Who should use a management service contract
A management service contract matters for every company in which a senior position is held by someone from outside the founder group, and wherever the roles are to be separated formally. A sound contract states the duties, restricts competing activity, protects business secrets and gives the company a firm footing should the cooperation deteriorate.
What the protective clauses cover
The contract usually contains provisions on the protection of confidential information, on a non-competition covenant for the period after termination, and clear procedures for parting ways. Those clauses work like insurance: most often they are never called upon, yet they carry considerable value where a manager leaves with strategic knowledge or sets up a competing business.
Board membership and the contract are two different things
Appointment to the management board follows from a corporate resolution, while the contract governs the commercial terms of the cooperation. Keeping the two apart matters at the moment of parting, because removal from the board does not by itself end the contract. We align the notice provisions, the handover of duties and the settlement of remuneration with the corporate documents of the company, so that a single decision does not leave the other layer unresolved.