When a Director of a Czech s.r.o. Is Personally Liable for the Company’s Debts

Home » Director Liability for a Czech s.r.o.’s Debts: When It Becomes Personal

JUDr. Sergey Zaripov, LL.M., attorney (ČAK). As of October 2026.

In short: it is first of all the company itself that is liable for the debts of an s.r.o. A director is personally liable only in certain cases, and in each of them the cause is a breach of the director’s duties, not the mere fact of running the company.

The general rule

The shareholders of an s.r.o. are liable for the company’s debts only up to the amount of their unpaid contributions as entered in the commercial register (Section 132(1) of the Business Corporations Act, “ZOK”). A director need not be a shareholder, and holding the office does not by itself make the director liable for the company’s debts.

The duty of care of a prudent manager

Anyone who accepts office as a member of an elected body undertakes to perform it with the necessary loyalty, knowledge and diligence (Section 159(1) of the Civil Code, “OZ”). A person acts with due care and knowledge if, when making a business decision, they could reasonably assume in good faith that they were acting on an informed basis and in the defensible interest of the company (Section 51(1) ZOK). If a court assesses whether a member of a body acted with the care of a prudent manager, the burden of proof is on that member, unless the court decides that this cannot fairly be required (Section 52(2) ZOK). That is why it matters how decisions are documented and what information the director had when making them.

Liability to creditors

A member of an elected body who has not compensated the company for damage caused by a breach of duty, although obliged to do so, is liable to the company’s creditor for the company’s debt to the extent the damage was not compensated, if the creditor cannot recover from the company (Section 159(3) OZ). All three conditions must be met: a breach of duty and damage to the company, uncompensated damage, and the creditor’s inability to recover from the company.

Insolvency of the company

A debtor is insolvent if it has more than one creditor, monetary obligations more than 30 days overdue, and cannot meet them (Section 3(1) of the Insolvency Act, “IZ”). The company’s statutory body must then file for insolvency without undue delay, and where there are several directors who may act independently, each of them has this duty (Section 98(1) and (2) IZ). A person who breaches this duty is liable to creditors for the damage, which is the difference between the claim established in the insolvency proceedings and the amount the creditor received (Section 99(1) and (2) IZ). The person is released from liability only by proving that the breach did not affect the amount available to satisfy the creditor’s claim, or that the duty was not performed because of circumstances beyond their will (Section 99(3) IZ).

Where bankruptcy (konkurs) has been declared on the company’s assets and a member of the statutory body contributed to the insolvency by breaching duties, the insolvency court may, on the trustee’s application, order that person to contribute to the estate up to the difference between the company’s debts and the value of its assets (Section 66(1) ZOK).

Disqualification from office

A court may decide that a member of a statutory body who, in the three years before the proceedings began, repeatedly or seriously breached their duties may not serve as a member of the statutory body of any business corporation for up to three years (Section 63(1) ZOK). Anyone with an important interest may apply (Section 63(3) ZOK). A person who breaches the ban is liable for all obligations of the company that arose while they actually performed the office, and the ban may be imposed again for up to 10 years (Section 65 ZOK). The rules apply by analogy to former members and to persons who are in the position of a member of the body in fact (Section 69(2) ZOK).

What this means in practice

Decisions and their rationale should be recorded in writing, because the burden of proof is on the director.
At the first signs of insolvency, assess at once whether the duty to file for insolvency has arisen.
Leaving office does not remove the question of liability for the period in which the director served.

If a claim has been made against you, or you want to assess a director’s risks, we will prepare a position based on the documents. More about the service: “Corporate Disputes”.