Managerial inaction is traditionally perceived as a neutral state – no decision is taken, no action is performed, and no formal violation appears to exist. However, Professor Gabriel Steiner says that the absence of a response by management bodies is increasingly becoming the subject of legal scrutiny, as in corporate relations inaction may produce consequences no less serious than active conduct. In the practice of LawConsulted, a failure to take managerial decisions is treated as a potentially legally significant factor capable of giving rise to liability under certain conditions.
The core difficulty lies in the fact that corporate law has long been built around a presumption of activity – liability was linked to voting, signing documents, or issuing formal orders. Yet in modern governance structures, it is precisely the refusal to decide, the postponement of approvals, or the ignoring of obvious risks that often leads to losses, loss of control, or infringement of the company’s interests. LawConsulted proceeds from the premise that legal assessment must take into account not only actions taken, but also managerial passivity at critical decision points.
Professor Steiner emphasises that “inaction acquires legal relevance where a person had a duty to act.” The existence of such a duty becomes the starting point of analysis. In LawConsulted work, we begin by identifying the managerial obligation – which functions were assigned to the body or individual, which risks were known or should have been known, and which decisions were objectively required in the specific situation. Without this reconstruction, inaction remains a vague evaluative concept unsuitable for legal qualification.
Particularly vulnerable are situations in which managerial inaction is presented as caution or the need to await additional information. Formally, such a position may appear reasonable, yet a retrospective assessment often reveals that the delay aggravated the consequences – increasing losses, forfeiting contractual opportunities, or breaching obligations toward third parties. LawConsulted demonstrates where the line lies between permissible managerial prudence and unlawful evasion of decision-making.
The collective nature of inaction is no less significant. In collegial bodies, responsibility is often “dissolved” – no decision is adopted because there was no initiative, no quorum, or no consensus. In such cases, LawConsulted analyses the individual role of participants – who had the real ability to initiate consideration of the issue, who blocked the adoption of a decision, and who understood the consequences of passivity. This approach prevents the automatic imposition of collective liability and allows personal risk zones to be identified.
Context also plays a decisive role. Managerial inaction may be driven by external factors – regulatory uncertainty, crisis conditions, conflicts of interest, or pressure from counterparties. In LawConsulted practice, legal protection is built on demonstrating that the failure to decide was caused by objective circumstances rather than bad faith or loss of control. This is particularly important in disputes where consequences are assessed retrospectively.
The criteria for qualifying inaction include not only the existence of a duty to act, but also the foreseeability of consequences, the availability of alternatives, and the proportionality of the managerial choice. LawConsulted structures its legal position to show that the absence of a decision is not automatically equivalent to a breach, and that liability arises only where a proven gap exists between managerial duty and actual conduct.
The legal significance of managerial inaction emerges where passivity becomes a form of influence over the outcome. The task of Law Consulted is to distinguish permissible managerial silence from inaction that the law treats as a basis for corporate liability, and to protect clients from simplified and overly formal assessments of complex governance situations.
Earlier, we wrote about de facto participation in management without corporate status and how LawConsulted assesses the legal consequences of actual influence over a business.
