Personal and several liability

The members of the Board of Directors are personally and severally liable towards the NV (or BV, as the case may be) for any loss caused by the improper performance of duties. Each member of the Board who proves that he cannot be blamed for such improper performance and that the activities concerned fall outside the scope of activities addressed to him, and that he has not been negligent in taking steps to avert the related consequences, is not liable (Article 2:14 Section 4 Netherlands Antilles Civil Code; NACC). Therefore, a division of tasks among such members can influence the liability. A claim based on Article 2:14 NACC can be instituted by the NV itself only, or, in case the NV has been declared bankrupt, by a bankruptcy trustee (in Dutch: ‘curator’). When the claim is instituted by the bankruptcy trustee, a member of the Board of Directors may not claim that he was granted any form of discharge from the liability by the NV (Article 2:14 Section 5 NACC).

Based on established case law, the obligation of the members of the Board of Directors of an NV to properly carry out their duties, is interpreted in such a manner that liability based on this obligation requires serious blame to be attributed to such members. Therefore, a Director of an NV can only be held liable by the NV if serious negligence in the performance of his duties is attributable to him. See the case of Ontvanger v. Roelofsen, Hoge Raad (Dutch Supreme Court) 8 December 2006, JOR 2007, 38. A finding of serious negligence on the part of a Director depends on the circumstances of the case. Actions that conflict with specific statutory provisions or the articles of association may constitute improper management rising to a level of serious negligence.

This standard for internal liability (i.e. the liability of a Director towards the NV) also applies when an individual shareholder holds a Director of the NV liable for the manner in which the latter has carried out his management duties. See the case of Willemsen Beheer v. NOM, Hoge Raad (Dutch Supreme Court) 20 June 2008, JOR 2008, 260.

In the event of bankruptcy of an NV which is significantly caused by mismanagement, each member of the Board of Directors is liable towards the bankruptcy estate for the deficit (Article 2:16 Section 1 NACC). If the Board e.g. has not timely observed its obligation to keep accounts, there is a statutory presumption of clear mismanagement. Unless the members of the Board can prove that they cannot be blamed for not meeting such obligations, each member will be personally and severally liable for said deficit. A claim based on Article 2:16 NACC can be instituted by the bankruptcy trustee only. If a bankruptcy trustee refuses to bring suit, any creditor of the bankruptcy estate can request that the bankruptcy judge order the bankruptcy trustee to commence such proceedings.

Karel Frielink
Attorney (Lawyer) / Partner

(4 August 2010)


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