In a recent ruling, the Austrian Supreme Court has defined de facto managing directors and their obligations and liabilities in connection to wrongful trading.
The key takeaways from the ruling are:
- A "de facto" managing director is an individual who permanently and distinctively "takes" the place of a corporate body that is authorised/required to file for insolvency.
- The de facto managing director must actively influence the actual managing director so that the latter fulfils their obligations to file for insolvency proceedings at the appropriate time.
- If the de facto managing director fails to assert their influence, they are potentially liable for any damages caused by the failure to file for insolvency proceedings at the appropriate time.
- Provided that certain essential tasks remain the sole responsibility of the actual managing director, individuals with far reaching responsibilities in other areas do not qualify as de facto managing directors and are therefore not liable for damages caused by wrongful trading.
Find out more
This case provides welcome clarification on the difference between individuals with significant individual responsibilities and de facto managing directors. To discuss this distinction in more detail, please reach out to a member of our Restructuring & Insolvency team.
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.