Losses from the CEO. Compensation for losses by the director. Compensation for damage by the director. The dishonesty of the director.
Is the director of the company guilty of running a parallel business? The fact of doing business "on the side" does not bother anyone as long as the parallel business does not harm the core. If the director takes customers and staff away, the “shadow” company gets the profit that the main one could get, those who are interested in the main company have the opportunity to recover losses and lost profits from the unscrupulous director.
The plot of the case:
Dmitry Nakonechny (hereinafter referred to as the Respondent, Director), holding the position of Director General of Real Company, created a company with the consonant name Real Logistic, reissued lease agreements for warehouses used by Real Company, conducted similar activities in providing warehouse and logistics services, reissued contracts with some customers to a new company, dismissed employees from the Real Company, and concluded contracts with them after they were registered as individual entrepreneurs.
The participants of the Real company estimated the damage at more than 9 million rubles, part of which is lost profit, the other part is payment to laid-off employees: while working under service contracts, the same people received higher pay than under labor contracts.
The court of first instance upheld the claim for the recovery of lost profits, refused to recover the difference in wages of employees. The court of appeal upheld the decision.
Judicial act: Resolution of the 17th AAS No. 17AP-7036/2019-GK dated 07/08/2019 in case No. A60-66643 / 2018
Court findings:
1. The defendant acted in a conflict of interest situation, terminated business relations with the main counterparties of the Real Company intentionally with the aim of transferring these counterparties to the Real Logistic company, his actions did not meet the interests of the main company, and led to losses.
2. As a result of termination of employment contracts, the company's expenses increased, however, in these actions the court did not see the director’s dishonesty or unreasonableness.
3. Termination of employment occurred at the initiative of employees, the director could not prevent such termination. The defendant did not have legal grounds for refusing to terminate employment contracts.
4. Evidence that, by concluding service contracts with former employees, the director acted contrary to the public interest, has not been submitted. There is also no evidence that the company had no need for third-party services, that the concluded service contracts required the approval of the company participants.
5. The burden of proof of losses and their connection with the actions of the executive body of the company bears the plaintiff. The plaintiff proved and justified only the fact of causing and the amount of lost profit.
6. The dishonesty of the director’s actions is presumed if the director acts in a conflict of personal and “working” interests. The exception is situations when a legal entity is notified of a conflict of interest and accordingly approves the transaction.
Comments:
1) The director of the company "Real" performed only managerial functions, was not among the members of the specified company. At the same time, as a director, he registers a company with a similar name and a similar type of activity, being the sole participant and director of a new legal entity.
The company is not notified that the director conducts parallel activities. The director takes customers, rented premises (assets), having all the powers for this. Such director behavior is not economically driven. Having assessed all these conditions together, the court rightly found the director guilty of causing losses to the company.
2) As an executive body, the director is liable for losses caused by his actions to the company by virtue of law. A priori, the director must act in good faith and reasonably. Causing loss in the form of lost profits cannot be called reasonable behavior.
3) The withdrawal of workers outside the scope of labor law is not a prohibited method in doing business, however, such actions should be economically justified. The court indicated that the director could not impede the employees' desire to quit the company. At the same time, it is obvious that employees wrote a letter of resignation with a view to the subsequent transition to service contracts and to increase their income from cooperation with the company.
For society, this is an increase in costs. As the plaintiff pointed out, in case of dismissal of some employees, the director had the right to select other people and hire new employees for the same payment, but he did not. In this case, one can argue about the good faith and expediency of such behavior of employees and the director, but formally the court did not find grounds for recognizing the additional costs as losses of the company.
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