Clifford Chance
Prague's High Court of Appeal: The provision in a shareholders agreement agree to ensure that the directors nominated by them follow their instructions in day-to-day management is invalid
9 January 2020
Prague's High Court of Appeal ruled in its judgment of 23 January 2019, file ref. 14 Cmo 23/2018 (the "Ruling"), that the provision in a shareholders agreement imposing an obligation on the company's shareholders to ensure that the board of directors members nominated by them follow their instructions in day-to-day business management is invalid because it is in conflict with Section 194(4) of the Commercial Code, which stipulated a prohibition on instructions being given to board of directors members regarding day-to-day management.
