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Director and Supervisory Board Liability in the Netherlands

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What is director and supervisory board liability in the Netherlands?

Under Dutch law, a director of a BV or NV is not liable for the company’s debts as such. Liability requires a specific ground: serious blame towards the company (Article 2:9 Dutch Civil Code, DCC), a wrongful act towards a creditor (Article 6:162 DCC) or, in bankruptcy, manifestly improper management that is plausibly an important cause of it (Articles 2:248 and 2:138 DCC).

Supervisory directors face the same tests. This page covers internal liability towards the company, external liability towards creditors and other third parties, liability in bankruptcy, de facto directors (feitelijk beleidsbepalers), supervisory board members (commissarissen), discharge and D&O insurance. For a shorter overview, see our page on the liability of a director of a Dutch company.

Improper Management under Dutch Law: Article 2:9 Civil Code – When Are You Liable as Director?

What constitutes proper management in the Netherlands?

Every director owes the company a proper performance of his or her duties (Article 2:9(1) DCC). The duties of each director include all board duties that the law or the articles of association have not assigned to one or more other directors. In performing their duties, directors must be guided by the interests of the company and the business connected with it (Article 2:129(5) DCC for the NV, Article 2:239(5) DCC for the BV). The yardstick is a director who is equal to the task and performs it meticulously (HR 10 January 1997, ECLI:NL:HR:1997:ZC2243 (Staleman/Van de Ven), para. 3.3.1).

How Does Collective Responsibility Work in the Dutch Jurisdiction?

Each director is responsible for the general conduct of affairs in the company (Article 2:9(2) DCC). If there is improper management (onbehoorlijk bestuur), each director is liable for the whole, unless he or she meets the two conditions for exculpation discussed below.

The company itself can claim damages from a director under Article 2:9 DCC. Because the board represents the company, such a claim often only follows a change in the board or among the shareholders, or a bankruptcy. A bankruptcy trustee (curator) can bring a claim under Article 2:9 DCC alongside the bankruptcy-specific ground (Article 2:248(8) DCC; for the NV Article 2:138(8) DCC).

The company or trustee must state and prove that the director can be seriously blamed (ernstig verwijt). Not every mistake meets that test (Staleman/Van de Ven, para. 3.3.1). The formula “no reasonably thinking director would have acted in the same way” belongs to the bankruptcy test of manifestly improper management, discussed below.

Serious Reproach: High Threshold Prevents Defensive Management

According to the Supreme Court (Hoge Raad), a high threshold for liability towards the company also serves the company’s own interests, because it prevents directors from letting defensive considerations drive their actions to an undesirable extent (HR 20 June 2008, ECLI:NL:HR:2008:BC4959, para. 5.3).

Which circumstances determine whether you face serious reproach in Dutch law?

Article 2:9 DCC sets a standard of conduct (proper performance). The Supreme Court adds a liability test: serious blame. Whether there is serious blame depends on all circumstances of the case, including (Staleman/Van de Ven, para. 3.3.1):

  • The nature of the company’s activities
  • The risks that generally follow from those activities
  • The division of tasks within the board
  • Any guidelines that apply to the board
  • The information the director had or should have had at the time of the decision
  • The insight and care that may be expected of a director who is equal to the task and performs it meticulously

Acting in breach of provisions of the articles of association (statutaire bepalingen) that aim to protect the company is a weighty circumstance that in principle establishes liability. If the director puts forward facts and circumstances that could show that this does not amount to serious blame, the court must expressly take them into account (HR 29 November 2002, ECLI:NL:HR:2002:AE7011, para. 3.4.5).

What happens if a director has a conflict of interest?

A director who has a direct or indirect personal interest that conflicts with the interests of the company may not take part in the deliberations and decision-making. If no board resolution can then be adopted, the supervisory board decides or, if there is none, the general meeting, unless the articles of association provide otherwise (Article 2:129(6) DCC for the NV, Article 2:239(6) DCC for the BV). A similar rule applies to supervisory directors (Article 2:140(5) and 2:250(5) DCC). Read more about conflicts of interest in a Dutch company.

How Do You Avoid Individual Liability in the Netherlands?

Can an individual director prevent liability?

Because of collective responsibility, a finding of improper management in principle affects all directors, and each of them is liable for the whole (Article 2:9(2) DCC). The law does, however, allow an individual director to escape liability (disculpatie).

Whatever the division of tasks, each director remains responsible for the general conduct of affairs (Article 2:9(2) DCC). In practice this includes, for example:

  • General affairs
  • Strategic policy
  • Financial policy
  • Supervision of co-directors
  • Compliance with essential legislation
  • Risk management

A division of tasks does not exclude collective liability, but it is taken into account in the exculpation test.

When does your exculpation succeed under Netherlands law?

Under Article 2:9(2) DCC, a director escapes liability only if both conditions are met:

  1. He or she cannot be seriously blamed, also in view of the duties assigned to others
  2. He or she was not negligent in taking measures to avert the consequences of the improper management

A director who notices improper management by a co-director, even in a task assigned to that co-director, should therefore act: object, record the objection and take measures. Whether a director could rely on information from co-directors depends on the circumstances of the case.

Important: supervision also matters towards third parties

Insufficient supervision of the way a co-director performs his or her task can, in certain circumstances, also lead to personal liability towards third parties under Article 6:162 DCC (HR 30 March 2018, ECLI:NL:HR:2018:470 (TMF), para. 3.5.2). More on this below.

Supervisory Board Members: When Do They Face Improper Supervision?

Does Article 2:9 BW also apply to supervisory board members?

Yes. Article 2:149 DCC (NV) and Article 2:259 DCC (BV) apply Article 2:9 DCC, and the bankruptcy rules of Articles 2:138 and 2:248 DCC, by analogy to the performance of duties by the supervisory board (raad van commissarissen). For associations and foundations, see Articles 2:50a(3) and 2:300a(3) DCC. The standard is applied in light of the supervisory role.

The supervisory board supervises the board’s policy and the general conduct of affairs in the company and its business, and advises the board. Supervisory directors must be guided by the interests of the company and its business (Article 2:140(2) DCC for the NV, Article 2:250(2) DCC for the BV). The supervisory board consists of one or more natural persons (Articles 2:140(1) and 2:250(1) DCC). In a one-tier board, supervision is carried out by non-executive directors, who are members of the board itself (Article 2:129a and 2:239a DCC).

How does a supervisory board member exculpate themselves under Netherlands law?

Collective responsibility also applies within the supervisory board. Through Articles 2:149 and 2:259 DCC, Article 2:9(2) applies by analogy: an individual supervisory director is not liable if both of the following apply:

  1. He or she cannot be seriously blamed, also in view of the duties assigned to others
  2. He or she was not negligent in taking measures to avert the consequences

In bankruptcy, the corresponding exculpation of Article 2:248(3) DCC applies by analogy (see below).

When are directors liable in bankruptcy (articles 2:138 and 2:248 BW)?

When does the trustee hold you liable for the estate deficit under Dutch law?

Articles 2:138 (NV) and 2:248 (BV) DCC give the trustee a separate ground of liability. In a bankruptcy, each director is jointly and severally liable towards the estate for the debts that cannot be paid from the remaining assets if:

  1. The board manifestly performed its duties improperly (kennelijk onbehoorlijk bestuur)
  2. It is plausible that this is an important cause of the bankruptcy

If these conditions are met, each director is liable for the whole shortfall in the estate, not only for loss caused by his or her own conduct. The court can reduce the amount (Article 2:248(4) DCC; see below).

These rules also apply by analogy to directors of associations and foundations. The evidentiary presumption discussed below applies to them only if they are subject to corporate income tax (for an association, only if its articles of association are also laid down in a notarial deed) or are required by law to prepare financial statements equal or equivalent to annual accounts (Articles 2:50a(2) and 2:300a(2) DCC).

What Does Manifestly Improper Performance Mean in the Netherlands?

During which period must the manifestly improper management have occurred?

Only improper performance in the three years before the bankruptcy counts (Article 2:248(6) DCC). The test concerns the board as a whole. The trustee does not have to show which director contributed what; an individual director can rely on the exculpation in Article 2:248(3) DCC.

Manifestly improper management means that no reasonably thinking director, in the same circumstances, would have acted in that way. The Supreme Court used this formula again in HR 9 July 2021, ECLI:NL:HR:2021:1099, para. 3.2.

Important Cause: Causal Connection with Bankruptcy

The manifestly improper management does not have to be the only cause of the bankruptcy, but it must plausibly be an important cause (Article 2:248(1) DCC). Unless the presumption discussed below applies, the trustee must state and make this plausible.

Which evidentiary presumptions strengthen the trustee’s position under Netherlands law?

Trustees often rely on Article 2:248(2) DCC (Article 2:138(2) for the NV). It links two consequences to a breach of two duties of the board:

  1. The duty to keep proper accounts (Article 2:10 DCC)
  2. The duty to publish the annual accounts (Article 2:394 DCC)

If the board has not complied with these duties, the following applies:

i. Fixed rule: the board is deemed to have performed its duties improperly; no counter-evidence is possible on this point (HR 9 July 2021, para. 3.2)

ii. Rebuttable presumption: it is presumed that improper performance is an important cause of the bankruptcy

An insignificant omission (onbelangrijk verzuim) is disregarded (Article 2:248(2), last sentence). The same rules apply if the company is a fully liable partner of a general or limited partnership and the partnership’s bookkeeping duty under Article 3:15i DCC was not met.

Which deadlines apply to publishing the annual accounts?

Within what timeframe must you publish the annual accounts in the Netherlands?

For the NV and BV, the board must prepare the annual accounts within five months after the end of the financial year. The general meeting can extend this period by up to five months on the basis of special circumstances. For a company whose securities are admitted to trading on a regulated market, the period is four months and cannot be extended, subject to an exception in the Financial Supervision Act (Article 2:101(1) DCC for the NV, Article 2:210(1) DCC for the BV).

The general meeting adopts the annual accounts. The company must publish them by filing them with the trade register within eight days after adoption (Article 2:394(1) DCC). If they have not been adopted within two months after the end of the preparation period, the board must publish the prepared accounts without delay, stating that they have not yet been adopted (Article 2:394(2)). In any case, publication must take place no later than twelve months after the end of the financial year (Article 2:394(3)).

Note: late publication is also an offence

Late publication triggers the presumptions of Article 2:248(2) DCC. Not publishing within the deadline of Article 2:394(3) DCC is also an economic offence (Article 1 Economic Offences Act), and offences committed by a legal entity can also be prosecuted against those who ordered or actually directed them (Article 51 Criminal Code).

Minor Default: A Safety Valve

When do you avoid the evidentiary presumption via minor default under Dutch law?

An insignificant omission is disregarded (Article 2:248(2) DCC). Whether a late filing is insignificant depends on the circumstances. The Supreme Court looks at the purpose of the rule, which is to protect the company’s creditors (HR 11 June 1993, ECLI:NL:HR:1993:ZC0994 (Brens q.q./Sarper)).

Practice Example from Case Law

In Brens q.q./Sarper, a filing that was only a few days late, measured against the latest date that would have applied after a permitted extension, could be regarded as an insignificant omission. The statutory deadlines at the time differed from the current Article 2:394 DCC.

What does the administration duty require?

What exactly does Article 2:10 BW require from your administration in the Netherlands?

The board must keep records of the company’s financial position and of everything concerning its activities, in accordance with the requirements of those activities, and must keep the books, documents and other data carriers in such a way that the company’s rights and obligations can be known at any time (Article 2:10(1) DCC). The records must be kept for seven years (Article 2:10(3) DCC).

This is an open standard: what is required depends on the nature and size of the business.

Which test has applied since 2014 for proper administration under Dutch law?

Courts often used a shorthand derived from Brens q.q./Sarper (1993): quick insight into the debtor and creditor position and the liquidity. In HR 10 October 2014, ECLI:NL:HR:2014:2932 (FSM Europe), paras. 3.5.2 and 3.5.3, the Supreme Court made clear that the test is Article 2:10(1) DCC itself, and that elements of the records other than debtors, creditors and liquidity can also be relevant.

Background of Evidentiary Presumptions: Legislator Sets High Standards

The law treats proper bookkeeping and timely publication as so important that a breach counts as improper performance (Article 2:248(2) DCC). According to the Supreme Court, non-compliance with these duties indicates that the board did not perform its duties properly in other respects either (HR 9 July 2021, ECLI:NL:HR:2021:1099, para. 3.2).

How Do Directors Refute the Second Presumption in the Netherlands?

How do directors refute the causal presumption?

The director can rebut the presumption by making it plausible that facts or circumstances other than his or her improper performance were an important cause of the bankruptcy. If the director succeeds, the trustee must make it plausible under Article 2:248(1) DCC that the manifestly improper management was also an important cause (HR 30 November 2007, ECLI:NL:HR:2007:BA6773 (Blue Tomato), para. 3.4).

If the director points to an external cause and the trustee argues that the director failed to prevent it, the director must also state and, if necessary, make plausible that this failure was not improper performance (Blue Tomato, para. 3.4). Conduct of one or more directors that is not improper in itself can also be enough to rebut the presumption (HR 9 July 2021, para. 3.2).

Practical Tip for Directors

Keep a record of the causes of financial problems, such as the loss of a major customer or a refusal by an insurer, and of the measures the board took. Such records can help to rebut the presumption.

Who else can be held liable besides formal directors?

Does this liability also affect non-appointed directors under Dutch law?

Yes. For bankruptcy liability, a person who determined or co-determined the policy of the company as if he or she were a director is treated as a director (Article 2:248(7) DCC; Article 2:138(7) for the NV). This is the de facto director or de facto policymaker (feitelijk beleidsbepaler). Whether someone qualifies depends on the circumstances: he or she must have appropriated at least part of the directors’ powers, but the formal board does not have to have been pushed aside entirely (HR 24 March 2023, ECLI:NL:HR:2023:445, para. 3.3).

The claim cannot be brought against an administrator appointed by the court or a director appointed by the Enterprise Chamber (Article 2:248(7), second sentence). For a BV, a de facto policymaker is also treated as a director for liability for distributions (Article 2:216(4) DCC).

When are supervisory board members liable in bankruptcy under Netherlands law?

Through Articles 2:149 and 2:259 DCC, Articles 2:138 and 2:248 DCC apply by analogy to the supervisory board. Supervisory directors can therefore be liable towards the estate if the supervisory board manifestly improperly performed its supervisory duties in the three years before the bankruptcy and it is plausible that this is an important cause of the bankruptcy.

The duties to keep accounts and to publish the annual accounts rest on the board (Articles 2:10 and 2:394 DCC). The supervisory board must supervise whether the board complies with them.

How can a director escape liability?

How do you exculpate yourself under Articles 2:138/2:248 BW in the Netherlands?

A director is not liable in bankruptcy if he or she proves both of the following (Article 2:248(3) DCC):

  1. The improper performance by the board is not attributable to him or her
  2. He or she was not negligent in taking measures to avert its consequences

This is the exception to the collective liability of all directors.

Can the judge mitigate your liability under Dutch law?

Yes. The court can reduce the amount for which the directors are liable if it considers it excessive, in view of (Article 2:248(4) DCC):

  • The nature and seriousness of the improper performance by the board
  • The other causes of the bankruptcy
  • The way in which the bankruptcy was wound up
  • For an individual director: the time he or she was in office during the period of improper performance

Does a discharge protect you?

A discharge (décharge or kwijting) granted by the general meeting releases a director from liability towards the company. It does not extend to information that does not appear from the annual accounts and was not otherwise disclosed to the general meeting before it adopted them (Staleman/Van de Ven, para. 3.4.1). Adoption of the annual accounts does not in itself operate as a discharge (Article 2:101(3) DCC for the NV, Article 2:210(3) DCC for the BV), except in the BV situation of Article 2:210(5) DCC where all shareholders are also directors. In bankruptcy, a discharge does not prevent the trustee’s claim, and the director may not set off the claim against a claim on the company (Article 2:248(6) DCC).

When is a director liable to third parties (article 6:162 BW)?

When does a third party hold you directly liable as director in the Netherlands?

A creditor or another third party can sometimes hold a director personally liable in tort (onrechtmatige daad, Article 6:162 DCC). The starting point is that only the company is liable for its own breach of contract or wrongful act. Liability of a director alongside the company requires that the director can personally be seriously blamed (persoonlijk ernstig verwijt) (HR 5 September 2014, ECLI:NL:HR:2014:2627, para. 4.2).

That test does not apply if the director is liable for breaching a duty of care that rests on him or her personally and is separate from the performance of his or her duties as director. The ordinary rules of tort then apply (HR 23 November 2012, ECLI:NL:HR:2012:BX5881 (Spanish villa), para. 3.4.2).

Serious Reproach: High Threshold Protects Entrepreneurship

Why does the law also maintain a high liability threshold here under Dutch law?

The Supreme Court justifies the high threshold on two grounds: towards the other party it is primarily the company that acts, and there is a public interest in preventing directors from letting defensive considerations drive their actions to an undesirable extent (HR 5 September 2014, para. 4.2).

What makes your actions personally seriously culpable in the Netherlands?

Whether the director can personally be seriously blamed depends on the nature and seriousness of the breach of the standard and the other circumstances of the case (HR 5 September 2014, para. 4.3). The leading cases are Beklamel (HR 6 October 1989, ECLI:NL:HR:1989:AB9521) and Ontvanger/Roelofsen (HR 8 December 2006, ECLI:NL:HR:2006:AZ0758, para. 3.5). Director liability is one strand of Dutch corporate law.

The Supreme Court has since confirmed these tests several times, including in its two judgments of 5 September 2014 (RCI and Hezemans Air) and in TMF (HR 30 March 2018, ECLI:NL:HR:2018:470, para. 3.3.2).

Three Common Tort Situations

Situation 1: Assuming Obligations Without Recourse Possibility

If the director entered into an obligation on behalf of the company and the creditor’s claim remains unpaid and cannot be recovered, personal liability can be assumed if the director, when entering into the obligation, knew or should reasonably have understood that:

  • The company would not be able to perform its obligations
  • The company would offer no recourse

This is the Beklamel test. The director can still put forward circumstances showing that he or she cannot personally be seriously blamed (Ontvanger/Roelofsen, para. 3.5, case (i); HR 5 September 2014, para. 4.3).

Situation 2: Non-Performance of Previously Assumed Obligations

If the director caused or allowed the company not to perform its statutory or contractual obligations, he or she can be held liable if this conduct towards the creditor is so careless that he or she can personally be seriously blamed. Such serious blame can in any case be present if the director knew or should reasonably have understood that this course of action would mean that:

  • The company would not perform its obligations
  • The company would offer no recourse for the resulting loss

Other circumstances can also justify serious blame (Ontvanger/Roelofsen, para. 3.5, case (ii)).

Situation 3: Selective Payment of Creditors

When a company cannot pay all its creditors, the question is whether paying some of them and not others is wrongful. The Supreme Court has left open which circumstances generally make unequal treatment of creditors wrongful (HR 12 June 1998, ECLI:NL:HR:1998:ZC2669 (Coral/Stalt), para. 3.4.3). A director who causes or allows wrongful payments can be liable under the Roelofsen test (situation 2).

Note: Group Creditors Versus External Creditors Under Dutch Law

A group company that has decided to end its activities and cannot pay all its creditors does not, in principle, have the freedom to pay creditors within its group ahead of creditors outside the group, other than on grounds of priority recognised by law. Such preferential treatment is only lawful if special circumstances justify it, which the company must state and, if disputed, prove (Coral/Stalt, para. 3.4.3).

Professional (trust) directors

The same test applies to a professional director, such as a trust company acting as director. In TMF, the Supreme Court confirmed that insufficient supervision of a co-director can lead to personal liability, but upheld the finding that the investors had not stated facts showing that the trust company knew or should reasonably have known of the breaches of Dutch rules (HR 30 March 2018, ECLI:NL:HR:2018:470, para. 3.5.2).

No Joint and Several Liability: Individual Assessment Per Director

Does the burden of proof for tort differ from that for improper management under Netherlands law?

Yes. Because the serious blame must be personal, it must be established for each director separately that he or she acted wrongfully in that capacity and that this can be attributed to him or her, except where Article 2:11 DCC applies (TMF, para. 3.3.3). The claimant must state and, if necessary, prove this for each director.

Practice Example: TMF Judgment Clarifies Individual Test

In TMF (HR 30 March 2018), investors argued that a breach of rules protecting investors (Articles 3 and 7 (old) of the former Securities Transactions Supervision Act 1995) in principle meant personal serious blame for every director. The Supreme Court rejected this: personal serious blame is also required in that situation, and it cannot be presumed (para. 3.4.2). This individual approach differs from collective liability under Article 2:9 DCC.

What if a director is itself a legal entity (Article 2:11 DCC)?

Can a legal entity be director of another legal entity in the Netherlands?

Yes. Under Dutch law, a legal entity can be a director of a BV or NV. Supervisory directors and non-executive directors, by contrast, must be natural persons (Articles 2:140(1) and 2:129a(1) DCC for the NV; Articles 2:250(1) and 2:239a(1) DCC for the BV).

Why did the legislator introduce Article 2:11 BW?

Article 2:11 DCC provides that the liability of a legal entity as director of another legal entity also rests, jointly and severally, on everyone who was a director of that corporate director when the liability arose. Its purpose is to prevent a natural person from hiding behind the legal personality of a corporate director (HR 17 February 2017, ECLI:NL:HR:2017:275 (Kampschöer/Le Roux), para. 3.4.2).

On the wording of Article 2:11 DCC, the same applies if the director of the corporate director is itself a legal entity: the liability then also rests on that entity’s directors.

Does Article 2:11 DCC apply to every ground of liability?

Article 2:11 DCC applies in all cases in which a legal entity is liable by law in its capacity as director, including liability in tort under Article 6:162 DCC (Kampschöer/Le Roux, para. 3.4.3).

Kampschöer/Le Roux: Piercing with Tort

Does Article 2:11 BW also apply with liability based on tort in the Netherlands?

In 2017 the Supreme Court combined Article 2:11 with tort (Article 6:162 DCC) and answered three questions (Kampschöer/Le Roux, para. 3.4.3):

Question 1: Does Article 2:11 BW apply when the director-entity is addressed based on Article 6:162 BW?

Answer: Yes.

Question 2: Must the creditor also demonstrate a personally serious reproach regarding the director of the director-entity?

Answer: No.

Question 3: How does the director of the director-entity prevent liability (after all)?

Answer: By stating and, if necessary, proving that he or she cannot personally be seriously blamed for the conduct on which the liability of the corporate director is based.

What does this mean in practice?

A creditor who holds the directors of a corporate director liable through Article 2:11 DCC does not have to show personal serious blame for each of them; they must exculpate themselves. A creditor who sues natural-person directors directly under Article 6:162 DCC must establish personal serious blame for each director separately (TMF, para. 3.3.3).

Advice: Review Your Group Structure

Do one or more director-entities sit in your group structure? Then with regard to these developments, it is advisable to examine your structure and decision-making practices extra carefully.

What other rules affect directors and supervisory directors?

Which other rules matter depends partly on your sector. Below are some rules that affect many types of organisations. For certain unpaid taxes of a company, such as wage tax and VAT, directors can also be liable under Article 36 Collection of State Taxes Act 1990, subject to the conditions of that article, including the duty to notify the tax collector of an inability to pay.

What did this act change under Dutch law?

The Management and Supervision of Legal Entities Act (Wet bestuur en toezicht rechtspersonen, WBTR) is no longer a bill. Its amendments to Book 2 DCC have applied since 1 July 2021. It concerns associations, cooperatives, mutual insurance societies and foundations.

Main changes

The articles of association of an association or foundation can now provide for a supervisory board (Article 2:47 DCC for associations, Article 2:292a DCC for foundations). Provisions for a one-tier board at associations and foundations (Articles 2:44a and 2:291a DCC) have been adopted but have not yet entered into force.

The act also clarified:

1. Starting Points for Directors and Supervisory Board Members

Directors and supervisory directors must be guided by the interests of the legal entity and the business or organisation connected with it (for example Article 2:44(3) and 2:291(3) DCC for directors, Articles 2:47(2) and 2:292a(2) DCC for supervisory directors).

2. Position with Conflicting Interest

Conflict-of-interest rules now also apply to these legal entities. For a foundation’s supervisory board, if no resolution can be adopted because of a conflict, the supervisory board itself takes the decision, recording in writing the considerations on which it is based, unless the articles provide otherwise (Article 2:292a(7) DCC).

3. Liability Rules Under Netherlands Law

Bankruptcy liability under Article 2:138 DCC now applies to directors of all associations and foundations; the evidentiary presumption of paragraph 2 applies only if they are subject to corporate income tax (for an association, only if its articles are also laid down in a notarial deed) or are legally required to prepare equivalent financial statements (Articles 2:50a(2) and 2:300a(2) DCC).

GDPR: General Data Protection Regulation Since May 25, 2018

Which organizations fall under the GDPR in the Netherlands?

The GDPR’s entry into force on May 25, 2018, raised considerable attention. The GDPR applies to organizations processing personal data of European Union citizens. Organizations from outside the European Union can also fall under the GDPR’s operation.

The Netherlands additionally adopted a national act: the GDPR Implementation Act (Uitvoeringswet Algemene verordening gegevensbescherming).

When are you liable for GDPR violations under Dutch law?

Article 82 of the GDPR determines: anyone suffering material or immaterial damage as a result of a GDPR violation has a right to compensation from the controller or processor. A controller or processor is exempted from liability when proving they are in no way responsible for the damage-causing fact. Multiple responsible parties or processors can be jointly and severally liable.

When are you personally liable as director?

For the legal entity’s liability toward a third party, a GDPR violation must exist. Non-compliance with the GDPR is a statutory duty violation and therefore also qualifies based on Article 6:162 BW as the legal entity’s tortious act.

However, for a director’s personal liability, the director’s own wrongful act is required. In most cases, the test of personal serious blame applies (HR 5 September 2014, para. 4.2; see above).

Data Breach Reporting Obligation: Documentation Required

Which obligations apply with data breaches in the Netherlands?

A much-discussed obligation in data protection is the obligation to notify data breaches under the GDPR, including stricter requirements for documenting data breaches.

Important Change: Organizations Must Document All Data Breaches

With this documentation, the Dutch Data Protection Authority (Autoriteit Persoonsgegevens) verifies whether organizations comply with the data breach notification obligation. In certain cases, the organization must notify the data breach to the authority. Sometimes the persons whose data were leaked must also be informed under the GDPR. Such notification enables them to take measures themselves and thus limit further damage.

Can the Dutch Data Protection Authority fine directors?

To whom can the Dutch Data Protection Authority impose fines?

One of the enforcement powers of the Dutch Data Protection Authority is imposing fines. Under Dutch administrative law, a fine for an offence committed by a legal entity can also be imposed on those who ordered it or actually directed it (Article 5:1(3) General Administrative Law Act, which applies Article 51(2) and (3) Criminal Code by analogy).

Can the legal entity recover the fine from directors?

The legal entity can try to recover a fine imposed on it from its directors on the basis of improper management (Article 2:9 DCC). Improper management may lie, for example, in failing to act in accordance with the GDPR despite knowing of a data breach. Whether that amounts to serious blame depends on all circumstances of the case (Staleman/Van de Ven, para. 3.3.1).

Does indemnification or D&O insurance help?

Does your indemnification protect against new risks under Dutch law?

It is not uncommon for the legal entity to provide a director with indemnification for potential damage they incur through exercising their director duties. In many cases, the legal entity insures personal risks in director liability for the benefit of directors and others facing comparable risks.

Advice: Review Policy Conditions for Relevance

Check whether the indemnity and the D&O policy cover administrative fines, defence costs and claims by a bankruptcy trustee, and which exclusions apply. Also check whether former directors and de facto directors are covered.

What should directors and supervisory directors keep in mind?

Dutch law sets a high threshold for personal liability: in most cases serious blame or manifestly improper management is required. The threshold is effectively lower where the rules of Article 2:248(2) DCC apply, because breach of the bookkeeping or publication duty counts as improper performance.

Keep proper records, publish the annual accounts on time, document decisions and objections, and check, before the company enters into obligations or makes distributions, whether it will be able to pay.

Frequently asked questions about director and supervisory board liability in the Netherlands

What is directors’ liability in the Netherlands?

It is the personal liability of a director for loss suffered by the company or a third party, or for the shortfall in a bankruptcy. It requires a specific legal ground: serious blame towards the company (Article 2:9 DCC), a wrongful act for which the director can personally be seriously blamed (Article 6:162 DCC), or manifestly improper management that is plausibly an important cause of the bankruptcy (Articles 2:138 and 2:248 DCC).

Who is a de facto director under Dutch law?

A person who determined or co-determined the policy of the company as if he or she were a director (feitelijk beleidsbepaler). For bankruptcy liability, such a person is treated as a director (Article 2:248(7) DCC). He or she must have appropriated at least part of the directors’ powers; the formal board does not have to have been pushed aside entirely (HR 24 March 2023, ECLI:NL:HR:2023:445, para. 3.3).

What is the difference between a supervisory board and a board of directors?

The board of directors manages the company (Article 2:239(1) DCC for the BV). The supervisory board supervises the board’s policy and the general conduct of affairs and advises the board (Article 2:250(2) DCC; for the NV Article 2:140(2) DCC). In a one-tier board, non-executive directors carry out the supervision within the board itself (Articles 2:129a and 2:239a DCC).

Are supervisory board members liable in the Netherlands?

They can be. Articles 2:149 and 2:259 DCC apply Article 2:9 DCC and the bankruptcy rules of Articles 2:138 and 2:248 DCC by analogy to the supervisory board. Under Article 2:9(2) DCC, applied by analogy, a supervisory director is not liable if he or she cannot be seriously blamed and was not negligent in taking measures to avert the consequences; in bankruptcy, the exculpation of Article 2:248(3) DCC applies by analogy.

Are shareholders liable for the debts of a Dutch company?

In principle no. A shareholder of a BV or NV is not personally liable for what is done in the name of the company and does not have to contribute to losses beyond the amount to be paid up on his or her shares (Article 2:175(1) DCC for the BV, Article 2:64(1) DCC for the NV). Exceptions include receiving a distribution from a BV while knowing or having to reasonably foresee that the company would not be able to continue paying its debts as they fall due, up to the amount of the distribution (Article 2:216(3) DCC) and acting as a de facto director.

Primary sources

Practical Recommendation for Directors

Consider discussing this topic regularly with your lawyer, including sector-specific legislation that applies to your organisation.

Do you have questions about director liability, compliance, or contract law in the Netherlands? Contact a specialized lawyer in Amsterdam for tailored legal advice for your organization.

Remko Roosjen

Dutch lawyer

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