Directors' liability

What we do

As a director of a legal entity (BV, NV, Association, Foundation), there is in principle no personal liability in the event of bankruptcy. However, the legislature has included a number of exceptions in the law, under which the director of a legal entity is jointly and severally liable. If the director is held jointly and severally liable, this means that the director is liable for the satisfaction of the debt with their entire private assets.

As director(s) of a legal entity, liability may be established for all outstanding debts in bankruptcy. If the trustee is of the opinion that the board has performed its duties 'manifestly improperly' and it is plausible that this 'improper performance of duties' is the cause of the bankruptcy, the trustee may institute the claim against the board. Improper performance of duties may, for example, occur if the company's administration is deficient. It is advisable to seek legal advice immediately in the event of a liability claim. Our lawyers and legal experts will then investigate the possibilities.

Questions regarding directors' liability? Contact us.

Directors' liability under insolvency law

Directors' liability has multiple perspectives. From the perspective of Insolvency Law, it primarily revolves around the position of the director in the event of an impending or declared bankruptcy: what the trustee is permitted to investigate, when they can seize private assets, and what defenses you have. This is a different approach from the purely corporate law (governance) perspective. Our mixed teams of lawyers and in-house counsel advise both international corporations and local bakers, and understand the difference between liability towards the bankruptcy estate, towards individual creditors, and towards the tax authorities.

Liability towards the bankruptcy estate: Article 2:248 of the Dutch Civil Code

The most important ground for insolvency is Article 2:248 of the Dutch Civil Code (for the BV; for the NV, the identical Article 2:138 applies). This stipulates that every director is jointly and severally liable for the deficit in the bankruptcy if the board has manifestly performed its duties improperly and it is plausible that this improper performance of duties is a significant cause of the bankruptcy. Manifestly improper management exists when no reasonable director—under the same circumstances—would have acted in this way. Consequently, an unfortunate decision or normal business risk does not automatically result in liability; the bar is deliberately set high.

The presumption of proof: accounting obligation and publication obligation

Article 2:248 paragraph 2 of the Dutch Civil Code provides the bankruptcy trustee with a powerful tool. If the management has failed to comply with the accounting obligation of Article 2:10 of the Dutch Civil Code or the publication obligation of Article 2:394 of the Dutch Civil Code (the timely filing of the annual accounts), it is thereby established that there is manifestly improper management. Moreover, it is presumed that this improper management is a major cause of the bankruptcy. This presumption is rebuttable: the director may demonstrate that another major cause (for example, an external shock, loss of customers, or a pandemic) led to the bankruptcy. In practice, such counter-evidence is difficult and requires concrete, numerically substantiated facts. This is precisely where we make the difference for our clients.

Liability towards individual creditors: the Beklamel standard

In addition to liability towards the bankruptcy estate, a director may also be personally liable towards an individual creditor on the grounds of unlawful act (Article 6:162 of the Dutch Civil Code). The best-known standard is the so-called Beklamel standard: a director acts unlawfully if he enters into obligations on behalf of the company while knowing, or reasonably ought to know, that the company will not be able to fulfill them and will offer no recourse. It is required that the director can be personally held sufficiently seriously at fault, also viewed against the standard of proper performance of duties under Article 2:9 of the Dutch Civil Code. Selective payment (preferentially paying certain — often affiliated — creditors) can also be unlawful under certain circumstances.

Fiscal directors' liability and notification of inability to pay

A separate regime applies to tax debts. Pursuant to Article 36 of the Collection Act 1990, the Tax and Customs Administration can hold a director jointly and severally liable for, among other things, unpaid payroll tax and value-added tax. Crucial is the notification of inability to pay: as soon as the company is unable to pay these taxes, the board must report this to the Tax and Customs Administration within two weeks of the payment deadline. If the notification is timely and correct, the Tax and Customs Administration must prove that the non-payment is the result of manifestly improper management. If the notification is not made or is made too late, the presumption of proof turns against the director, and liability is in principle presumed. Timely and correct reporting is therefore one of the simplest and most important ways to limit personal liability.

The role of the trustee and the three-year term

In every bankruptcy, the trustee investigates the causes and conducts an investigation into legality and causality. In doing so, he assesses the conduct of the board of directors during the three years preceding the bankruptcy (Article 2:248, paragraph 6 of the Dutch Civil Code). If he concludes that there has been manifestly improper management, he may hold the board liable on behalf of the joint creditors and even place a provisional attachment on their private assets. We assist directors from the first contact with the trustee: from guiding the questioning and providing information to conducting the defense in liability proceedings.

Defense and exoneration

A liability claim is not a fait accompli. A director can defend themselves by rebutting the presumption of proof, by demonstrating that the accusation is insufficiently serious, or by exonerating themselves pursuant to Article 2:248, paragraph 3, of the Dutch Civil Code. Exoneration is possible when the improper performance of duties is not attributable to the individual director and they were not negligent in taking measures to avert the consequences — particularly relevant in the case of a multi-member board with a division of tasks. The three-year time limit, the substantiation of causality, and the amount of the bankruptcy estate deficit also often provide starting points for a defense. Our lawyers and legal experts assess on a case-by-case basis which route — defense, settlement, or proceedings — yields the best results, whether you manage a large group or a one-person private limited company.

Our approach: from prevention to procedure

Prevention is better than cure. We provide directors with preventive advice regarding their administrative and publication obligations, the timely reporting of insolvency, and acting responsibly during financial difficulties — for example, in conjunction with a suspension of payments or a creditors' agreement. Should liability nevertheless arise, we mount a decisive defense against the bankruptcy trustee or the Tax and Customs Administration. By combining lawyers and in-house counsel, we offer both legal clout in the courtroom and practical advice at the boardroom table.

Frequently asked questions about directors' liability

Am I automatically liable as a director if my BV goes bankrupt? No. The basic principle is that a legal entity is liable itself. Only in the case of manifestly improper management that is a major cause of the bankruptcy, or under the other statutory exceptions, can the director be held personally liable.

What should I do if my company can no longer pay taxes? Report the inability to pay to the Tax and Customs Administration within two weeks of the due date (Article 36 of the Collection Act 1990). Timely notification shifts the burden of proof to the tax authorities and significantly limits your risk.

Can I defend myself against the presumption of proof under Article 2:248 paragraph 2 of the Dutch Civil Code? Yes. You can demonstrate that another significant cause led to the bankruptcy, or exonerate yourself on the basis of Article 2:248 paragraph 3 of the Dutch Civil Code. This requires concrete, numerical substantiation; seek timely legal assistance in this matter.