How to appoint and remove officers in a Slovenian subsidiary

A mandatory officer of the most common type of commercial company in Slovenia – a limited liability company - is the manager (in Slovenian: “poslovodja”). A company may have one or more managers (directors) who shall manage the company's operations and represent the company at their own liability. The Articles of Association of the company shall lay down whether the managers shall be entitled to represent the company jointly or individually.

Legal persons may not be appointed as the managers and only natural person may be appointed on such a position. The person appointed as a manager may be either employed with the company or not. In case the manager is also in employment relationship with the company, special rules apply to employment agreement concluded with such a maneger (in principle, the parties may deviate from certain mandatory provisions under the employment law, such as the conditions and limitations of fixed-term employment, working time, provision of breaks and rest periods, remuneration for work, disciplinary responsibility, termination of the employment contract). If the manager is not employed with the company, the provisions of the Companies Act, Articles of Assotiation and the Management agreement(s) shall apply to the relationship between the company and the manager.

Corporate officers (directors, management board members) must fulfil certain common requirements, otherwise they may not be appointed as representatives of the company. Any natural person with the capacity to contract may be appointed as a member of a management body, with the exception of a person who:

• is already a member of another management or supervisory body of the company;
• has been convicted by a final judgement of a criminal offence against the economy, against employment relationships and social security, against legal transactions, against property, against the environment, spatial planning and natural resources. Such a person may not be appointed as a member of a management body for five years after the judgement became final and for two years after serving their prison sentence;
• is subject to a preventive measure prohibiting them from pursuing their profession, for the duration of the prohibition; or
• who, acting as a member of the management or supervisory body of a company for which bankruptcy proceedings had been initiated, has been convicted by a final judgement and is thereby required to compensate the creditors in accordance with the Act governing financial operations of companies and damage liability for a period of two years after the court ruling became final.

No statutory maximum age limit exists for the appointment on the position of the manager of the company (but can be provided in the Articles of Association). It is however mandatory that the manager is full of age (that is at least 18 years old when individual has a full capacity to contract). The Articles of Association can provide additional prerequisites to appointments, such as for example the requirements for a specific training or degree, experience, knowledge, etc.

There is no requirement for the manager to be a Slovenian national or to live in Slovenia. However, single permit requirements, notification requirements and/or visa requirements would normally apply (different rules apply to EU and non-EU nationals and further different requirements apply in the event the manager is not residing in Slovenia during the term of the office). Certain regulated sectors (e.g., banking, insurance, real estate, transport, telecom) require additional conditions, such as specific licenses, permits, etc.

If provided so in the Articles of Association, a limited liability company may have a two-tear form (there is a Supervisory Board and the Manager / Management Board) or a one-tier form (where there is a Board of Directors who may appoint one or more executive directors). Since in case of a limited liability company a one tier form with the board of directors and executive directors is relatively rare, it will not be further detailed in this Q&A.

The appointment process of corporate officers – managers - depends on the number of shareholders and on the fact whether the company has a supervisory board or not

• if a limited liability company has e a supervisory board, the manager(s) shall be appointed by the supervisory board;
• in case there is no supervisory board, the manager(s) shall be appointed by the shareholders on the general meeting by a majority of votes cast (unless Articles of Association provide for a different majority);
• in case a limited liability company has only one shareholder, the manager(s) shall be appointed by the sole shareholder’s resolution whereby the resolution shall be entered into the book of resolutions to be valid and effective.

Manager shall be appointed either for a definite or indefinite term. The Articles of Association may provide that a manager shall be appointed for a fixed period of time which shall in no event be shorter than two years. The same person may be reappointed as the manager.

The resolution on appointment of manager(s) shall specify the term of appointment and the manner of representation (that is whether, in case of more managers, the particular manager is entitled to represent the company individually or jointly with other manager(s)). Restriction of powers of manager(s) determined in the appointment resolution (except from joint representation with other manager(s)) do not have any effect against third parties (which is also in case those restrictions are entered into the court/business register).

If the limited liability company does not have a manager due to death, permanent or long-term work disability or in other urgent cases, a manager shall be appointed by the court in non-litigious proceedings based on a proposal. Anyone with legal interest may submit the proposal. The position of the court-appointed manager shall cease at the end of the period for which he/she was appointed by the court, or upon the appointment of a new manager in accordance with the Articles of Association. The court-appointed manager shall have the right to be paid for his/her work and compensated for the expenses incurred. If the court-appointed manager and the company cannot reach an agreement on the expenses and payment, the court shall decide on both.

Any new appointment or change of manager shall be promptly (within 15 days from the occurrence of change) registered with the court and business register of the Republic of Slovenia.

In principle, a corporate officer (manager) may freely resign at any time as there is no legal provision limiting the right of corporate officers to resign from their duties at any time.

However, the Employment or Management Agreement concluded with particular manager may set out conditions for their resignation, insofar as they do not deprive corporate officers of their actual right to resign. The agreement may require that the resignation be given in writing, by registered mail, with a specific notice period. Corporate officers who do not comply with these conditions may be held liable by the company for any damages.

In addition, resignation can be deemed given in bad faith (against the good faith and fairness principle) or at inappropriate time or with the intention to cause harm to the company. In such cases, the corporate officer may be found liable towards the company and sentenced to pay damages based on the general provisions of obligations code.

The resignation of an officer (manager) is not requested to be acknowledged by the person or body in charge of the appointment. The officer may hence on the basis of its resignation statement effect that he/she is deleted from the court and business register as the representative of the company.

Change of representative must be promptly (within 15 days from the occurrence of change) registered with the court and business register of the Republic of Slovenia in order to be effective against third parties.

The process for removing a corporate officer is the same as for the appointment of a corporate officer. Corporate officers can be removed from their office by decision of the person or body in charge of their appointment, namely:

• if a limited liability company has a supervisory board, the manager(s) shall be removed (recalled from the position) by the supervisory board;
• in case there is no supervisory board, the manager(s) shall be removed (recalled from the position) by the shareholders on the general meeting by a majority of votes cast (unless Articles of Association provide for a different majority);
• in case a limited liability company has only one shareholder, the manager(s) shall be removed (recalled from the position) by the sole shareholder’s resolution whereby the resolution shall be entered into the book of resolutions to be valid and effective.

The relevant body may remove the manager at any time, notwithstanding whether the manager has been appointed for a fixed period or indefinite period of time. The Articles of Association of a limited liability company may lay down that the manager shall only be recalled from the position for the reasons specified therein. The rules governing contractual obligations shall be applied to claims stemming from a contract for the performance of managerial duties.

Change of representative must be promptly (within 15 days from the occurrence of change) registered with the court and business register of the Republic of Slovenia in order to be effective against third parties.

If the corporate officer also has an employment contract in place, the above removal process of corporate officer does not preclude the company from also having to deal with the individual’s situation as an employee.

In principle, a manager of a limited liability company may be removed from his/her position at any time, notwithstanding whether the manager has been appointed for a fixed period or indefinite period of time, and without justified reason. Hence, in such case the manager shall not be entitled to any damages or other compensation due to removal from the position of manager.

However, if the Articles of Association of a limited liability company provide that the manager may only be recalled from the position for the reasons specified therein (hereinafter: “justified reasons”), removal without those justified reasons would entitle the manager to claim damages or severance pay due to early termination of the office.

Furthermore, the Employment agreement between the manager (if the manager is in employment relationship with the company) or the Management Agreement (if the manager is not in employment relationship with the company) may provide for the manager’s other rights and entitlement in the event the manager is removed before the term of appointment for justified or unjustified reasons. According to the contractual freedom principle, the parties may freely determine their mutual rights and obligations in this respect.