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Should management board members have agreements?

While it is not compulsory for management board members to sign agreements with their companies it could be useful sometimes. It is especially important to consider if the management board has more than 1 member and/or you are looking to involve investors to your company.

So what to regulate in board member agreements? Concrete obligations, benefits/salary, non-compete clauses, compensation in case of termination, conditions for termination etc are just some of the terms that could be regulated. The regular board member fee is fixed by shareholder decision but other important agreements should be fixed in the contract.

Having a separate and concrete written agreement creates clarity and can avoid disagreements arising from incomplete or oral agreements.

If the management board member also has a concrete role in the company other than managerial duties (such as software engineer etc) then an employment agreement with them can also be signed simultaneously. Different rules apply to employment agreement and the 2 should be kept clearly separate.


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