The directors of Romanian companies are liable not only for damages directly caused to the company, but also for loss of profits. Further, the directors can be liable even for the slightest negligence, as the law provides that they have to perform their obligations with the caution and diligence of a good director.
The liability of directors whose mandates are remunerated is even higher according to the law, as they should perform their duties with the diligence of a good owner.
Such obligations of caution and diligence are not breached if, when adopting a business decision, the director is reasonably entitled to consider that the decision is in the interest of the company. In this respect, a business decision is deemed to be any decision to take or not to take certain measures regarding the management of the company including filing for insolvency, if the economic context requires such measure.
Therefore, given the current context generated by the pandemic and its economic effects on the large majority of companies, directors must ensure that any business decision they take in order to help the company navigate the crisis has a solid economic basis, reflected in, among others, cash flow and liquidity levels as well as financial forecasts. Nevertheless, as the current circumstances are extraordinary, impacting all involved in the company, it would be useful if directors could engage the shareholders as well, by requesting their confirmation on more sensitive business decisions. This would not only limit the directors’ liability but would also ensure that all impacted parties are on board with the strategy adopted.
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