Early Termination of Management Board Mandates: Settlement, Dismissal and Case Law

ODI Law Founder and Managing Partner Uroš Ilić spoke on 16 September 2026 at the seminar Early Termination of Management Board Mandates: Settlement, Dismissal and Case Law, organised by the Slovenian Directors’ Association (ZNS) in Ljubljana.

The early termination of a management board member’s mandate is one of the more sensitive decisions a supervisory board may be required to make. Choosing between a negotiated termination and dismissal requires a careful assessment of the company’s interests and of the legal, financial and commercial risks associated with each approach.

During the seminar, Uroš outlined the key factors supervisory boards should consider when making such a decision – including the need for swift action, the statutory grounds for dismissal, the terms of the management agreement, potential litigation exposure, financial implications and the protection of the company’s reputation.

Particular attention was given to the grounds for dismissal and relevant case law. Uroš discussed serious breaches of duties, inability to manage the company, a vote of no confidence by the general meeting and other economic or business reasons. He also addressed the distinction between a subjective loss of confidence and the objective circumstances that may provide a legally sustainable basis for dismissal.

A significant part of the presentation focused on the supervisory board resolution on dismissal. In subsequent litigation, the resolution is a central source for assessing whether the dismissal was lawful. The grounds for dismissal therefore need to be clearly identified, properly substantiated and linked to the individual management board member concerned. Grounds that were not considered and recorded when the decision was adopted generally cannot later be introduced to remedy deficiencies in the original resolution.

The seminar also examined the consequences of an unlawful dismissal, including judicial review, potential reinstatement and damages claims, as well as the potential liability of supervisory board members.

Another key focus was the alternative of a negotiated termination of the mandate. A settlement can provide for an orderly departure and enable the parties to address matters such as termination of employment, severance and outstanding variable remuneration, confidentiality, post-termination non-compete obligations, handover arrangements and the application of D&O insurance. At the same time, entering into such an agreement does not in itself prevent the company from pursuing potential claims against a former management board member at a later stage.

Uroš also addressed specific considerations applicable to the dismissal of managing directors of limited liability companies and the importance of appropriately regulating dismissal grounds and severance entitlements in the articles of association and management agreements.

The central message of the seminar was that there is no single solution suitable for every early termination. Supervisory boards need to assess the legal and factual circumstances of each case carefully and select the approach that best protects the company’s interests while managing the risk of future disputes.

For decades, Uroš Ilić has combined experience in business, corporate governance and law, actively sharing that expertise within the professional community. His contribution to discussions of this kind also reflects ODI Law’s broader commitment to advancing best practices and high standards of corporate governance.

Through this continued professional engagement, ODI Law reinforces its active role in shaping corporate governance standards in Slovenia and contributes to responsible and professional business leadership.