.

A shareholder on the company’s behalf

Every shareholder may assert, on the company’s behalf, the claims the company has against a director. This does not apply if the company is already asserting them (§ 122(3)). The shareholder bears the costs of the proceedings; if the court awards costs to the company, they are paid to the shareholder (§ 122(4)). It is a tool for a minority shareholder when the director is protected by the majority that appointed him.

A creditor of the company

A creditor may assert the company’s claims against directors in its own name if it cannot satisfy its receivable from the company’s assets (§ 135a(5)). It does not assert its own damage but the company’s claim; the director may defend himself with the same grounds for release. Creditors’ claims do not lapse even if the company waives its claims or settles with the directors.

The bankruptcy trustee and a late bankruptcy filing

Once bankruptcy is declared, the creditors’ claims against directors are asserted by the bankruptcy trustee (§ 135a(5)). A debtor that is a legal entity must file for bankruptcy within 30 days of learning, or being able to learn with due care, of its insolvency; the statutory body has this duty too. For a breach, a contractual penalty of EUR 12,500 is deemed agreed (§ 11(2) of Act No. 7/2005 Coll.).

The person obliged to file is also liable to creditors for damage caused by failing to file in time (§ 11a). The law makes their position harder with presumptions — both that the filing was not made in time and as to the amount of the damage (to the extent of the unsatisfied receivable). The presumption as to the amount is, however, expressly rebuttable.

Who can be sued

The defendant need not be only a director entered in the Commercial Register. A person who in fact performs the function of the statutory body without being appointed has the duties of a mandatary (§ 66(7)) — and, for a breach, the same liability.

Burden of proof: what the company must prove

As claimant, the company bears both the burden of assertion and the burden of proof. It must state and prove the decisive facts. What exactly these burdens cover follows from § 135a(3) and the case law of the Constitutional Court of the SR.

Breach of duty: what is presumed and what is not

The company does not have to prove that the director acted unprofessionally or disloyally. The Constitutional Court of the SR, in its finding of 2 March 2023, ref. III. ÚS 621/2022, held that a breach of the director’s duty to act with due care is presumed and the burden of proving otherwise lies with the director.

The existence and amount of the damage

Without proven damage the claim fails. With money this step is easier: under finding III. ÚS 621/2022, undisputed cash withdrawals from the account meant a reduction in the company’s assets and therefore damage. Whether the money was used for the company is already a matter of proving due care — which the director must bear.

Other types of damage are harder. For a sale below value, the company must prove the actual value at the time of sale (usually by an expert opinion); for lost profit, that it would genuinely have achieved it had the director proceeded properly.

Causation

The company must prove that the damage arose as a result of the director’s act or omission. The director may also defend himself by showing another cause — for example a market fall or a customer’s insolvency that could not be foreseen when the deal was made.

How courts handle the burden of proof

Lower courts do not always proceed uniformly. In the case ending with finding III. ÚS 621/2022, both the district and regional courts dismissed the trustee’s claim against a former director for EUR 42,900 withdrawn from the account — reasoning that the claimant had not proved she spent the money other than for the company’s benefit. The Constitutional Court held this unduly shifted the burden onto the claimant, although it was the director who bore the burden of proving she handled the money with due care.

The Supreme Court decided similarly in judgment 3Obdo/30/2015: a director withdrew EUR 69,173.21 to the cash desk, but proven expenses reached only EUR 16,437.73, and the court ordered him to repay the difference. It was for the director to prove what the funds were used for; as sole director he should, within due care, have ensured that others had no access to the accounts.

One more point matters: it is not decisive on what legal ground the claimant brought the claim — the legal assessment is for the court. If the company sues for unjust enrichment, the court may assess the facts under § 135a.

Burden of proof: what the director must prove

A director is not liable if he proves he acted with due professional care and in good faith that he was acting in the company’s interest (§ 135a(3)). He must prove both. If he cannot, and the company proves damage and causation, he is liable.

Due care: an informed decision

In a dispute it is useful to be able to prove:

• what information the director had before the decision and where he got it,
• what advantages, disadvantages and risks of the decision he weighed,
• what other options he had and why he chose this one.

Evidence includes offers, analyses, advisers’ opinions, internal e-mails or minutes of meetings from the time the decision was made. With money the defence is more concrete: it is not enough to claim the money went on running the firm — the director must prove it with accounting and cash records of its use.

Good faith and the company’s interest

The second condition is loyalty. The director must prove he did not prefer his own interest, the interest of only some shareholders or of a third party. For deals with related parties it is therefore wise to show the terms matched the market — for example with comparative offers or a valuation.

Carrying out a general-meeting resolution

Directors are not liable for damage caused by conduct carrying out a resolution of the general meeting (§ 135a(3)). The protection does not apply if the resolution conflicts with the law, the articles of association or the by-laws, nor to the duty to file for bankruptcy; approval by a supervisory board does not protect the director. In a single-shareholder company, that shareholder’s decision must be in writing and signed — an oral instruction does not protect the director.

Other lines of defence

• Challenge the damage and its amount — that the assets did not decrease, the price matched the market, or the lost profit would not have arisen even otherwise.
• Challenge causation — if another cause produced the damage, no liability arises.
• Raise limitation — the court considers it only if the liable person raises it (§ 388(1)).
• Check the claimant’s standing — a shareholder may sue only if the company is not already doing so; a creditor only if it cannot satisfy itself from the company’s assets.
• Consider the duty to avert damage — the liable person does not compensate damage that arose because the injured party failed to take measures to avert it (§ 384(1)).

What proof looks like in a real dispute

The court does not look for evidence itself — it decides which of the proposed evidence to take (§ 185 of the Code of Civil Contentious Procedure). For the director, § 151 is key: factual assertions he does not expressly deny are treated as undisputed, and if he denies assertions about his own conduct he must state his own version, otherwise the denial is ineffective. A general statement that he denies the claimant’s assertions is not enough — the director must describe what he did with the money or the assets.

The defence must be prepared in full right at the start (§ 153 and 154). A former director often has no access to the documents — but the court may order whoever holds a needed item to produce it (§ 189, the disclosure duty). The request should be as specific as possible. Typical evidence:

• bank statements, the cash book and cash receipts,
• accounting and financial statements,
• contracts, orders, invoices and correspondence,
• minutes and resolutions of the general meeting,
• witness testimony (the accountant, other directors, employees),
• an expert opinion (the market value of sold assets, the amount of lost profit).

Limitation: what to watch out for

The Commercial Code sets no special limitation period, so the general four-year period applies (§ 397). For damages it runs from the day the injured party learned, or could have learned, of the damage and of who must compensate it, and ends at the latest ten years after the breach (§ 398).

Limitation stops running when the claim is filed (§ 402). For the company the decisive day is the day the claim is filed, not the day a pre-action letter is sent; for the director, that he must raise the limitation objection himself. Beware written acknowledgements: if the debtor acknowledges the debt in writing, a new four-year period runs, even for an already time-barred right (§ 407). A director should therefore not sign debt acknowledgements or instalment agreements under pressure without legal advice.

With a series of withdrawals or payments, limitation must be assessed for each act separately — older withdrawals may be time-barred even if newer ones are not. If the damage was caused by a sole director who did not inform the company, it is defensible to argue the company could have learned of it at the latest when approving the financial statements (§ 122(2), § 125(1)).

Watch the change in the law too: on 1 October 2026 a new Civil Code was adopted, intended to end the dualism of civil and commercial obligations law. Once it takes effect, its transitional provisions will also need checking for claims against directors.

Agreements on liability, waiver of claims and settlement

Agreements excluding or limiting a director’s liability are prohibited; neither the articles of association nor the by-laws may limit it (§ 135a(4)). The company may waive the claims or settle them only after three years from their arising, with the general meeting’s consent and provided shareholders holding at least 10 % of the registered capital do not object. A premature waiver does not stand, and even a valid waiver does not protect the director against the company’s creditors (§ 135a(5)).

A practical approach for both sides

A company considering a claim

• Secure the evidence right after taking over management — statements, accounting, contracts, e-mail access, while they are complete.
• Quantify the damage item by item and tie each item to a specific act and date; only then assess limitation of the individual items.
• Act fast on non-competition breaches — claim the profit within three months (§ 65(3)).
• Do not settle prematurely — a waiver without the conditions of § 135a(4) does not stand.

A director facing a claim

• Hand over demonstrably — have the handover of documents and agenda confirmed by a protocol, and warn of any imminent damage (§ 66(2)).
• Assess the demand first — do not reply with a debt acknowledgement or instalment proposal; check limitation, the claimant’s standing and whether the damage is specified.
• Prepare evidence before the first filing and, for documents the company holds, propose that the court order their production (§ 189 CCCP).
• Check your insurance — directors’ and officers’ liability cover, the deadlines and duties for notifying a claim.
• Keep the criminal dimension in mind — unexplained withdrawals may run alongside criminal proceedings (e.g. § 237 of the Criminal Code).