In its judgment on 16 March 2021 (Case No. 27 Cdo 1873/2019), the Czech Supreme Court commented on shareholders' duties under a shareholders' agreement in legal conditions covered by Act No. 513/1991 Coll., the Commercial Code (the "Commercial Code") and Act No. 40/1964 Coll., the Civil Code (the "Civil Code").

According to the Supreme Court, a shareholders' agreement regulates relations between shareholders (here shareholders in a joint stock company) pertaining to their involvement in the company. It is governed by Part Three of the Commercial Code and its interpretation must be based on section 266 of that Code. Any agreement by which shareholders agree to instruct members of the board of directors on matters falling within the company's business management and, at the same time, to ensure that those board members follow these instructions without delay (notwithstanding their duty to act with due care) would contravene the meaning and purpose of section 192(1)(a), paragraph 1, first sentence of the Commercial Code and Section 194(4) in fine of the Commercial Code. As such, it would be invalid as a breach of law (section 39 of the Civil Code) or, as the case may be, based on the initial (legal) impossibility of performance (section 37(2) of the Civil Code).

However, this does not mean that shareholders cannot agree to intercede with board members to obtain a specific solution to a particular business management-related manner. In other words, they may present the board (i.e. its members) with their arguments or opinions, which the board may, but will not be bound to, take into account in its decision-making. Similarly, shareholders may commit to ensuring the achievement of a particular outcome, for example,  the board's adoption of a certain decision on a particular matter. In such a case, however, this is not a commitment to intercede but rather the assumption of responsibility for a particular outcome. Such an arrangement does not automatically entail a breach of statute. It is not a commitment to action (conduct) contrary to the law (here the giving of instructions in breach of section 194(4) in fine of the Commercial Code) but a "guarantee" of a certain (agreed) result.

In both of the cases described above, as a matter of principle, the shareholders may only assume a duty to intercede or "guarantee the result" concerning actions (decisions) by the board of directors (i.e. its members) that comply with the law and the articles of association. This means - among other things - that the members must not breach their performance obligations, including the duty to act with due care.

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