The duties and responsibilities of company directors in the Netherlands are regulated by Book 2 of the Dutch Civil Code (DCC) and by the respective company’s Articles of Association. The Works Council Act 1971 applies to companies with a works council, meaning companies with more than 50 employees.
There are no restrictions imposed by Dutch law regarding the age of a company director or his/her nationality. However, the Articles of Association may set out certain restrictions and may make it mandatory for the director to have a number of special qualifications.
Table of Contents
Duties of a Dutch company director
The director has to serve the best interest of the company and its enterprise. When managing the Dutch company, the interest of all the persons involved in the company should be considered.
Improper management, a generally negligent behavior and insufficient management may lead to the director’s liability towards the company.
The duty of loyalty towards the company is one of the most important duties. The director has to put the interest of the company above his or her personal interest. Also, the director must not act as a competitor for the company or use corporate opportunities in his/her own purpose.
The duty of care means that a company director should make sure that the company complies with existent laws, regulations and provisions. All of the director’s decisions and, subsequently, the board’s decisions should be made with the utmost care.
Other duties include: keeping the accounts of the company, preparing and signing the annual accounts, conceiving the company’s strategy and its general financial risks.
Liabilities of a Dutch company director
There are two types of liabilities that can occur: liability towards the company and liability towards third parties.
The director is liable towards the company if he or she breaks the duty of loyalty and the duty of care, meaning that there was serious negligence in managing the company. Generally, the responsibility of the management board towards the company is a collective one. However, each manager is personally responsible for the tasks assigned to him/her. Our law firm in the Netherlands is ready to provide the required assistance in this matter.
Supervisory board in Dutch companies
For some Dutch companies, there may be a supervisory board whose main role is to oversee and monitor the actions of the regular board of Dutch company directors. Every Dutch company is required to prepare an annual financial report in a specific format. This report should accurately reflect the company’s financial situation and profit or loss for that year.
The board of directors members are responsible for keeping records that clearly understand the company’s transactions, allowing an accurate assessment of its financial position. They also have a duty to protect the company’s assets and take necessary measures to prevent and detect fraud and other irregular activities.
Contacting our team of attorneys in Netherlands can provide guidance and assistance in establishing a supervisory board, drafting necessary documents, and understanding the legal obligations and responsibilities of the supervisory board and its members. Our services extend to many parts of the country, including Rotterdam.
How is a Dutch company director appointed?
Directors in a Dutch company are typically appointed by shareholders, but if there is a mandatory supervisory board in a large company, they are appointed by that board with notification to the shareholders.
Once the appointment is made, the company must file a notification with the Dutch Trade Register. The Trade Register requires certain personal details and a certified copy of the director’s passport.
Directors are usually appointed indefinitely, but appointments for a specific period and reappointments are also possible.
Large Dutch company directors are restricted from holding more than two supervisory positions at other large companies or foundations. They also cannot serve as the chairman of such boards.
A Dutch company can also appoint a nominee director, for the purpose of fulfilling a formal or legal requirement, without having significant involvement or decision-making power in the company’s operations.
A Dutch law firm can provide valuable assistance in the process of appointing directors and establishing a supervisory board. Let us know immediately if you need any advice.
Role of Dutch company directors in Corporate Social Responsibility
Dutch company directors play a crucial role in Corporate Social Responsibility (CSR) and related regulations. They are responsible for ensuring compliance with CSR reporting obligations, such as the Corporate Sustainability Reporting Directive. They also oversee the implementation of due diligence policies proposed in the Corporate Sustainability Due Diligence Directive and the existing Human Rights Due Diligence law.
Directors in companies from Netherlands must engage with stakeholders, consider their interests, and promote sustainable long-term value creation in line with the Dutch Corporate Governance Code. Additionally, directors bear the responsibility of fostering a culture of ethical and responsible behavior, ensuring compliance, and aligning the company’s strategy with sustainable and socially responsible practices.
You can contact our Dutch lawyers for any issues regarding the involvement of directors. We also provide services regarding VAT Registration in Netherlands.
For more details regarding this subject, here are some key statistics and insights on supervisory boards, company directors, and companies in Netherlands:
- Approximately 30% of Dutch companies have women representation across their supervisory and executive boards, as well as the broader executive committee, in 2022;
- In 2021, there were approximately 1,9 million companies in Netherlands;
- Most of them were operating in specialized business services, trade, and construction;
- Limited liability companies, the most prevalent legal entity type in Netherlands, were nearly 380 thousand in 2021.
Investors that are interested in starting their own business in the Netherlands should seek specialized counseling regarding Dutch companies. Also, our expert Dutch lawyers can duly represent clients in various litigation cases.