DISCHARGING THE MANAGEMENT BOARD

Only for matters evident from the accounts

The shareholders of a Dutch Caribbean limited liability company (NV or BV) may provide a discharge (décharge) to members of the management board for matters evident from the annual accounts, or matters otherwise made known to the general shareholders meeting. This is a standard item on the agenda for shareholders meetings at which a company’s annual accounts are adopted.

The aim of this discharge is that the company generally has no longer a legal cause of action against a management board member.

The effect of a discharge is limited. A discharge does not affect liability towards third parties. If, in the event of the bankruptcy of the company, a claim based on internal liability or external liability is instituted by the trustee in bankruptcy against the managing director, the managing director shall not be entitled to rely on a discharge being granted in any way or form by the company (Sections 2:14 subsection 5 and 2:16 subsection 1 Civil Code).

A resolution granting a discharge may be void or voidable on the basis of Section 2:21 Civil Code (resolutions can be challenged on the ground of breach of law, the company’s articles of association, internal regulations or the principles of reasonableness and fairness).

In the course of corporate inquiry proceedings, upon request the Joint Court of Justice in Curaçao or in St. Maarten may annul a resolution granting a discharge on the basis of Section 2:283 Civil Code. The principles of reasonableness and fairness laid down in Section 2:7 Civil Code can prevent a managing director from relying on a discharge.

Furthermore, the scope of a discharge itself is limited. It is important to note that a discharge only covers matters disclosed in the annual accounts, or otherwise generally disclosed to the shareholders prior to the discharge being granted.

Karel Frielink
(Attorney/Lawyer, Partner)

(18 January 2016)

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