Statutory director

According to the law, all B.V.s and N.V.s (the Dutch equivalents of private companies and public limited companies) must have a statutory director, which is also registered as such in the trade register of the Chamber of Commerce. The General Assembly of Shareholders (or sometimes even the Supervisory Board) must appoint this person. Therefore the statutory director is an employee, but on with a special position.

Far-reaching responsibilities

The statutory director leads the company and has certain obligations towards the company and its shareholders. If these activities are not carried out properly, the director could be held personally responsible for the debts of the company. The director’s responsibilities are often far-reaching and the consequences can be likewise. In return the director receives a considerable salary and a pre-determined payment in case of the termination of employment. This article is about the legal context of the position of a statutory director, which has changed radically after July 1st.

Dismissal

If a company wants its statutory director to resign, the General Assembly of Shareholders must decide on the dismissal of the director with a majority of votes. During this meeting, the director must be offered the opportunity to share his opinion on the proposed dismissal. This way he or she has a chance to plead in his favour. In the meanwhile the director can be suspended, before the shareholders take a decision on the dismissal.

Ending the legal labour relation

In the framework of company law, this decision by the general assembly ends the relation between the director and the company. On April 15th 2005 the Supreme Court ruled that such a decision also ends the relationship in the framework of labour law. However, there is an exception: the prohibition notice. If the statutory director calls in sick, before the dismissal proposal has been put on the agenda for the general assembly, the prohibition notice applies unabated. The statutory director can also 

challenge the resignation decision, when procedural regulations from the articles of association have not been respected, or when the resignation decision conflicts with the principle of reasonableness and fairness.

Notification of the ground for dismissal

A novelty since July 1st 2015 is that the general assembly has to give a ground for dismissal. The law knows a restrictive list with grounds for dismissal and the general assembly will have to call upon one of those reasons, before it can decide to dismiss the statutory director. This means that there has to be a reasonable ground for dismissal of the employment and the company must consider whether the statutory director can be replaced internally. Often, this will not be the case, but it is not inconceivable, especially in bigger companies. This was not required before July 2015, until then the general assembly could dismiss the director without an explicit reason and at any time.

Notification period, transition compensation, chain rule

Since July 1st 2015 more things have changed for the position of a statutory director. Now the notification, that requires the employer to notify an employee of the intended extension of a temporary labour agreement, also applies to the statutory director. The statutory director is entitled to a compensation of a day worth of salary, for every day the notification was late (limited to a month), if the general assembly does not live up to this requirement.
f the general assembly does not live up to the requirement. A statutory director can also ask for a fair compensation for his dismissal. For statutory directors an adjusted chain rule applies. Where a normal employee may receive three temporary contracts in two years before the next contract must be for an indefinite term, a statutory director may receive three contracts for a maximum of five years.

No reflection period

When an employee has consented to his dismissal or has signed a settlement agreement for the termination of employment, the employee has two weeks to change its mind without an explicit reason. The statutory director does not have this possibility. If he agrees on his dismissal or signs a settlement agreement, this becomes definite immediately.

More information

Do you have questions about your statutory director as an employer or are you a statutory director yourself with questions about your position within the company? Then please contact our attorney, Suzanne van Dijsseldonk LL.M.