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  1. Directors’ and officers’ (D&O) liability

Practice areaDirectors’ and officers’ (D&O) liability

Directors, supervisory directors and supervisory officers are more likely to be held personally liable today than they were ten years ago. It appears that the claim culture has also gained a foothold in the Netherlands. To protect themselves against this, directors take out D&O liability insurance policies, and it is precisely this that encourages the claim culture. Even though large cases are widely discussed in the press, directors are often unaware of the risks involved in managing a legal entity.

D&O liability is not only a risk for directors and supervisory directors of listed companies. Every director, supervisory director or supervisory officer - from a village school to a multinational company - can be held personally liable under certain circumstances, which may result in private capital being called upon. As a rule, personal liability applies only if the director can be personally blamed, but this does not prevent some creditors or trustees in bankruptcy from lodging claims.

Nevertheless, the risk of being held personally liable is a danger attached to the performance of virtually all management tasks. For instance, shortcomings in the formation of the legal entity, inaccurate prospectuses, irresponsible dividend payments, financial statements that are misleading or filed late, improperly maintained records or prejudice to creditors could lead to personal liability. Directors run an extra risk before and after bankruptcy. Moreover, in the event of bankruptcy, all kinds of evidentiary presumption may apply, which could be very detrimental. Also in the event tax debts are paid late or if the undertaking has acted rashly and incurred an obligation that cannot be fulfilled, directors can easily become the focal point.  

There are several forms of directors' liability, which can roughly be divided into:

  • Internal director's liability, where a director is held liable by his/her own company, own institution or the bankruptcy trustee. 
  • External directors' liability, where a director is held liable by a third party. This can be a creditor or a bankruptcy trustee.

The consequences of personal liability can be considerable, both financially and otherwise. If you are a director, supervisory director or supervisory officer, it is important to prevent or in any case limit the (consequences of) liability. You can cover yourself in advance in different ways and, if such a situation arises, it is usually possible to raise a good defence.

Our D&O liability section advises and supports you in this. If, however, proceedings are lodged, we will conduct a defence on behalf of a director taken to court.  

In addition to D&O’s, the section also assists (national and international) insurance companies in claims for damages that are often sizable, where we coordinate the defence of the directors or provide advice on the D&O insurance as monitoring counsel.

The team

In the section, our multidisciplinary know-how and expertise are combined in one team. This enables us to act quickly and effectively.

The section is led by Daan Baas, a lawyer in the Liability, Damage and Insurance section. He is often involved in complex cross-border disputes. Lawyers Wim Weterings and Lieke Verlinden are also part of the same section, which is the largest damage section in the Netherlands. Rogier Faase, a corporate lawyer and bankruptcy trustee, advises and litigates on matters related to bankruptcy. Eva Nass, a corporate lawyer, specializes in accounting law. Corporate lawyer Rob van Houts has knowledge of liability from a financial law perspective. From a notarial perspective, Deline Kruitbosch advises on liability when forming and restructuring companies and with regard to tensions between the company's stakeholders. Tom van Malssen, healthcare lawyer, is responsible for providing administrative advice regarding the healthcare sector. Tom is also a cassation lawyer and litigates, if necessary, before the Supreme Court.

Would you like to receive further information about the Directors’ liability section or make an appointment? Please contact Daan Baas, telephone +31 (0)26 353 84 16 or baas@dirkzwager.nl