LIABILITY OF COMPANY DIRECTORS

No derivative suit

It is considered a general rule of Dutch Caribbean corporate law that the management board (a.k.a. board of directors) must act in the best interests of the company (an NV or BV) in the performance of its duties, even when acting on instructions from others (e.g. shareholders). This includes the interests of the shareholders, the employees and, according to most legal writers, the creditors of the company.

Under the Civil Codes of Curacao, St. Maarten and the BES-islands (Bonaire, St. Eustatius and Saba), directors of a limited liability company (naamloze vennootschap or besloten vennootschap) are personally and severally liable to the company for damages caused by the improper performance of duties. Each director 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. A director can only be held liable by the company if serious negligence in the performance of his duties is attributable to him.

Regardless of allocation of tasks within the board, all directors remain collectively responsible for the general affairs of the company, including the obligation to keep accounts of the financial position of the company.

Directors may be held liable to third parties for any actions which may give rise to tortious (wrongful) acts. In order for a managing director to be held liable on the basis of a wrongful act, severe personal blame is required. For instance if a director is simply unwilling to pay so that a debt of the company is not paid or in the event that the director undertakes an obligation on behalf of the company when he knows or reasonably ought to know that this obligation cannot be fulfilled by the company and that the company will not be able to compensate the loss arising from this either, the director can be held personally liable for this.

The laws in the Dutch Caribbean jurisdictions do not provide for a shareholders’ derivative suit. Shareholders may have a claim against a managing director who acts tortiously towards the shareholders personally.

In the event of bankruptcy of the company each director is jointly and severally liable to the bankruptcy estate for the deficit being the amount of the debts insofar as they cannot be settled by liquidation of the other assets if (i) apparent improper management had been involved and (ii) it is plausible that this is a major cause of the bankruptcy.

If the obligation to keep accounts has not been complied with or the annual accounts have not been drawn up within due time, it is presumed that improper management was apparently also involved with regard to the rest and that this improper management was a major cause of the bankruptcy; this is a refutable presumption.

A director is not liable if he proves (i) that the improper management which was a major cause of the bankruptcy, partly considering his sphere of activities and the period during which he was in office, cannot be attributed to him and (ii) he has not been negligent in taking measures to avoid the consequences of it.

Karel Frielink
(Attorney/Lawyer, Partner)

(18 November 2015)

.

Leave a Reply

You must be logged in to post a comment.