Managing Director Liability – Business Judgment Rule
Managing directors constantly face critical business decisions that shape the success of their companies. The economic outcome of these decisions is often uncertain by nature. Investments, strategic realignments, and everyday business operations all involve both opportunities and risks. Effective risk management and well-informed decision-making are therefore essential for sustainable business growth and long-term corporate success.
Austrian corporate law recognizes this business reality and does not hold managing directors liable for every incorrect decision. Instead, it provides an important legal safeguard: the Business Judgment Rule.
This principle clarifies that liability does not depend on whether a business decision ultimately leads to economic success or failure. Rather, the decisive factor is how the decision was made.