Decision of the Supreme Court file no. 32 Cdo 4133/2009 from 25 January 2011

i.      Applicable legal provisions

Section 13 para 1 and Section 191 para 1 of the Commercial Code

ii.    Facts

Pursuant to the statutes and the commercial register, only the chairman of the noard of directors was entitled to act and sign on behalf of the joint stock company in question.

The company entered in the loan agreement which was signed by a regular member of the board of directors on the basis of Power of Attorney signed by the chairman of the board of directors.

The court had take a judgement regarding the validity of the loan agreement and further, whether the member of the board of directors signed the loan agreement as an attorney (indirect representation), or as a member of the board of directors (direct representation).

iii.    Relevant court practice of the Supreme Court

29 Odo 1082/2005
"When a company statutes provide that at least two members of the board of directors shall act on behalf of the company, it is not acceptable that two board members granted a general power of attorney only to one of them.

iv.    Decision and its explanation

a)    The Supreme Court confirmed its earlier findings with respect to the granting of a general Power of Attorney to the member(s) of the board of directors with no authorization pursuant to the statutes to act on behalf of the company. Such general Power of Attorney may not be granted.

b)    However, the court stated that the above didn’t exclude that a member(s) of the board of directors authorized acting on behalf of the company grants an individual power of attorney for particular act to another member of the board of directors due to the temporary inconvenience (illness, business trip, etc.)

c)    In such case, the empowered member of the board of directors doesn’t act as an attorney based on Power of Attorney but still as its statutory body (direct representation.