DELAWARE CASE-LAW ON FIDUCIARY DUTIES
Good faith, not a good result, is what is required of the board
According to the Delaware Court of Chancery in its decicion of 18 October 2016 regarding Capital One (click here), the standard under Delaware law for imposing oversight liability on a director (sometimes referred to as Caremark liability) is an exacting one that requires evidence of bad faith, meaning that “the directors knew that they were not discharging their fiduciary obligations.”
In this derivative action, a stockholder of Capital One Financial Corporation asserts that its directors breached their fiduciary duty of loyalty and unjustly …
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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 …
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ARUBAN LAW REGARDING CORPORATE AUTHORITY
The Aruba Trade Register should be checked
The laws of Aruba provide that, subject to restrictions laid down by any statutory provision or a corporation’s articles of association, the board of directors of a company shall be competent to represent the company, i.e. a limited liability company (NV, AVV or VBA). In the event of the company having several managing directors, any managing director shall be competent, insofar as not otherwise provided by the articles of association (or sometimes bylaws). The articles of association may also grant other officers, to be designated by or pursuant to the articles, representative authority, …
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CONVERSION OF A DUTCH CARIBBEAN LIMITED LIABILITY COMPANY
An NV may be converted into a BV and vice versa
The Netherlands Antilles Civil Code provides for an NV to be converted into a BV and vice versa. Conversion does not terminate the existence of the legal entity.
Conversion requires a resolution. A resolution to convert and to amend the articles has to be adopted, if only to satisfy similar requirements as for a resolution to amend the articles. The conversion shall become effective by execution of a notarial deed of conversion, and said deed must contain the new articles of association.
A conversion balance sheet must be attached to …
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TRANSACTIONAL POWER OF THE MANAGING BOARD OF A DUTCH CARIBBEAN CORPORATION (I)
Limitations must be disclosed to have effect
Netherlands Antilles law provides that, subject to restrictions laid down by the Netherlands Antilles Corporate Code or a corporation’s articles of association, the board of directors of a corporation shall be competent to represent the corporation, e.g. a limited liability company (‘naamloze of besloten vennootschap’; NV or BV). In the event of several managing directors, any managing director shall be competent, insofar as not otherwise provided for by the articles of association.
Under Netherlands Antilles law, information required to be disclosed pursuant to the Civil Code, for instance (i) the identities of the …
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MANAGING A COMPANY WHICH BELONGS TO A FOREIGN OWNER
A contractual arrangement may limit the board’s powers
Shareholders of a Dutch Caribbean NV or BV may choose between the English/American one-board system and the traditional continental European two-tier system. In a two-tier system there is a management board (parallel to the inside directors on a one-tier board) and a separate supervisory board (parallel to the outside directors on a one-tier board). Although every company (NV or BV) has a management board, not every company has a supervisory board.
Article 2:14 of the Netherlands Antilles Corporate Code (a.k.a. Book 2 Civil Code) provides that each member of the board of …
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