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Purpose & Characteristics of Liability<\/strong><\/p>\n Like the previous legislative regime (art. 22a of the Law 2190\/1920), Law 4548\/2018 establishes the express liability of the members of the Board of Directors towards the company in case of violation of their duties. Such a violation can be committed by action or by their omission (art. 102 \u00a71). The measure of responsibility is the diligence of the prudent entrepreneur, who operates in similar circumstances (art. 102 \u00a72).<\/p>\n The personal responsibility of the members of the Board of Directors towards the company constitutes the compensation for the dissociation that may be identified between the persons acting (:members of the Board) and the person responsible (:SA), (1698\/2013 Supreme Court).<\/p>\n The establishment of this liability aims at the restoration of any direct damage of the SA (1285\/1980, Nomos Legal Database). Also in the prevention of related delinquent behaviors of the members of the Board of Directors. And all this because it is of paramount importance that the members of the Board of Directors work in good faith (and without interruption), with a view to the realization of the corporate objective.<\/p>\n The provision related to the liability of the members of the Board of Directors (art. 102) is of mandatory nature. It is therefore not possible to modify its content and effects based on statutory provision or contractual regulation. To exclude, e.g., the liability of the members of the Board of Directors or to limit it only to liability due to gross negligence. Also, to turn into objective responsibility. Any such provision or provision is void (174 CC).<\/p>\n It should be clarified here that the liability of the members of the Board of Directors being investigated here constitutes a separate reason for liability based on their organizational <\/strong><\/a>relationship with the <\/strong><\/a>SA<\/strong><\/a>. This means that it should not be confused with a member’s liability arising from any special relationship <\/strong><\/a>they have with the SA (eg an employment contract between a member and the SA). Also, with any external liability of the members, i.e. liability towards shareholders or third parties.<\/p>\n <\/p>\n The Diligence of the Prudent Businessman<\/strong><\/p>\n Liability for breach of duty towards the company does not exist if the member of the Board of Directors proves that “in the exercise of their duties, they exercised the diligence of a prudent businessman operating in similar circumstances” (art. 102 \u00a72 paragraph a’).<\/p>\n It is an abstract measure of behavioral monitoring. The criterion for its concretization will be the rules of diligence, which can and must be observed by an average diligent administrator of a foreign property of a similar (to the SA) size and object, in a similar condition, based on good faith (1801\/2008 Court of Appeal of Thessaloniki, Nomos Legal Database).<\/p>\n When checking the due diligence, the status of each member and the duties assigned to them, by law, by the statute or by decision of the competent corporate bodies are taken into account (art. 102 \u00a72 in fine). And so are any other particularities of each case – such as the type and size of the business. On the contrary, it is accepted that the individual qualities of the members who are burdened with the relevant responsibility are not taken into account, e.g. inexperience or lack of specialist knowledge.<\/p>\n With this specific regulation (art. 102 \u00a72), the burden of proof regarding compliance with the subjective measure of due diligence belongs to the member of the Board of Directors and not the company (art. 102 \u00a72-1698\/2013 Supreme Court, Nomos Legal Database). The distribution, in this way, of the burden of proof (wrongful objective responsibility) facilitates the company in terms of proving the objective nature of the administrative fault (see Memorandum to law 4548\/2018 on art. 102).<\/p>\n Conditions for Establishment of Liability<\/strong><\/p>\n In order to establish liability according to \u00a71 of article 102, specific conditions are to be met. In summary:<\/p>\n Member of the Board of Directors<\/strong><\/p>\n A basic condition for such liability to be conceivable is that one has the status of a member of the Board of Directors<\/strong><\/a>. The way of their appointment is not of relevance (e.g. election <\/strong><\/a>by the General Assembly<\/strong><\/a>, <\/strong><\/a>direct appointment <\/strong><\/a>by <\/strong><\/a>a shareholder<\/strong><\/a>). However, it is noteworthy that, according to an explicit legislative provision, members of the Board of Directors whose appointment act is defective are also liable towards the SA (art. 102 \u00a75).<\/p>\n The subjective scope of this responsibility also includes any substitute <\/strong><\/a>bodies <\/strong><\/a>(art. 87 and 102 \u00a75 -5102\/2012 Court of Appeal of Athens, Nomos Legal Database). Also, the liquidator of the SA (art. 167 \u00a75).<\/p>\n Any liability of a member of the Board of Directors is established from the time of acquisition of the relevant capacity. From the time, i.e., of acceptance of their appointment, regardless of whether the required publicity formalities were observed. It ends with the actual cessation of the duties arising from its organic relationship. [e.g. It is accepted that there is liability in the case of formal resignation from the Board of Directors, along with (substantial) continuation of management actions].<\/p>\n However, in addition to the members of the Board of Directors, as defined above, in the subjective field of application of the specific provision (: art. 102), it is argued, by virtue of a broader interpretation, that responsibility also arises against: (a) the de facto member and (b) of the member due to legal effect.<\/p>\n (a) De facto members of the Board of Directors<\/p>\n This case concerns members of the Board of Directors who, although they have not been appointed, exercise, in fact, management. Legal theory and jurisprudence disagree regarding the existence or non-responsibility of such persons. Basic objection: the fact that no factual data can create a special legal relationship.<\/p>\n In theory, various functional criteria have been developed that must be met in order to qualify a person as a de facto member of the Board of Directors. Such board members may be the parent company or the creditor bank, when, for example, it acquires an active role in the organizational structure of the SA.<\/p>\n (b) Board members by virtue of legal effect<\/p>\n This is the case of the persons who create -to third parties dealing with the company- the impression that they are part of a body of the SA. In the context of the security of the law and the (necessary) protection of bona fide third parties, it is argued that they, too, should be treated as members of the Board.<\/p>\n Breach of Obligation<\/strong><\/p>\n Additional condition for establishing the liability of art. 102 constitutes, of course, the violation of the obligation of the member of the Board of Directors (: objective criterion). In comparison, the member of the Board of Directors is liable towards the SA “for damage it suffers due to an act or omission that constitutes a violation of their duties” (art. 102 \u00a71).<\/p>\n Main obligations of the members of the Board of Directors (according to the law on SAs and what has already been mentioned) are:<\/p>\n (a) The duty of diligence<\/strong><\/a>: This, as we have mentioned in a previous article, is divided into three subcategories: (i) the obligation to observe legality (art. 96 \u00a71 section a), (ii) the duty of diligence in narrow meaning (art. 96 \u00a71 ed. b’ & 102\u00a72) and (iii) in the obligation to supervise and control the organization and operation of the SA (art. 96 \u00a71 para. b’).<\/p>\n (b) The obligation behind <\/strong><\/a>it<\/u><\/strong>: <\/strong><\/a>The law enshrines various aspects of this obligation (e.g. the obligation to <\/strong><\/a>refrain <\/strong><\/a>from competitive acts<\/strong><\/a>).<\/p>\n It is pointed out, here too, that the member’s liability is only determined by a breach of obligations that are consistent with their organizational position (the status, i.e., of the member of the Board of Directors) and the duties that derive from it.<\/p>\n Culpability<\/strong><\/p>\n Beyond the objective criterion of the breach of obligation, the law (no. 102) also claims culpability of the member of the Board of Directors (subjective criterion). The member is responsible for their own fault (and not for any responsibilities of the other members of the Board of Directors). Any degree of culpability (deceit, gross\/slight negligence) is sufficient. At the same time, it is not necessary for the member to have knowledge that the illegality committed causes damage to the company.<\/p>\n It is noted, finally, that the member of the Board of Directors cannot invoke an objection of joint fault of the company using as an argument, e.g., any violation of the obligation of another member of the Board of Directors or the election by the General Assembly of unsuitable members of the Board of Directors.<\/p>\n Damage<\/strong><\/p>\n Furthermore, the responsibility of art. 102 presupposes causing (direct) damage to the company’s property. Any damage to shareholder property is irrelevant.<\/p>\n In this case, the theory of difference applies (:298 CC). In essence, it compares the company’s existing assets to what the company would have had the damaging act\/omission not occurred. Any risk, simply, of the corporate property does not establish the responsibility of a member of the Board of Directors.<\/p>\n If, however, the member’s responsibility is established, both the positive loss and the lost profit are restored.<\/p>\n Causality<\/strong><\/p>\n Finally, a necessary condition is the existence of a connection (:causal link) between the violation of the obligation of the member of the Board of Directors and the damage caused to the company. It is required, specifically, that the act or omission of the member of the Board of Directors causally leads to the company\u2019s loss, i.e. to the reduction of the company’s assets. Therefore, the probability of occurrence is not enough.<\/p>\n The criterion of causality is of particular significance in the case of collective decisions of the Board of Directors. A question, reasonably, arises as to whether it is possible for a member of the Board of Directors to plead, e.g., that despite their vote, the damaging decision would have been taken. The legislator dealt with the relevant issue. Specifically, it is provided that everyone is jointly and severally liable in the event that they participated in the taking of the respective damaging decision (art. 102 \u00a73 section a’). Any reservation of vote and the (unjustified) abstention do not seem to be in favor of the lack of causality.<\/p>\n Responsibility To The Whole<\/strong><\/p>\n In cases, therefore, in which the damaging act has been committed jointly by members of the Board of Directors or they are jointly responsible, the members are jointly and severally liable. Similarly, if several have acted simultaneously or successively and it cannot be ascertained whose action caused the damage (art. 102 \u00a73 section b’).<\/p>\n The court, however, may decide to apportion the responsibility jointly and severally between the parties responsible. Critical elements are, by law, the seriousness of the act, the degree of guilt and the distribution of duties of the members of the Board of Directors (art. 102 \u00a73 section c). Lastly, the court can also regulate the right of the persons responsible to sue each other (art. 102 \u00a73 section d’).<\/p>\n Participation in a Board of Directors for professional reasons, personal reasons or even as a \u201cfavor\u201d is not without responsibilities for the member; towards the SA, the State, its Agencies and third parties. It is necessary, therefore, to demonstrate the maximum possible care when accepting such a proposal but also, of course, throughout the maintenance of the specific status. We were concerned above with the conditions of (intra-company) responsibility. We will follow up, in our next article, with the reasons for exemption from comparative liability, the possibility of the SA to waive its claims as well as their limitation period.-<\/p>\n Stavros Koumentakis<\/a> <\/p>\n![\"\"](\"https:\/\/koumentakislaw.gr\/wp-content\/uploads\/2020\/09\/11.9.20-003-cropped-150x150.jpg\")
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