MEMORANDUM

1. Relevant Law
In Czech law, the Civil Code and the Business Corporations Act are relevant for determining the scope of duties and responsibilities of the statutory body

2.Concept of Statutory Body

Under Czech law, a statutory body is a person who is authorised to act on behalf of a company and who is entitled to manage the company’s business (hereinafter referred to as a “director”). A director is registered in the Commercial Register.
The law also recognises a so-called de facto director, i.e. a person who is not formally entered in the register but who de facto holds the position of a director.
Both the director and the de facto director have the duties and responsibilities described below.

3.Basic Director’s Duties

➢ Due diligence
➢ Duty of loyalty
➢ Duty to act in the best interests of the company
➢ Duty to act in good faith
➢ Duty to inform about certain matters (conflict of interests, directorship in another company that has been or is insolvent, criminal proceedings)
➢ Duty to file for bankruptcy if the company is insolvent

4.Director’s Liability

➢ If the Director breaches an obligation and causes damage to the company, the Director is liable for the damage to the extent of all his/her assets.

➢ If the Director breaches the obligation to file for bankruptcy in due time or has contributed to the bankruptcy through his/her activities, the Director is personally liable for the company’s obligations up to the amount of the unsatisfied part of the claims in the bankruptcy proceedings.

The Director has the burden of proving that he has acted with due diligence in any dispute over damages.

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