The liable persons – The liability of a board member of a limited liability housing company and its actualization

The doctoral dissertation analyzes the content and the actualization of the liability of a member of the board of directors of a limited liability housing company, from a legal dogmatics and law and economics point of view. The study is limited within Limited Liability Housing Companies Act (asunto-osakeyhtiölaki, 1599/2010, the Act), specifically chapter 24, section 1. According to the section, a member shall be liable for damages for the loss that he has while in office deliberately or negligently caused to the housing company, a shareholder or a third party. The liability of a board member is structured by the principles of general company law and tort law. The previous affects what are the duties of the board of directors and what are the duties of an individual board member. The latter sets forth the rules by which a party suffering damage must prove that the board member has damaged his interest and how much. In addition, tort law governs the amount of compensation that is calculated, and what can be included in a conciliation. The liability is also structured by the special features of the Act. The membership of the board is a permanent task until the member resigns, is dismissed, loses eligibility for the membership, or his term ends. As long as he is a member of the board, his liability can be actualized by actions taken during the general board meeting and activities the board takes or does not take, whether he participates in the meetings or not. The board member has a duty of care. No member of the board can avoid the liability of a limited housing company by being passive with a case the board must handle. Inactivity towards the duties may occur during the arrangement of a case in the board meeting or absence from the meeting the board should make a decision. The member has a duty of act in a company. Therefore, the number of absences from the meetings does not release him from the responsibilities. The member may limit his individual liability by voting against the majority or leaving a dissenting opinion into the minutes. The study shows, there are several other means – like a division of tasks of the board, professional competence, health and manipulation of the member – one must take into account when assessing the actualization and the amount of damage.The principle of full compensation is applied in the liability in limited housing company law. However, there is one exception. The amount of damage can be arbitrated in court if the party suffering damage fails to take appropriate tasks to limit the damage, and the compensation would be unreasonable for the member of the board.