Managers and directors of commercial companies assume fundamental responsibilities that go beyond mere operational management, encompassing ethical and legal obligations aimed at protecting the interests of the collective entity. Among these, the duties of non-competition and of refraining from the improper use of assets belonging to the company stand out, both grounded in the principles of loyalty, care, and diligence.
These duties seek to preserve the integrity of the company, preventing conflicts of interest that may compromise its sustainability and the trust among the parties involved.
The duty of loyalty is the central pillar of these obligations, inseparable from the principle of trust that must govern relations not only with the company, but also with shareholders and third parties. This duty requires honest, careful, and transparent conduct, consistent with good faith and the prohibition of abuse of rights. In this context, the manager must prioritize the company’s interest, considering not only the pursuit of profit, but also the impact on stakeholders.
The Duty of Non-Competition
In particular, the duty of non-competition prohibits the manager or director from engaging in activities that may compete with those of the company in a disloyal manner. It is not necessary for the competing activity to be identical to that of the company; similarity and the potential to divert clientele are sufficient, taking into account factors such as geographical proximity and market impact.
The law does not prohibit competition per se, but rather condemns unfair competition—namely, conduct that violates market principles and undermines the loyalty owed to the managed company.
Furthermore, the duty of loyalty encompasses the prohibition on taking advantage of business opportunities for personal benefit and the obligation to act in good faith, as well as the need to avoid conflicts of interest. The use by the manager or director of confidential information or company resources to promote competing ventures may, moreover, give rise to damages. Such conduct reveals the prioritization of personal interests to the detriment of the collective interest, rendering the continuation of the manager or director untenable.
The Duty of Non-Use of Assets Belonging to the Company
In turn, the duty of non-use of assets belonging to the company complements the foregoing, requiring the manager or director to act diligently in the administration of assets and to refrain from the abusive use of company property for purposes unrelated to the company’s interests.
The breach of these duties may result in the removal of the manager or director for just cause, particularly in cases where there is a serious violation of the duties of care, diligence, and loyalty, leading to an irreparable loss of trust that renders the maintenance of the relationship with the company untenable.
Final Considerations on Corporate Governance
Thus, the duties under consideration naturally reinforce the need for management aligned with corporate interests, combined with an assessment of their impact on shareholders, employees, and other stakeholders. For companies, the promotion of transparent governance is essential. It is therefore recommended that managers and shareholders seek legal guidance to assess situations of potential conflicts, avoiding disputes and preserving corporate harmony.
The content of this information does not constitute any specific legal advice; the latter can only be given when faced with a specific case. Please contact us for any further clarification or information deemed necessary in what concerns the application of the law.