Important sources for liability of directors of a legal entity such as a B.V. (limited), are civil and corporate law. According to Dutch corporate law, directors are liable towards the legal entity in case of improper performance of their duties. A high liability threshold is applicable: a director is solely liable in case the director may be attributed serious blame in relation to the improper performance.
This “internal liability” of the director towards the legal entity should be distinguished from the external liability of the director towards third parties. In principle, it is the legal entity that shall be liable towards third parties in case of underperformance by the legal entity. However, based on tort law the director can be held personally liable under certain circumstances. Again, the director is only liable in case the director may be attributed serious blame.
In case of bankruptcy of a corporation, each director can be personally liable for debts that cannot be paid with the remaining assets of the corporation subject to the following conditions being met (I) improper performance by the board of their duties and (II) it is likely that such improper performance is a material cause of the bankruptcy. In case the board did not fulfil the obligations to maintain a proper administration and to publish the annual accounts in time, this always qualifies as improper performance by the director and on the basis of law it is assumed that this improper performance is a material cause for the bankruptcy which may be rebutted by the director.
In case the director has an employment agreement, such director may also be held liable based on employment law but only in case of wilful conduct by the director or if the director has been deliberately reckless.
Under tax law, directors can become liable for fulfilling certain tax-obligations of the corporation in case the corporation is not able to pay such taxes and it is plausible that such is the consequence of improper performance by the directors of their duties. Directors can also be held personally liable in case the Tax Authorities have not been notified in time that the corporation is not able to fulfil its tax obligations.
Under administrative legislation such as competition law, financial law and environmental laws, administrative sanctions may also be imposed on directors by the competent authorities in special circumstances, such as when a director qualifies as a “de facto manager” in relation to the violation of the administrative legislation. Accordingly, a director may be fined for antitrust violations for an amount up to EUR 900.000,-.