THE ARUBA PUBLIC LIMITED LIABILITY COMPANY
Managing and supervisory directors’ liability
I will refer only to the Aruba NV type of company, otherwise known as the public limited liability company, governed by the Commercial Code of Aruba. Furthermore, I will discuss only the basic concept of managing and supervisory directors’ liability.
Duties
Section 106(1) of the Aruba Commercial Code (ACC) provides that, in performing their duties, each member of the management board should focus on the interests of the NV. In accordance with the “stakeholder model”, a.k.a. “stakeholder orientation”, the board must take into account various interests, not only those of the company, its business and …
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THE SELLING OF SHARES BY A CURACAO COMPANY
Answers to foreign counsel queries
A Curaçao company (NV or BV) may have assets, both local and foreign. Not seldom such a company wants to sell all or a portion of its assets. If foreign assets or a foreign buyer is involved, foreign counsel always asks questions about the laws of Curaçao. Several of those questions will be dealt with here. Let’s assume that a Curaçao company wants to sell its shares in a Dutch BV.
The Curaçao NV or BV may sell some or all of its shares in the Dutch BV. It is customary that board minutes or …
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IMPACT OF LIABILITY TO THE DIRECTOR OF THE DIRECTOR
Curaçao law cannot ‘break through’ to a legal relationship governed by foreign law
Under Section 2:17 subsection 1 of the Curaçao Civil Code, the liability of a legal entity as a managing director of another legal entity (the direct or 1st degree director) also rests jointly and severally on each person who at the time this liability arose for the legal entity was its managing director (the indirect or 2nd degree director). It applies to this indirect managing director as it applies to the direct managing director that he will not be liable if he can prove that he cannot …
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LIABILITY OF COMPANY DIRECTORS
No derivative suit
It is considered a general rule of Dutch Caribbean corporate law that the management board (a.k.a. board of directors) must act in the best interests of the company (an NV or BV) in the performance of its duties, even when acting on instructions from others (e.g. shareholders). This includes the interests of the shareholders, the employees and, according to most legal writers, the creditors of the company.
Under the Civil Codes of Curacao, St. Maarten and the BES-islands (Bonaire, St. Eustatius and Saba), directors of a limited liability company (naamloze vennootschap or besloten vennootschap) are personally and …
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SHAREHOLDER APPROVAL REQUIRED FOR SELLING ALL ASSETS
In particular circumstances this rule may be set aside
Generally speaking, the management board of a company (NV or BV) is not entitled to sell the company’s business or a substantial part thereof, without the approval of the shareholders’ meeting. The Enterprise Chamber of the Court of Appeal in Amsterdam confirmed this in its decision of 27 February 2014 (ECLI:NL:GHAMS:2014:597; JOR 2014, 160). According to the Court, (the managing board of) a legal entity that intends selling all shares in its subsidiaries must observe the requirements for adopting a resolution to liquidate that entity.
According to Section 2:7(2) of the Civil …
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KNOWLEDGE CEO CAN BE IMPUTED TO CORPORATION
Interesting opinion of the United States Court of Appeals for the Ninth Circuit
Knowledge can be both actual and constructive. The question is under what circumstances actual knowledge, for instance the CEO’s knowledge, can be imputed to the corporation. This question was addressed by the Ninth Circuit in its opinion of 23 October 2015 (securities class action lawsuit against ChinaCast Education Corporation et al).
Summary (prepared by court staff):
Reversing the dismissal of a securities fraud claim, the panel held that a CEO’s fraud could be imputed to his corporate employer, even though his alleged embezzlement and misleading …
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CORPORATE GOVERNANCE AND STATE-OWNED ENTERPRISES
Speech Karel Frielink – Conference of the Caribbean Ombudsman Association
Ladies and Gentlemen!
I have only half an hour, so I won’t travel back in time to the early days of mankind. I just start with Plato (427 – 347 B.C.E.). You may have heard of this philosopher. And of ‘Platonic love ’ of course. Plato himself mistrusted and generally advised against physical expressions of love.
Ladies and gentleman, we are real people. Human beings of flesh and blood. We are no zombies! So I imagine that Plato would have advised people like you and me: “govern yourself, put restrictions …
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LIABILITY OF THE SILENT PARTNER
The Supreme Court can give its opinion
I will first describe Dutch law in this respect. A limited partnership (commanditaire vennootschap: ‘CV’) is a contractual, legal relationship between two or more persons or legal entities to carry on a business under a joint name, whereby the aim is to gain proprietary benefits on the basis of their contributions. The CV (with multiple managing partners) is therefore a special form of the general partnership (vennootschap onder firma: ‘VOF’). This special status consists of the business operations also being carried on at the expense of one or more silent partners (limited partners), …
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SUPREME COURT U-TURN
The bankruptcy of a general partnership (‘VOF’) does not automatically mean the bankruptcy of its partners
For many decades the rule had to be adhered to that the bankruptcy of a general partnership (vennootschap onder firma: ‘VOF’) also meant the bankruptcy of the individual partners (Supreme Court 14 April 1927, NJ 1927, page 725).
However, in a ruling of 6 February 2015 the Supreme Court made a U-turn and held that there is no (or no longer) any justification for this connection (ECLI:NL:HR:2015:251). The Supreme Court has justified its new position as follows:
3.4.1 A VOF has no corporate personality. …
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QUASI DIRECTOR OR JUST THE BOSS?
This depends on the facts
If a legal entity (an NV or BV comes to mind) becomes bankrupt, any director (according to its Articles) becomes jointly and severally liable for the deficit of the bankrupt’s estate if it is apparent that there has been improper management and it is plausible that this was a major cause of the bankruptcy.
The Act provides that a person who (during the relevant period) determined or co-determined the policy of the legal entity as if he was a director is considered equivalent to a director. This is also called a quasi director. For instance, …
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LIABILITY OF A NEW PARTNER
Supreme Court creates clarity
The National Ordinance on Partnerships (Landsverordening personenvennootschappen) of Curacao (1 January 2012) and St. Maarten (1 April 2014) mentions two main variants of the partnership: the public partnership and the silent partnership. The public partnership is a partnership (i) for carrying on a profession or business or performing professional or business acts, which (ii) partnership acts externally in a way which is clearly recognizable by third parties (iii) under a name it uses as such (Section 7:801 subsection 1 of the Civil Code).
The partners of a public partnership are jointly and severally liable for the …
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REVOCATION OF A RESOLUTION TO DISSOLVE A LEGAL ENTITY
The Supreme Court formulated stringent conditions
On 9 December 2014 the Dutch Supreme Court pronounced a ruling (ECLI:NL:HR:2014:3677; JOR 2015/33) which is also relevant to the law of the Caribbean (Is)lands of the Kingdom. On the basis of that ruling the following requirements are imposed on the revocation of a resolution to dissolve a legal entity:
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