Do former board members have to keep company secrets? New regulations in the Commercial Companies Code
According to Article 209¹§2 of the Commercial Companies Code (CCC) , “A board member may not disclose company secrets even after the expiration of his mandate.” This provision, introduced on October 13, 2022, implements new solutions for board members of limited liability companies. Previously, the regulations did not explicitly regulate the prohibition of former board members from disclosing company secrets.
The new regulation is aimed at strengthening the protection of companies against the disclosure of confidential information by former board members to unauthorized parties, including competitors. Similar solutions have been introduced for board members of joint-stock companies, as regulated by Article 377¹§2 of the Companies Act.
What is covered by the term “company secret”?
The concept of “company secret” raises many doubts, as the legislator has not explicitly defined it. According to doctrinal views, this concept refers to all information of material importance to the company, which should not be disclosed to unauthorized parties. In practice, the question is whether the assessment should be based on objective criteria or on the subjective interests of the company.
An important point of reference is the justification of the bill of August 23, 2021 regarding the Law on Amendments to the Law – Commercial Companies Code and Other Laws (print No. 1515, Ninth Chamber of Parliament). It refers to the concept of business secrets under Article 551 of the Civil Code (CC). As can be seen from the cited justification , company secret should be understood as information acquired in the course of and in connection with the performance of the mandate.
Significantly, the definition of a company secret is broader than the definition of a business secret under the Act on Combating Unfair Competition. Unlike a business secret, in the case of a company secret, it is not necessary to prove that the company has taken steps to keep the information confidential. A variety of information is protected, such as company plans, management methods, development forecasts , acquired expertise, information about contractors or litigation.
How long is the prohibition on disclosing company secrets valid?
According to Article 209¹§2 of the Commercial Companies Code (CCC), a member of the board of directors may not disclose company secrets even after the expiration of his mandate. This means that:
- Before the expiration of the mandate, a board member is even less (a maiori ad minus) entitled to disclose company secrets.
- This obligation after the expiration of the mandate is indefinite in nature.
In other words, this prohibition applies to both a current and former member of the board of directors of a capital company, regardless of whether he or she remains associated with the company in some other way (e.g., as a shareholder or member of another body). Importantly, the reason for the expiration of the mandate is irrelevant, and the duty of confidentiality does not disappear even in the event of a claim by the board member against the company.
Prohibition on disclosure of company secrets: no exceptions?
The provision of Article 209¹§ 2 of the Companies Act is mandatory. This means that the provisions of the company’s articles of association, resolutions of the governing bodies, or the articles of association cannot override or limit this prohibition. In practice, this means that sharing company secrets with unauthorized persons is prohibited.
It is not a violation of the law for a board member to use this information in the course of the company’s business, in its judicial or administrative proceedings, or at the request of public authorities. However, it is important that the board member take measures to prevent unauthorized access to this information.
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