Information which is a business secret

Duty to keep business secret according to provisions of the Companies act

Duty to keep business secret is regulated by the provisions of Articles from 72 to 74 of the Companies Act.

A business secret is information the disclosure of which to a third party may damage the company, as well as information that has, or may have, economic value because it is not generally known or easily available to third parties who could acquire economic benefit through its use or disclosure, and with regard to which the company took appropriate measures to keep its secrecy.

Information which is a business secret may be of a productive, technical, technological, financial or commercial nature, a study, a research finding, as well as a document, formula, drawing, facility, method, procedure, notice or internal instruction, and the like.

A business secret is also information determined by law, another regulation or company document as a business secret.

A company document:

  • May determine as a business secret only a piece of information which meets the conditions set out by the Companies Act and
  • May not determine as a business secret all information which refer to the company’s operation.

Exceptions from Duty to Keep Business Secret

Disclosure of information is not considered a breach of duty to keep a business secret, if such a disclosure:

  • Is an obligation prescribed by law
  • Is necessary for carrying out business or protecting the company’s interest
  • Was delivered to the competent authorities or public, exclusively with the purpose of pointing to the existece of an act punishable by law.

Persons which have Duty to Keep Business Secret

Persons which have special duties towards the company, as well as persons employed in the company, shall keep the company’s business secret even after they cease to have that capacity, in the period of two years of the day of termination of that capacity.

Memorandum of association, articles of association, the company’s resolution or a contract concluded with such persons may provide for that period to be longer, but not exceeding five years.

The following persons have special duties towards the company:

  • General partners
  • Members of a limited liability company who own a significant share in the company’s share capital or limited liability company member who is the controlling member of the company in terms of Article 62 of the Companies Act
  • Shareholders who own a significant share in the company’s share capital or a shareholder who is the controlling shareholder of the company in terms of Article 62 of the Companies Act
  • Directors, supervisory board members, representatives and procurators
  • Liquidator.

Other persons may also be designated as persons with special duties towards the company by means of a memorandum of association, or articles of association.

Consequences of Breach of Duty

A company may file an action against a person who violates the duty to keep the business secret, demanding:

  • Compensation of damages
  • Expulsion of that person as a company member, if that person is the member of the company.

The filing of action does not exclude or condition the possibility of termination of employment in accordance with the act governing employment relations.

A company shall provide full protection to a person who acted diligently and in good faith pointed to the competent bodies to the existence of information exclusively with the purpose of pointing to the existence of an act punishable by law.

Read more:
Labour rule book »
Assumptions of liability for damages »
Competence for conducting enforcement »

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