Management board member agreement

MANAGEMENT BOARD MEMBER AGREEMENT

This management board member agreement (hereinafter the "Agreement") has been entered into in [Place of signing] on [Date of the agreement] between the following parties:

1. PARTIES

1.1 [Name of the company]
Registry code: [Registry code of the company]
Address: [Address of the company]
Representative: [Name of the company's representative], basis of the right of representation: [Basis of the representative's right of representation]
(hereinafter the "Company")

1.2 [Name of the board member]
Personal identification code: [Personal identification code of the board member]
Address: [Address of the board member]
E-mail: [E-mail of the board member]
(hereinafter the "Board Member")

2. SUBJECT MATTER OF THE AGREEMENT

2.1 By a resolution of the competent body of the Company, the Board Member has been appointed as a member of the management board of the Company as of [Date of appointment as a board member].

2.2 This Agreement does not appoint the Board Member to office or remove the Board Member from office. The Agreement governs the legal relationship between the Company and the Board Member arising from the appointment as a member of the management board.

2.3 The Board Member is not an employee of the Company and the Employment Contracts Act does not apply to this Agreement (§ 1 (5) of the Employment Contracts Act). The provisions of the Law of Obligations Act on authorisation agreements apply to the Agreement to the extent not otherwise provided by the Commercial Code, the articles of association of the Company or the Agreement.

2.4 The Board Member confirms that the Board Member is not subject to a prohibition on acting as a member of a management board, a prohibition on business or any other impediment arising from law or a court decision to being a member of a management board, and that the Board Member has no obligations that would prevent the performance of the Agreement. The Board Member notifies the Company without delay if such a circumstance arises.

3. TERM OF OFFICE

3.1 The authority of the Board Member is for an unspecified term and is valid until removal or resignation, unless a term of authority arises from law or the articles of association of the Company.

3.2 A member of the management board of a private limited company is elected for an unspecified term unless the articles of association prescribe a term (§ 184 (2) of the Commercial Code). A member of the management board of a public limited company is elected for up to three years unless the articles of association prescribe another term, but not for longer than five years (§ 309 (2) of the Commercial Code). An extension of the term of office may not be decided earlier than one year before the planned expiry of the term of office.

3.3 The Parties perform without delay the acts necessary for entering the details of the Board Member in the commercial register and for amending them.

4. RIGHT OF REPRESENTATION

4.1 The Board Member has the right to represent the Company alone in all legal acts.

4.2 The scope of the right of representation is entered in the commercial register and is valid with regard to third parties according to the registry entry.

4.3 In relation to the Company, the Board Member complies with the restrictions on the right of representation prescribed by the articles of association and established by the competent bodies of the Company, although these are not valid with regard to third parties (§ 181 (2) and § 307 (2) of the Commercial Code). If the Company has a supervisory board, the Board Member enters into transactions beyond the scope of everyday economic activities only with the consent of the supervisory board.

4.4 A transaction between the Company and the Board Member requires the consent of the shareholders or the supervisory board, except for transactions entered into in the everyday economic activities of the Company on the basis of the market price of goods or services (§ 181 (3) and § 307 (3) of the Commercial Code).

5. DUTIES OF THE BOARD MEMBER

5.1 The Board Member manages the everyday economic activities of the Company and is responsible for the following areas:
[Description of duties]

5.2 The Board Member organises the accounting of the Company and ensures the timely submission of the reports required by law.

5.3 The Board Member organises the Board Member's working time independently, based on the needs of the Company and the proper performance of duties. Expected time commitment: [Expected time commitment].

5.4 The Board Member manages the Company in accordance with the law, the articles of association, the lawful resolutions of the competent bodies of the Company and the Agreement, and acts in the most economically purposeful manner for the Company, avoiding causing damage to the Company and protecting the reputation of the Company.

5.5 The Board Member notifies the shareholders, or the supervisory board if there is one, on the Board Member's own initiative and without delay of any significant deterioration of the economic situation of the Company and of other circumstances significantly affecting the activities of the Company. If a resolution or instruction of a competent body is contrary to the law, the articles of association or the interests of the Company, the Board Member draws the attention of the body to it without delay.

5.6 If the Company is insolvent and the insolvency is not temporary due to the economic situation of the Company, the Board Member ensures that the management board files a bankruptcy petition with the court within the term provided by law (in the case of a private limited company, § 180 (5¹) of the Commercial Code).

5.7 The Board Member avoids conflicts of interest and notifies the Company without delay of the Board Member's direct or indirect interest in a transaction that the Company intends to enter into.

6. DUTY OF CARE AND LIABILITY

6.1 The Board Member is required to act with the diligence of a prudent entrepreneur and in the economic interests of the Company (in the case of a private limited company, § 187 (1) of the Commercial Code; in the case of a public limited company, § 315 (1)).

6.2 The Board Member is liable for damage caused to the Company by a breach of the Board Member's obligations. Members of the management board who have caused damage are jointly and severally liable; the Board Member is released from liability if the Board Member proves that the Board Member has performed the Board Member's obligations with the diligence of a prudent entrepreneur (§ 187 (2) and § 315 (2) of the Commercial Code).

6.3 The Board Member is not liable for damage arising from the performance of a lawful resolution of a competent body of the Company.

6.4 The limitation period for a claim against the Board Member is five years (§ 187 (3) and § 315 (3) of the Commercial Code).

6.5 Clauses 6.3 and 6.4 or any other agreement between the Company and the Board Member do not restrict the right of a creditor or the trustee in bankruptcy of the Company to file a claim for compensation for damage against the Board Member as provided by law, including where the Company has waived the claim, entered into a compromise with the Board Member or shortened the limitation period (§ 187 (4)–(5) and § 315 (4)–(5) of the Commercial Code).

7. REMUNERATION

7.1 For the performance of duties, the Board Member is paid remuneration of [Monthly fee (€, gross)] euros per month (gross).

7.2 The remuneration is paid to the Board Member's bank account [Fee payment day].

7.3 The taxes prescribed by law are withheld from and paid on the remuneration.

7.4 The amount of the remuneration and the procedure for its payment are determined by the shareholders, or by the supervisory board if there is one, ensuring that the total amount of payments made by the Company to the Board Member is in reasonable proportion to the duties of the Board Member and the economic situation of the Company (§ 180¹ (1)–(2) and § 314 (1)–(2) of the Commercial Code).

7.5 If the economic situation of the Company deteriorates significantly and continuing to pay the remuneration would be extremely unfair to the Company, the Company may demand a reduction of the remuneration. In such case, the Board Member has the right to cancel the Agreement extraordinarily with one month's advance notice (§ 180¹ (3)–(4) and § 314 (3)–(4) of the Commercial Code).

7.6 Bonuses, additional benefits and severance compensation are paid only on the basis of a resolution of a competent body of the Company or a written agreement of the Parties.

8. REIMBURSEMENT OF EXPENSES

8.1 The Company reimburses the Board Member for justified expenses related to the performance of duties that have been approved in advance and are documented.

8.2 For the reimbursement of an expense, the Board Member submits the documents certifying the expense in accordance with the procedure set out in the internal accounting rules of the Company.

9. CONFIDENTIALITY

9.1 The Board Member undertakes to keep confidential the business secrets and other confidential information of the Company that have become known to the Board Member in the performance of duties (§ 186 (1) and § 313 (1) of the Commercial Code).

9.2 The confidentiality obligation remains in force without a time limit also after the termination of this Agreement.

9.3 The confidentiality obligation does not apply to information that must be disclosed by law. The Company may not demand compensation for damage caused by a breach of the obligation to maintain business secrets if the Board Member acted in accordance with a lawful resolution of the shareholders' meeting, the general meeting or the supervisory board (§ 186 (2) and § 313 (2) of the Commercial Code).

10. RESTRICTION ON COMPETITION

10.1 During the term of authority, the Board Member may not, without the consent of the shareholders, or of the supervisory board if there is one, be a sole proprietor in the area of activity of the Company, be a partner of a general partnership or a general partner of a limited partnership operating in the same area of activity as the Company, or be a member of the management body of a company operating in the same area of activity as the Company, except in the case of companies belonging to the same group (in the case of a private limited company, § 185 (1) of the Commercial Code; in the case of a public limited company, § 312 (1)).

10.2 In the event of a breach of the prohibition specified in clause 10.1, the Company may demand the termination of the prohibited activity, the surrender to the Company of the income received from the prohibited activity and compensation for damage to the extent exceeding the income collected (§ 185 (2) and § 312 (2) of the Commercial Code).

10.3 The Board Member undertakes not to act in an enterprise competing in the same area of activity as the Company for [Duration of the restriction on competition (months)] months after the termination of the Agreement.

10.4 The Company pays compensation for the restriction on competition of [Compensation for the restriction on competition (€ per month)] euros per month during the term of the restriction.

10.5 The restriction on competition applies only if the Company actually pays the compensation. The restriction covers the area of activity of the Company and the territory in which the Company operated at the time of termination of the Agreement.

11. TERM AND TERMINATION OF THE AGREEMENT

11.1 The Agreement enters into force upon signing.

11.2 Either Party may cancel the Agreement by giving the other Party at least [Advance notice of cancellation of the agreement (months)] months' advance notice thereof. The provisions of the Law of Obligations Act on the cancellation of authorisation agreements apply to the cancellation of the Agreement (§ 184 (3) and § 309 (3) of the Commercial Code).

11.3 The removal of the Board Member by a resolution of a competent body of the Company also terminates this Agreement. The competent body of the Company may remove the Board Member regardless of the reason.

11.4 The Board Member may resign from the management board regardless of the reason by notifying the body that appointed the Board Member (§ 184 (7) and § 309 (5) of the Commercial Code). Where possible, the Board Member does so with the advance notice specified in clause 11.2 so that the Company is able to appoint a new member of the management board. Resignation also terminates this Agreement.

11.5 Either Party may cancel the Agreement extraordinarily if, taking into account all circumstances and weighing the interests of both Parties, the cancelling Party cannot be expected to continue performing the Agreement until the expiry of the period of advance notice (§ 631 of the Law of Obligations Act).

11.6 Upon the termination of the Agreement, the Board Member hands over to the Company all documents, data carriers, access credentials and property of the Company in the Board Member's possession and cooperates with the Company in amending the details in the commercial register.

11.7 Upon the termination of the Agreement, the Board Member has no right to severance compensation unless the Parties have separately agreed thereon in writing or unless otherwise provided by law.

12. DISPUTE RESOLUTION

12.1 Disputes arising from the Agreement are resolved primarily through negotiations.

12.2 Failing agreement, the dispute is resolved in court: [Court for resolving disputes].

13. FINAL PROVISIONS

13.1 Amendments and supplements to the Agreement are made in writing or in a form reproducible in writing and enter into force once both Parties have confirmed them and the competent body of the Company has approved them in accordance with the law or the articles of association.

13.2 Notices related to the Agreement that have legal consequences are given in writing or in a form reproducible in writing to the address or e-mail address specified in clause 1.

13.3 If any provision of the Agreement is or becomes invalid, this does not affect the validity of the remaining provisions. The Agreement constitutes the entire agreement between the Parties with regard to the subject matter of the Agreement.

14. LEGAL BASIS

14.1 The Agreement is governed by the law of the Republic of Estonia, in particular the Commercial Code and the Law of Obligations Act. The Employment Contracts Act does not apply to the Agreement (§ 1 (5) of the Employment Contracts Act).