Liability of persons performing functions of entrepreneurial company’s bodies to creditors for its obligations

The article is focused on clarifying the essence and specifics of the liability of persons performing the functions of entrepreneurial company’s bodies to creditors for its obligations, taking into account modern realities of national legislation, doctrinal provisions and principles of legal precedents. The purpose of the article is to define the essence and specifics of the liability of persons performing the functions of entrepreneurial company’s bodies to creditors for its obligations. To achieve the indicated purpose, the author has used a number of methods of scientific cognition, in particular: dialectical, analysis and synthesis, formal and legal, comparative and legal, as well as the method of economic analysis of law. It has been emphasized that persons, performing the functions of the bodies acting on behalf of and in favour of a legal entity and are part of it, do not have a legal relationship with the creditors of the legal entity itself; being obligated only to the legal entity, they have no obligations to creditors, as well as they should not consider creditors’ interests in their activities. However, in case of bankruptcy of an entrepreneurial company and the impossibility of satisfying the creditors' claims, persons performing the functions of the company's bodies may be held liable. This is because they are liable for their own wrongful acts (act of omission), which are manifested in bringing the company to insolvency (bankruptcy). It has been argued that bringing to subsidiary liability is possible only after the court decision on declaring the debtor insolvent (bankrupt) enters into legal force. The bankruptcy legislation does not provide the possibility of establishing a situation when a debtor is unable to fulfill monetary obligations or the obligation to pay mandatory payments and (or) other payments without issuing an appropriate procedural document – a court decision on declaring the debtor insolvent (bankrupt). The author has made the admonition that it is mandatory to establish unlawful nature of behavior of persons performing the functions of entrepreneurial company’s body (bringing the company to bankruptcy by providing mandatory instructions or otherwise determining the debtor’s acts) for bringing them to liability. At the same time, the specified persons are not liable for damage caused to the creditors’ property rights if they prove that they acted in good faith and reasonably in favour of the debtor.

legal entity; entrepreneurial company; participant; official; creditor; liability; good faith; reasonableness