Austria: The Duties Of A Supervisory Board Member Towards His Former Company

Is a supervisory board member justified in taking a decision which helps his current company at the expense of his former company?


In spring 2010 a considerable former Austrian politician stepped down from his supervisory board seat at a big Austrian stock company (A-AG). A few days later, it became known that he had been elected chairman of the supervisory board of another Austrian stock company (B-AG). Due to the fact that both companies were strong competitors this "change over" caused harsh reactions from A-AG. The main apprehension was the potential disclosure of confidential information he, as a former supervisory board member, had collected through his activities on the supervisory board. This led to lively public discussions about under which circumstances the acceptance of a supervisory board mandate might be inappropriate or even illegal.

No explicit conflict of interest rules

Despite the fact that such situations might occur more often than publicly known, the Austrian Stock Corporation Act does not provide any explicit rules governing such conflicts. Neither does the Austrian Corporate Governance Codex, although it does contain several conflict of interest rules. For example, according to rule 44 Austrian Corporate Governance Codex, supervisory board members may not pursue their own interests or those of associated companies or persons being in conflict with the interest of the company they are responsible for. If a conflict arises, the supervisory board member must immediately disclose the conflict of interest to the chairman of the supervisory board. Case law and doctrine outlined several instruments to overcome such conflicts of interest, including:

  • voting bans
  • information restrictions
  • shifting to committees
  • dismissal of the supervisory board member (in case of a structural or permanent conflict of interest)

However, it is questionable whether these considerations can be transferred equally to the subject at issue. The intention of Rule 44 is to protect the company for which the supervisory board member is presently active. In the case described above, not B-AG but A-AG was worried about a potential conflict of interest; B-AG could only benefit from their new supervisory board member's knowledge.

The duty to observe secrecy

In general, supervisory board members shall be guided by the interest of the company and the enterprise connected therewith. They must apply the standard of care of a diligent manager. The duty not to disclose confidential information (or trade secrets) is one of the key obligations a supervisory board member is bound to. The task of the supervisory board is to advise regularly and supervise the management board in the management of the enterprise. It must be involved in decisions of fundamental importance to the enterprise. Therefore, good corporate governance requires an open discussion between the management and supervisory boards, as well as among the members within the supervisory board. The comprehensive observance of confidentiality is of utmost importance for this.

This obligation outlasts membership in the supervisory board. Applied to the case described above, this means at first and as a matter of principle that the observance of an adequate cooling off period of six to twelve months is indicated. However a rigid fixed period of time cannot guarantee that any potential conflict will be eliminated in future. Therefore, the supervisory board member would still be bound to strictly observe the following:

  • to not make use of any information obtained during his supervisory activities for A-AG to the detriment of A-AG;
  • in case of a conflict, to report the conflict to the chairman or vice chairman of the supervisory board. Depending in the specific facts of the case, the member might be prevented from taking part in the respective meeting and from exercising its voting rights;
  • rescission of the mandate (or refusal to accept in the first place), but only as a last resort and under the precondition that the strict observance of the confidentiality would harm B-AG.


Supervisory board members must comply with the rules of proper corporate management. If they violate the duty of due care and diligence of a prudent and conscientious supervisory board member, they are personally liable to the company for damages. It should be noted that any company having suffered a loss through the misconduct of the supervisory board member may be entitled to claim damages!

Apart from this, several other consequences are conceivable, such as:

  • a recall of the member;
  • resolutions passed with the conflicted member's involvement might be void and subject to actions for declaration of nullity.

A supervisory board member should therefore check, prior to accepting a mandate, whether a conflict of interest with any prior supervisory board memberships is likely. If so, the potential member has to decide whether the conflict affects only single issues or the function as a whole. In the latter case, the mandate should not be accepted. If conflicts arise only sporadically, appropriate steps will have to be assessed on a case by-case basis.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Schoenherr Attorneys at Law
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Schoenherr Attorneys at Law
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions