Attorney-at-Law Eva Mägi’s article addresses a situation where the sudden departure or death of a company’s board member can paralyze the entire operations of the enterprise. Since a legal person can act only through its bodies, a company becomes incapacitated without a board of directors. This brings severe consequences: obligations and rent remain unpaid, performance of contracts is interrupted, and failure to submit the annual report threatens the company with compulsory dissolution. The appointment of a new board member may become stalled due to, for example, an ongoing succession process or disagreements among heirs. In such situations, assistance can be sought from the court to ensure the continuation of the company’s business activities.
Under the Commercial Code and the Code of Civil Procedure, the court may, for good cause, appoint a substitute member to replace a departed board member. The application to the court may be submitted by a shareholder, the supervisory board, or another interested party, such as prospective heirs. The applicant can propose a suitable candidate to the court—to which it is advisable to immediately attach the candidate’s consent—though the court itself may also find a candidate if necessary. The court may appoint as a substitute member any person compliant with statutory requirements who is capable of performing the duties at the required level. In the event of multiple candidates or competition, the court decides at its discretion, taking into account the candidates’ knowledge and prior connection with the company. Willingness to work without remuneration alone is not decisive, as by law a substitute member has the right to claim reimbursement of expenses and a fee from the company. If no agreement is reached regarding remuneration, the amount of the fee is determined by the court.
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