Managerial loyalty is traditionally perceived as an unconditional virtue of executives – an expectation to act in the interests of the company, support the strategy of the owners, and ensure business stability. However, Professor Gabriel Steiner believes that it is precisely within the sphere of loyalty that one of the most delicate legal boundaries emerges, where good-faith actions in the company’s interests may transform into grounds for personal liability. At LawConsulted, we treat managerial loyalty not as an abstract ethical concept, but as a legally significant category that requires careful assessment of context and consequences.
The core difficulty lies in the tension between corporate benefit and the personal risks faced by executives. Decisions taken in the interests of the company often involve heightened risks – financial, reputational, or regulatory. As long as the strategy delivers results, loyalty is perceived as justified. Yet once the outcome turns negative, it is the executive who becomes the focal point of claims – from shareholders, creditors, or regulators. In LawConsulted practice, we repeatedly encounter situations where actions previously praised as “proactive” are retrospectively reclassified as excess of authority or breaches of fiduciary duties.
Professor Steiner believes that “loyalty ceases to be a safeguard the moment it replaces legal assessment.” This means that invoking the company’s interests alone does not absolve an executive from responsibility. LawConsulted builds its legal position by analysing which interests were actually being protected – short-term or long-term, corporate or personalised – and how decisions were made in light of the information available at the time.
Particularly complex are cases in which management acts under pressure – during crises, threats of market loss, demands from investors, or directives from owners. In such circumstances, the line between permissible loyalty and legally risky conduct becomes blurred. LawConsulted demonstrates that executive actions must be assessed in light of managerial necessity, available alternatives, and objective constraints, rather than solely through the lens of the final outcome.
Equally vulnerable are situations where loyalty is expressed through informal support of decisions – tacit approval, absence of objections, or execution of questionable instructions. Formally, such behaviour may appear neutral, but in disputes it is often used to substantiate personal liability. LawConsulted analyses where the boundary lies between permissible alignment with corporate direction and the legal duty to raise objections.
The collective dimension is also critical. Executives frequently act within collegial bodies, where loyalty to the group may conflict with individual responsibility. Professor Steiner believes that in such cases the law tends to personalise risk, disregarding the actual distribution of influence within the body. LawConsulted structures its defence based on the executive’s real role, capacity to influence decisions, and degree of control over their implementation.
The legal assessment of managerial loyalty requires abandoning simplified formulas. Loyalty is not synonymous with unconditional compliance, and the interests of the company are not always identical to those of individual stakeholders. The task of Law Consulted is to demonstrate that management actions were justified, proportionate, and fell within the boundaries of permissible managerial discretion.
The boundaries of permissible managerial loyalty are shaped not by declarations, but by law enforcement practice. That is why we address such matters systemically – protecting executives from retrospective simplification and the automatic imposition of personal liability for complex corporate decisions.
Earlier, we wrote about the formation of legitimate expectations without contractual obligations and LawConsulted practice in assessing the liability of the parties
