Legal Q&A · Company & shareholders

Is an s.r.o. shareholder subject to the same non-compete duty as a managing director?

Law as at 17 August 2026

Answered by , Czech and Slovak attorney, admitted to the Slovak and Czech Bars (SAK 300422 · ČAK 19654).

Short answer

The statutory non-compete duty binds a managing director, not a shareholder. A shareholder may therefore operate in the company’s sector or hold a stake in a competitor unless the memorandum or articles impose a restriction. The law expressly allows the company to extend the duty to shareholders, but without such terms they are not bound.

Does the non-compete duty bind shareholders too?

The non-compete duty in Section 136 of the Commercial Code is directed at managing directors. A director must not, in particular, enter into transactions related to the company’s activities in their own name or for their own account, broker the company’s transactions for others, participate in another company as a shareholder with unlimited liability, or serve on bodies of another company with similar business activities.

No such statutory prohibition applies to a shareholder. In principle, a shareholder may participate in a competitor’s business, hold a stake in another company in the same sector or operate independently in the company’s field. Participation in an s.r.o. is primarily an investment interest and does not include the same statutory loyalty duties imposed on directors.

Can the memorandum impose stricter rules?

The law expressly permits the company to go further. Under Section 136(3), the memorandum or articles may specify the extent to which the non-compete duty also applies to shareholders. A company wishing to prevent shareholders diverting business elsewhere must put this in its founding documents. Otherwise, shareholders remain outside the prohibition. Define the restricted activities, territory and duration clearly to make the restriction enforceable.

What to consider

The two regimes overlap where a shareholder is also a managing director. As director, they are bound by law; as shareholder, only to the extent provided in the founding documents. We reflect suitable restrictions in the memorandum or articles and, where appropriate, the director’s service agreement. If a breach has occurred, we help through shareholder dispute resolution.

This answer provides general information on the law as at 17 August 2026. It does not constitute legal services or replace an assessment of an individual case. The details of your situation may differ. Book a consultation to discuss them.

More legal questions

All questions and answers
  1. I changed my surname. What documents are needed to update the Commercial Register? A shareholder or managing director’s name change, for example after marriage, must be reflected in the Commercial Register. Sensitive documents such as a marriage certificate or identity card are not required; a declaration by the applicant showing the change generally suffices. From 17 August 2026, registration proceedings are governed by the new Commercial Register Act, No. 29/2026 Coll.
  2. Can enforcement be taken against a business share in an s.r.o.? Yes. A business share is an asset that can be subject to enforcement. If the s.r.o. is not a single-member company and its memorandum prohibits transfer or requires general meeting consent, service of the enforcement order on the company has the same effect as court termination of the shareholder’s participation. The debtor’s participation ends and the settlement share is paid to the enforcing creditor. A freely transferable share is sold by the enforcement officer.
  3. What happens when an s.r.o. shareholder is declared bankrupt? Unless the s.r.o. has a sole shareholder, a declaration of bankruptcy over a shareholder’s assets has the same effect as court termination of their participation. The same applies if bankruptcy proceedings are discontinued or the petition is refused for insufficient assets. Participation ends and a settlement claim enters the bankruptcy estate instead of the share. If bankruptcy is later cancelled for other reasons and the company has not yet disposed of the share, participation may be restored.
  4. I sold my business share. Am I still entitled to profits from the previous year? Generally not. The right to a share of profits attaches to the business share, rather than the shareholder personally. A transfer passes all shareholder rights to the acquirer, including unpaid profits from earlier periods, unless the parties agreed otherwise or that particular claim was separately assigned. A former shareholder therefore generally cannot demand profits for the year preceding the transfer.

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Mgr. Patrik Tulinský, LL.M. Czech and Slovak attorney · SAK 300422 · ČAK 19654

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