Charles Explorer logo
🇬🇧

What is meant by „necessary loyalty“?

Publication at Faculty of Law |
2022

Abstract

Czech Civil Code as well as Business Corporations Act stipulate that member of an elected body is obliged to act with necessary loyalty. The contribution deals with the question how adjective "necessary" should be understood and if there are different levels of loyalty.

In general, administrators of matters of others are able to interfere in the sphere of entitled persons in different ways and the vulnerability of the interests of entitled person determines the intensity (content) of the duty of loyalty. Members of elected bodies of business corporations are able to affect interests of business corporation fundamentally and therefore their duty of loyalty is very intensive.

Nevertheless, there are considerable differences and this is reflected (inter alia) in the intensity (content) of duty of loyalty. Never, the member of an elected body cannot enrich himself at the expense of the business corporation.