In Danish public and private limited companies, the members of the management are liable for damages if they intentionally or negligently cause damage to the company, the shareholders or any third party. According to section 363(1) of the Danish act on Public and Private Limited Companies the damages for the management “… may be reduced if deemed reasonable, having regard to the degree of fault, the amount of the damage inflicted and the circumstances in general.” However, there also exist general rules regarding reduction of damages in the Danish act on the liability to pay compensation, including section 19(3) and 23, which both imply that the liability of employees is often reduced. As the executive board is usually hired by the board of directors, the main question in this article is whether the executive board of public and private limited companies can invoke these employee friendly rules or whether the executive board cannot go beyond the reduction rules of the act on Public and Private Limited Companies.
The article concludes that the general legal relation between the act on Public and Private Limited Companies and the act on the liability to pay compensation is not regulated in the acts themselves, the preparatory works, case law or principles of the applicable law. However, based on the interpretation of the specific reduction rules in the acts, the article concludes, that the members of the executive board can invoke the rules of the act on the liability to pay compensation when the members are liable for damages while performing employee tasks. The same, though more cautiously, is assumed regarding the executive board members performing of managerial tasks.