INTERNAL LIABILITY OF MANAGING DIRECTORS UNDER DUTCH CARIBBEAN LAW
Review without the benefit of hindsight
The basic rule regarding the duty of a managing director is set forth in article 2:14 Netherlands Antilles Civil Code, which provides that each managing director has an obligation towards the company to properly perform the duties assigned to him. It follows from case law and legal doctrine that a managing director can only be held liable if serious negligence in the performance of his duties is attributable to him. Although a director could contractually limit his liability under article 2:14 of the Civil Code, it should be noted that the conduct not covered by the indemnity, i.e. gross negligence and willful misconduct, is approximately the same as the conduct required by article 2:14 Civil Code to determine a director’s liability.
A finding of serious negligence on the part of a managing director depends on both the scope of a director’s responsibilities and the circumstances of the case. The individual facts are crucial. Actions that conflict with specific statutory provisions or with the articles of association, may constitute anything from improper management up to serious negligence.
However, improper management can only be said to have occurred if no reasonable managing director would have made or take the given decision, action or omitted to act. The Court must therefore examine the procedures, preparations and reasons behind such decisions, actions or omissions to act. These must be reviewed in light of the circumstances at the time they were made or taken, without the benefit of hindsight. On the basis of case law, internal liability is also influenced and determined by the contractual principal of “good faith”.
Karel Frielink
Attorney (Lawyer) / Partner
