The job of a director can be complex. The director must focus on the interests of the company being managed. At the same time, the interests of various stakeholders must be taken into account. These interests can conflict with each other. If the company gets into financial trouble, the director is often faced with difficult choices.
The starting point of the legislator is that a director should not be held liable too quickly. After all, doing business involves taking risks and it is not the intention that directors become too risk-averse.
Grounds for directors’ liability
There are various legal grounds for director’s liability. A director is liable to the company for improper management if he can be seriously blamed. In case of bankruptcy of the company, the bankruptcy trustee examines whether there are grounds to hold the director liable in order to clear the estate deficit. In doing so, the trustee can be assisted by legal presumptions of director liability when the annual accounts have been filed late or the accounting records are not in order. In addition to these specific regulations for directors’ liability, a director can also be held liable in tort, for example by a creditor. The condition that the director can be blamed for a serious personal fault also applies here. This is the case, for example, if the board member has allowed the company to enter into obligations, while at the time he knew or should have known that the company would not be able to fulfill the obligations or would not be able to fulfill them within a reasonable time.
There are special regulations for directors’ liability towards the tax authorities and industry pension funds. Because of these regulations it is very important for directors to report inability to pay in time.
Lawyers for directors’ liability LVH
The lawyers at our Rotterdam office have extensive experience with directors’ liability issues. These activities consist of assisting directors who have been held liable. We also assist clients who wish to hold directors liable. Furthermore, directors are assisted in difficult periods, such as financial problems, in making choices in a way that minimizes the risk of liability. Several of the lawyers at our firm have extensive experience as bankruptcy trustees, so that they can properly assess how a trustee will (have to) judge the matter.