LIECHTENSTEIN Law and Practice Contributed by: Matthias Niedermüller, Alexander Milionis and Fabian Rischka, Niedermüller Attorneys-at-Law
In Liechtenstein practice, the reverse piercing of the corporate veil is more prevalent. 3.3 Shareholders’ Claims Against Fraudulent Directors The strict liability provisions of the Persons and Companies Act serve as the balancing coun - terpart to the flexible and liberal framework of company law, thereby ensuring against its use and abuse for dubious or even criminal purpos - es by company bodies or directors who have neglected their duties. Primary Claims of a Legal Entity and Subsidiary Claims of Shareholders Against Directors Articles 218 to 227 of the Persons and Compa - nies Act state that primarily the organs/directors of a company will be liable for the damage to the legal person they have caused with intent or negligence. For a company director to be held personally liable for damage caused to said company, the following is required: • a damage has occurred; • the director has culpably acted in breach of duties; and • there is an adequate causal connection between the damage on the one hand and the conduct in breach of duties on the other. According to the general rule set out by the Supreme Court, directors of a company must manage the business with diligence and are liable for observing the principles of prudent management and representation. If the de facto management is entrusted to other persons, the administration will have a duty of supervision to the extent that it keeps itself informed about the management, as well as a duty to obtain reports
and – where there are doubts – to demand addi - tional information and to clarify ambiguities. Further, the director liability rules are not con - sidered to be tort claims. Rather, they are con - sidered as contractual obligations between the company and the director. Joint Liability It is particularly noteworthy that, according to Section 226(2) of the Persons and Companies Act, several directors of a company are jointly and severally liable with the others to the extent that the damage is personally attributable to them on account of their own culpability and the circumstances. In this regard, the Supreme Court also clarified that one director cannot as a rule invoke the contributory negligence of anoth - er director to their own benefit. Business Judgment Rule In 2009, the Liechtenstein legislator codified the business judgment rule in Section 182(2) of the Persons and Companies Act in order to introduce a liability-free space for directors who regularly have to take business decisions that may result in damage to the company. Based on this rule, if a director takes decisions on an adequate information basis, free from con - flicts of interest and in good faith that the deci - sion is in the best interest of the company, then the director is exempt from liability – even if the company was damaged by such actions. Secondary Shareholder Claims According to Liechtenstein law, the primary liability of a director/body is towards the com - pany. Shareholders may only claim compensa - tion directly from directors if two conditions are fulfilled cumulatively:
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