Managing and supervisory directors’ liability

I will refer only to the Aruba NV type of company, otherwise known as the public limited liability company, governed by the Commercial Code of Aruba. Furthermore, I will discuss only the basic concept of managing and supervisory directors’ liability.


Section 106(1) of the Aruba Commercial Code (ACC) provides that, in performing their duties, each member of the management board should focus on the interests of the NV. In accordance with the “stakeholder model”, a.k.a. “stakeholder orientation”, the board must take into account various interests, not only those of the company, its business and shareholders, but also those of other interested parties, such as employees and creditors. This provision is also relevant to the question of whether and to what extent a managing director can be held liable for poor performance.

The supervisory board is responsible for supervising the company as a whole, including the management board (Section 118(2) ACC). Like the management board, the supervisory board must take into account the interests of the company, its business and shareholders, as well as those of all the other stakeholders. The supervisory board represents the interests of all the stakeholders in a balanced way.

With respect to both boards, the leading principle is that they have collective powers and responsibilities, also in the event that the tasks within the management or supervisory board are divided.

Internal liability

The members of the management board are personally and severally liable towards the NV for any loss caused by the improper performance of duties, even if certain activities or tasks fall within the scope of activities addressed to one or more particular managing directors. This is called internal liability.

So the board members are held collectively liable due to the collective responsibility. However, any member of the board who can prove that he cannot be blamed for such improper performance and that he hasn’t been negligent in taking steps to avert the related consequences, is not liable (Section 106(2) ACC).

On the basis of established (Dutch) case law, the obligation of the members of the management board of an NV to properly carry out their duties is interpreted in such a manner that liability based on this obligation requires serious fault (ernstig verwijt) to be attributed to such members.

Therefore, a managing director of an NV can be held liable by the NV only if serious negligence in the performance of his duties is attributable to him. A finding of serious negligence on the part of a managing 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.

According to the standard applicable to the liability of an ordinary managing director, apparent improper performance of duties will exist only if no managing director thinking reasonably – under the same circumstances – would have acted thus.

The same internal liability standard also applies to supervisory board members, taking into account their statutory and other legal duties.

External liability

According to Section 116 of the Aruba Commercial Code, liability of a managing director of an NV towards the bankrupt estate may arise in the event of bankruptcy of the NV if such bankruptcy is wholly or partially caused by the director’s serious acts of negligence. Where that is the case the bankruptcy trustee may file a claim for compensation on behalf of the estate. This is called external liability.

Also, management board members are personally liable to third parties for the NV’s debts if matters have been misrepresented in the annual accounts, the interim figures or the annual report (Section 117 ACC).

The same external liability standards also apply to supervisory board members (Sections 127 and 129 ACC). They can be held liable when they cross a clear line that deserves sanction: liability applies to damage suffered only when the actions and omissions of the supervisory directors, in the light of their statutory and other legal duties, wouldn’t have been carried out or wouldn’t have been omitted by a reasonably acting supervisory director. So it isn’t about just second guessing their judgments made in good faith.

Karel Frielink
(Attorney/Lawyer, Partner)

(13 October 2016)


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