Directors and Officers Liability
The Law Firm Fabritius Tengnagel & Heine provides legal advice on management liability
(D&O liability). We provide legal advice to individuals, insurance companies, shareholders, bankruptcy estates, directors and managers.
We have extensive litigation experience, e.g. we have been involved in some of the most important cases regarding management liability in Denmark. At present, we represent managers in the “Amagerbank case” and the “EIK Bank case”. In the “Roskilde Bank case”, we represented the officer who was finally acquitted by the Easter High court, since the judgement was not appealed as far as our client is concerned.
It is important to be aware that the members of the board of directors or the management board of a company are jointly and severally liable with their personal property for mismanagement and omissions in connection with their work for the company. Therefore, much is at stake if a board member becomes involved in a case regarding management liability.
In a limited liability company, the board of directors is responsible for the general and strategic management of the company and for ensuring that the capital resources of the company are adequate so that the company can pay everyone his due. Often, cases regarding manage-ment liability occur in a situation where the board of directors chooses to continue operations even though the company ought to have ceased to operate. In such cases, it is said that opera-tions are continued “after the point of hopelessness”. This may give rise to liability for damages. The management liability may also be linked to individual actions or omissions. Fx irresponsible borrowing, lack of supervision and control of the management of the company, and non-compliance with laws and regulations.
In a limited liability company, the management board is responsible for the day-to-day man-agement of the company taking into account the guidelines of the board of directors and any decisions made by the board of directors. The management board is responsible for ensuring that proper accounting and bookkeeping procedures, etc., are maintained. Furthermore, the management board, in the same way as the board of directors, is obligated to ensure that the company’s capital resources are adequate at all times.
It is very important for directors or managers faced by a potential lawsuit to engage a lawyer of their own to provide advice and guidance as to how to deal with such cases on a practical, strategical and personal level. The best way to safeguard the interests of directors and manag-ers is often to start even before a writ is issued.