The legal issue arising from the use of assets owned by the company by its managers concerns the conciliation of two apparently conflicting values: on the one hand, the managers’ commitment to represent the company and to primarily pursue its specific and real interests and, on the other hand, their right to private enterprise, pursuant to Article 61 of the Constitution of the Portuguese Republic.
In a judgment dated 30 September 2014, rendered within the case no. 1195/08.0TYLSB, L1.S1, the Supreme Court of Justice considered that the use, by a company manager, of assets and information owned by the company – in this case, a mobile phone, computer and electronic mail server –, when intended to fulfil the individual and selfish interests of the manager, entails a breach of the duty of care imposed on the members of the management bodies of commercial companies.
In the case in question, the company manager set up a single-member company within which he wrongfully used assets owned by the company that he represented as manager in order to pursue a competing business of the one carried out by the latter.
While assessing the compliance of this conduct with the rules and principles governing the actions of the members of managerial bodies of commercial companies, the Supreme Court of Justice set out the issue in the light of the normative criteria laid down in Article 64 of the Commercial Companies Code (“CCC”) and, to this end, framed the situation in the fundamental duties of the members of management bodies of commercial companies.
The point in issue is to determine which fundamental duty is breached by the adoption of a conduct of this nature. In the decision in question, the Supreme Court of Justice understood that this act constituted a breach of the duty of care that shall govern the actions of the manager within the framework of the fiduciary duty established with the company. Indeed, this type of conduct evidences the lack of competence and commitment of the manager to perform his duties and entails an omission of the duty imposed on him to monitor the business of the company, for which reason the Court classified this conduct as a breach of the duty of care.
On the other hand, in legal theory, this conduct has been regarded as a typical example of breach of the duty of loyalty, more specifically the duty not to use assets owned by the company represented by the manager. The grounds for the breach of the duty of loyalty rest on the fact that the manager devalues and neglects the interests of the company represented in favour of his own interests, more specifically by engaging in a competing business and misusing the assets owned by the company.
In a nutshell, considering that the duty of loyalty requires that the members of management bodies always act in accordance with the interests of the company that they represent, the manager who places his own interests ahead of the interests of the company acts in breach of the fundamental duty of loyalty.
These situations of misuse of the company’s assets are addressed under the so-called corporate opportunities doctrine. This doctrine entails two different modalities: (i) the doctrine of subjective corporate opportunities, which includes the cases in which the member of the managerial body pursues and exploits a business opportunity belonging to the company represented; and (ii) the doctrine of objective corporate opportunities, which covers the cases in question, in which a member of a managerial body uses, wrongfully and disproportionately, information and assets owned by the company in order to attain his own interests.
In effect, it is unanimously agreed in legal theory and in case law that the improper use of the assets owned by the company by a manager constitutes just cause for dismissal, within the scope and meaning of Article 254.5 CCC, insofar as it entails a breach of a fundamental duty of the manager and irremediably compromises the continuation of the legal relationship entered into between the manager and the company and its underlying relationship of trust.
With regard to the possible accountability of members of management bodies for the improper use of the assets owned by the company, it must be noted that some authors are of the opinion that the rules concerning the prohibition of competition, provided for in Article 180.2 CCC, are applicable by analogy. This means that the company represented can not only be compensated for all losses suffered but may also, insofar as this is possible, make full use of the opportunity that it was deprived of.
However, other authors argue that the use of assets owned by the company, when providing an advantage for the member of the managerial body who undertakes its use, may be regarded as unjust enrichment, provided for and regulated in Articles 473 and following of the Portuguese Civil Code (“CC”), in order to oblige the manager to restore to the company represented the unjustifiable advantages arising from the wrongful use of the company’s assets.