Critical analysis of managerial rights and responsibilities in limited liability company: legal framework evaluation

Abstract

The roles and responsibilities of managers in limited liability companies, though seemingly well-established, remain a complex and evolving area of legal and managerial study. This research delves into the legal rights and duties of managers, who serve as the statutory representatives of the most prevalent type of business entity in many jurisdictions, specifically focusing on limited liability companies. A critical aspect of this study is the exploration of the legal relationship between the manager and the company, which is primarily contractual and commercial in nature. Unlike traditional employment relationships, the protections afforded to managers stem solely from their agreement with the company, highlighting the unique nature of this business-law dynamic (Commercial Code, §133–136). This contractual basis underscores the need for clear legal provisions to ensure fairness and accountability in managerial roles.

The study critically examines the legal definitions of managers’ rights and obligations, as well as their accountability to the company, drawing on an extensive analysis of relevant judicial precedents. Beyond assessing managerial competencies, the research evaluates the adequacy of the existing legal framework in governing these responsibilities, identifying potential gaps that could undermine effective management or corporate governance (Săraru, 2023). The methodologies employed include legal analysis, synthesis, comparison, deduction, and descriptive techniques, which facilitate a comprehensive investigation of the legal principles shaping managerial functions. By comparing Slovak and Czech case law, the study traces the evolution of judicial interpretations and their impact on defining managerial roles, offering a cross-jurisdictional perspective on legislative effectiveness (Supreme Court of the Czech Republic, 1999, 2010).

A central research question is whether the current legislative framework sufficiently regulates managers’ rights and duties or if legislative reforms are needed to enhance clarity and enforcement. The findings reveal that managers wield significant decision-making authority, including rights to compensation, profit distribution, and limited liability protections, which empower them to steer the company strategically (Jankelova et al., 2021). However, these rights are counterbalanced by stringent obligations, such as fiduciary duties, legal compliance, diligent record-keeping, and exercising professional care, which ensure accountability to the company and its stakeholders (Commercial Code, §135a). The study emphasizes the importance of managerial autonomy, which allows managers to make independent decisions, but stresses that this autonomy must be exercised responsibly to align with the company’s interests and avoid conflicts of interest (Patakyova & Gramblickova, 2020).

The analysis also highlights the need to balance managerial powers with the interests of other stakeholders, particularly shareholders, to maintain equitable corporate governance. The implications of this research are significant for both managers and companies, as it clarifies the scope of managerial authority, underscores the importance of accountability, and advocates for a balanced distribution of power within the company structure (Horvat et al., 2017). By adhering to their defined rights and obligations, managers can effectively fulfill their roles, contributing to the company’s long-term success and sustainability. Ultimately, this study concludes that while the legislative framework provides a robust foundation for governing managerial roles, ongoing evaluation is necessary to address emerging challenges and ensure that managers can navigate their responsibilities effectively in a dynamic business environment.