Change of managing director

What it means

A change of managing director means that the current managing director of a limited liability company stops holding office, whether through removal, resignation, expiry of the term or death, and a new person takes their place. Appointing an additional director or changing the way directors act on the company's behalf also counts as a change.

The general meeting decides on appointing and removing a director; in a single-member company the sole member does so by resolution. A director can also resign, and when that takes effect is governed by law and possibly the articles. An appointment is effective from the date set in the resolution, and the register entry is declaratory.

The change must be notified to the registry court without undue delay through an application for a commercial register filing. Until the new state is entered, third parties may rely on the registered data, so a prompt filing matters especially for banks, business partners and authorities.

How it works in practice

The practical procedure involves a general meeting resolution or a sole shareholder resolution, the new director's consent to the appointment with an officially certified signature, a declaration of eligibility and an electronic application for the change. The filing is usually prepared by a lawyer, a notary or a company that provides formation and change services.

Alongside the register entry, other things need updating too: signing rights at the bank, access to the electronic mailbox and the Financial Administration portal, powers of attorney, insurance contracts and, where relevant, the register of public sector partners. The new director should also take over accounting and contract files from their predecessor, ideally with a handover protocol.

If the new director is to be paid for the role, it is advisable to sign a contract for the performance of the office and set the director's remuneration. Social and health contributions, tax on employment income and obligations towards the Social Insurance Agency depend on that. The outgoing director should receive confirmation of the documents handed over to avoid later disputes about liability.

What to watch out for

A removed director remains answerable for their decisions after leaving office. Director's liability for damage caused by breaching duties while in office does not end with departure. It is therefore important to document the company's position on the handover date, including unpaid taxes and open contracts.

Watch out for a situation in which the company, after removing its director, has nobody who can act for it. The new director should be appointed in the same resolution, otherwise the company cannot sign contracts or file applications. A prolonged absence of a statutory body can, in extreme cases, even lead to the court dissolving the company.