Directors’ liability and officers’ liability

In the Netherlands directors’ liability refers to the wider liability of a director of a legal person towards creditors or other parties involved in the legal person.

In the Dutch Civil Code (BW) several rules regarding directors’ liability of a company are laid down:

• Article 2:9 BW deals with the internal directors’ liability of the board in respect to the legal person;
• Article 2:11 BW states that if the director of a legal person is itself a legal person, the liability is held jointly and severally by everyone who was director of this entity at the time of the inception of the liability. Directors’ liability thus extends to the ultimate natural person(s) in control;
• Articles 2:138 BW and 2:248 BW state that if manifestly improper management is identified during a bankruptcy, and if it seems that this was an important cause of the bankruptcy, the board of directors is jointly and severally liable for the negative balance of the insolvent company;

The scope of directors’ liability is further defined by the general doctrine of tort. For example, according to Dutch case law a board of directors acts wrongfully towards an affected creditor (and is liable for the caused damage) if the board, knowingly that the company would not be able to fulfil its obligations, incurs a debt to this party.