LIABILITY OF MANAGEMENT SERVICES COMPANIES
Aspects of director’s liability
Management services companies a.k.a. trust companies (‘trustkantoren’) can face liability as a result of how they have performed trust and management services to their clients, and in particular when acting as managing director (‘statutair directeur’) of a legal entity, whether alone or together with others.
A trust company acting as managing director for a client company is subject to the general rules on director’s liability. Such liability towards the client company may arise in the event a trust company is found to be seriously negligent (‘een ernstig verwijt kan worden gemaakt’) in fulfilling its tasks as member of the management board of a client company.
Liability towards third parties may arise in the event a trust company commits a breach of a legal obligation and/or a general duty of care towards third parties (tort).
Liability towards third parties may arise in the event of bankruptcy of the client company, if it is established that manifestly improper management was conducted during a period of three years prior to the date of bankruptcy.
A trust company cannot avoid liability simply by claiming that it was only formally a director and bound by the decisions or instructions of its principal (UBO).
If a trust company (as managing director of a client company) is intensively involved in the policy and the daily affairs of the subsidiary of a client company (as if it was a managing director) it runs the risk of being considered as a quasi or de facto director.
If a trust company acts as managing director of a client company that itself acts as a director in the subsidiary, such trust company may incur the same liabilities as the client company itself may incur in its capacity of director of the subsidiary.
According to Curaçao law there is a reluctance to conclude a breakthrough of liability. Only in special cases will it be possible to see through companies (i.e., lifting the corporate veil).
The effect of a discharge is limited. A discharge does not affect liability towards third parties or internal liability in the event of bankruptcy.
Liability arising out of a contract may be (and generally will be) excluded in the contract except in the case of gross negligence or willful misconduct. Such exclusion of liability in principle is valid and binding.
Each managing director of a client company may become jointly and severally liable for the payment of various taxes and social security premiums.
All of the above is just a summary of the most important issues and I of course recommend reading the 2nd edition (2023) of my book on Dutch Caribbean and Surinam corporate law (unfortunately only in Dutch).
Karel Frielink
(Attorney/Lawyer)
(2 August 2023)
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