Directors’ liability

Being a director means making decisions, including when interests conflict or the company is under pressure. As long as things are going well, risks often remain in the background. But in the event of financial problems, disputes with creditors or bankruptcy, the question may arise whether a director is personally liable.

The law assumes that directors must have room to do business. Not every disappointing decision therefore leads to liability. Personal liability may only arise if a director can be seriously personally blamed.

When does directors’ liability arise?

Directors’ liability can arise in different ways. A director may be liable towards the company for improper management. In bankruptcy, the trustee also investigates whether there are grounds to hold directors liable for the deficit in the estate. For example, late filing of annual accounts or inadequate administration may play an important role.

Creditors can also hold a director personally liable. This may be the case, for example, if the director entered into obligations while knowing, or having reason to know, that the company would not be able to fulfil them. Special rules also apply in relation to the Tax Authorities and industry pension funds. In such situations, it is important to report inability to pay in a timely and correct manner.

Advice on directors’ liability

LVH Advocaten helps directors, companies and creditors with questions about directors’ liability. We assess the facts, map out the risks and advise on the best approach. We also guide directors through financially difficult periods, so that decisions are made carefully and liability risks are limited as much as possible. Because several lawyers at our firm have experience as trustees, we know how these situations are assessed in bankruptcy. Are you being held liable as a director, do you want to hold a director liable or are you uncertain about your position? Feel free to contact us. We will think along with you quickly and practically

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