Concurrence of offices before the Constitutional Court

In the judgement, the Constitutional Court dealt with the issue whether a member of a corporation’s statutory body may carry out activities that, under the Corporations Act, pertain to the statutory body, in an employment relationship (governed by labour law). The law does not explicitly stipulate a ban of such a concurrence; however, courts have repeatedly deduced it in their decision-making practice.

The Constitutional Court emphasised that the general courts shall first respect the fundamental rights of private persons to act freely within legal boundaries and the principle that agreements are to be kept. Arguments for the ban of concurrence were analysed from the perspective of labour as well as commercial law. According to the Constitutional Court, no ban can be deduced from labour law that would prevent members of a statutory body from carrying out their activity or its part under a labour-law agreement. The Labour Code governs dependent work relationships; however, nothing prevents parties from opting for the Labour Code regime also in other cases. Whether the parties have agreed that their relationship will be governed by the Labour Code has to be assessed depending on the parties’ intent.

From the commercial law perspective, the situation is unclear. The Constitutional Court admits that a ban could be deduced here, however, it requests the courts substantiate such ban in a convincing and conclusive manner, as it goes against the interest of private persons. The question thus remains whether the general courts will manage to support a ban of the concurrence of offices with sufficient arguments. Hence, it continues to be advisable to avoid the concurrence of offices and to regulate the rights and obligations by using an executive service agreement as a suitable and legally anticipated tool. Notably, since the effective date of the new Civil Code, a vast majority of companies has already done so.