Thursday, April 16, 2015
Quasi director or just the boss?
Liable or not? The answer depends on all the facts and circumstances.
If a legal entity (an NV or BV comes to mind) becomes bankrupt, any director (according to its Articles) becomes jointly and severally liable for the deficit of the bankrupt's estate if it is apparent that there has been improper management and it is plausible that this was a major cause of the bankruptcy.
The Act provides that a person who (during the relevant period) determined or co-determined the policy of the legal entity as if he was a director is considered equivalent to a director. This is also called a quasi director. For instance, someone comes to mind who by giving instructions, either with or without authorization, enforces a certain policy with some regularity: he should also be considered as a policymaker. A political party or a minister who (quite dominantly) exerts pressure on a management board to take certain decisions also comes to mind. Therefore under certain circumstances they can also be considered as equivalent to a director and therefore be liable as such.
There was a case in the Netherlands whereby a person (we call him here A) was appointed as an interim manager, but not as a director under the Articles of Association. He was presented to the personnel as the "new boss". And he interfered with everything involved in the day-to-day affairs of this business. When the business went bankrupt the bankruptcy trustee not only held the director under the Articles of Association liable but also this interim manager. One of the reproaches was that the accounts were not in order and this leads, in short, to the presumption that (also with regard to the rest) there was apparent improper management and to the presumption that the improper management was a major cause of the bankruptcy.
The District Court held A liable but in appeal the claim of the bankruptcy trustee was rejected by the Appeal Court Arnhem-Leeuwarden on 17 February 2015 (ECLI:NL:GHARL:2015:1091). Both parties had many witnesses examined.
According to the Appeal Court the image emerges from these statements that A temporarily conducted the management of the actual operations in the business, as a manager/interim manager to keep the director under the Articles of Association (we will call him B) "out of the wind", and that A was the contact for the personnel as "the boss", whereas B in actual fact did not interfere much in the business but kept an eye on the state of affairs behind the scenes, took major decisions, consulted the accountant and the banks and determined the broad policy.
Although A had the title of general director and was involved in all kinds of things, according to the Appeal Court it had not become manifest that A determined the policy with regard to the personnel, the suppliers and the financial operations of the business. A was there to organize things (as B stated), but policy in the business was still ultimately determined and decided by B himself (the director under the Articles of Association). According to the Appeal Court insufficient facts had become manifest to justify the conclusion that A determined or co-determined the policy of the business as if he was the director. Therefore the claim of the bankruptcy trustee was rejected.
This case demonstrates once again that whether it can be said that someone has so much influence on the policy that it can be considered as equivalent to a director under the Articles of Association depends on the (often many) facts and circumstances. This is no different in the Caribbean part of the Kingdom.