Under the new law, a director of a Dutch legal entity can be disqualified in five situations that occur during a bankruptcy or during a three-year period before bankruptcy. One of these situations is when the director’s liability has been irrevocably established on the basis of Dutch Civil Code provisions dealing with mismanagement to the bankruptcy. Other situations are that fraudulent preference has taken place causing considerable injury to creditors; that certain tax offences have been committed; or that there was a serious failure to meet duties of cooperation and information towards the bankruptcy trustee. A last ground for disqualification is that repeated bankruptcies have taken place within a short period in which the director has been involved. The bankruptcy trustee or the public prosecutor can request a director’s disqualification. Former directors, actual policy makers and executive directors in a one-tier board also fall within the scope of the new provisions. A disqualification order cannot be issued against a supervisory director or non-executive director of a one-tier board. During the parliamentary debate the Minister of Security and Justice gave as a reason that (i) a supervisory director is further removed from the company, and (ii) legal entities without a supervisory board are often involved in cases of bankruptcy and fraud. The government made a commitment to review the bill after five years and will then examine the possibility of disqualifying supervisory directors in cases of mismanagement.
A director who has been disqualified cannot be appointed as a managing director or as a supervisory director of a Dutch legal entity for a set period not exceeding five years, unless the district court stipulates otherwise. Any appointment during that period will be void. A director’s disqualification will be registered on a pubic list kept by the Chamber of Commerce. The disqualified director will be taken off the Trade Register. If a legal entity no longer has managing or supervisory directors as a result of a director’s disqualification, the court may temporarily appoint one or more managing or supervisory directors.