8.4.1 Actual (co-)policymakers

In order to define the (co-)policymaking figure, the author first discusses the parliamentary history of the provisions that provide for the assimilation of (co-)policymakers with directors. To tackle the abuse of legal entities, the (co-)policymaker was introduced into statutory law in the 1980s. The legislator’s main objective was to prevent directors of legal entities from escaping liability by allowing straw men to act as directors in their place. Since liability for mismanagement was linked to this formal capacity, it was necessary to provide for provisions that effectively equated (co-)policymakers with directors. It is important to note that the legislator never intended a broad scope for the liability of (co-)policymakers. Moreover, only the (co-)policymaker who actually acted as if he or she were a director may be held liable. This requirement makes it clear that the liability for (co-)policymaking is limited to cases in which corporate powers (f.e. shareholders or supervisory board members) or contractual powers (f.e. employees or advisors) are exceeded. In principle, all responsibility rests with the directors, but the person who, by exceeding his or her authority, co-manages the company along with the directors or even sets the directors aside, may be liable in the same way as a director of the company.

In order to qualify the (co-)policymaker, it is important to consider the anti-abuse background that played a role in the introduction of this figure. In particular, one should think of cases which reveal an intention to avoid liability for prejudice to creditors by hiding behind the legal personality of a company. In order for a person not formally appointed as a director to be assimilated as such, it is necessary that he or she determined or co-determined the company’s policy, whereas in doing so he or she acted as if he or she were a director. For this qualification it is sufficient that this person co-managed the company. Finally, in principle, there must always be an active involvement of the (co-)policymaker in the damaging act.

Pursuant to sections 36 of the Collection of State Taxes Act 1990 (CSTA) and 23 Sectoral Pension Fund (Obligatory Membership) Act 2000 (SPF), directors of entities (a broader context than just legal persons) are jointly and severally liable for certain tax debts and pension premiums respectively, if they do not timely notify the tax authority or pension provider that these debts cannot be paid (notification of inability to pay). They may also be liable if the notification obligation has been met but the debts remain unpaid and it is plausible that the non-payment of these debts is the result of mismanagement attributable to the directors. An explanation of the law on this subject is followed by three caveats in relation to the (co-)policymaker. Firstly, a failure to correctly or timely notify the authority of the inability to pay leads in principle to liability. The author argues that this presumption that leads to liability, without actually determining whether it is a case of mismanagement, should not apply if it appears from the circumstances that the (co-)policymaker was not able to comply with the notification obligation because he or she was not authorised to do so. Secondly, the collective nature of these provisions means that directors cannot disculpate by referring to the (co-)policymaker, since the directors always have their own responsibility. However, the mere circumstance that (co-)policymaking has taken place cannot solely lead to liability. Thirdly, the possibilities for equation in section 36 CSTA and section 23 SPF respectively influence each other. Consequently, in applying these provisions, a legal entity-(co-)policymaker1 and its possible (co-)policymakers may also be held liable. The corporate law equivalent which provides for the liability of legal entity-directors (section 2:11 DCC) lacks such an effect. The referral in that provision is limited to the formal directors of legal entity-directors.

Pursuant to section 2:248 DCC each director is jointly and severally liable for the deficit in a bankruptcy of the company in case of mismanagement and when it is plausible that this mismanagement is a major cause of the bankruptcy. Policymakers share this fate. After a general explanation of these rules, the author once again makes several caveats in relation to the (co-)policymaker. First of all, the circumstance that on the basis of section 2:248 DCC, second paragraph, in the event of a violation of the obligation to keep records (section 2:10 DCC) or a violation of the obligation to publish the annual accounts (section 2:394 DCC), liability is in principle established. This principle also applies with respect to (co-)policymakers, although they do not necessarily have the powers required for the proper performance of their duties, including the power to involve themselves in the administration of the company or the annual accounts. The author argues that the Supreme Court has wrongly assumed responsibility for (co-)policymakers with respect to the duty of administration and the duty to publish. Secondly, it is doubtful whether the (co-)policymaker can effectively invoke the disculpatory powers of this provision. After all, the involvement of the (co-)policymaker in the mismanagement is often decisive in determining whether he or she can be regarded as a (co-)policymaker. Moreover, the (co-)policymaker may lack the ability to meet the requirements for an appeal to disculpation, since he is not formally authorised to oppose mismanagement of the directors or to take measures to avert the consequences thereof. In addition, the (co-)policymaker does not always realise that he or she qualifies as such and should therefore act disculpatory in anticipation of liability. For that reason, the author argues that when assessing an appeal to disculpation, account must be taken of circumstances that necessitate the conclusion that a policymaker did not have the ability or means to intervene and take action to limit the damage.

Supervisory board members may also be held liable as (co-)policymakers (section 2:248 paragraph 1 jo. 7 DCC), while the law also provides for the liability of de facto supervisory board members (section 2:249 jo. 2:248 paragraph 1 jo. 7 DCC). The author discusses the scarce case law in which such examples have arisen and concludes that supervisory board members, despite the fact that they may have a very strong influence or considerable degree of control over the company’s policy, will normally act within the limits of their legal authority, so that they only have to fear liability as a director in very exceptional cases.

The first part of this fourth chapter concludes with a discussion of sections 2:207 (repurchase of own shares), 2:208 (resolution to reduce capital) and 2:216 (dividend payment) DCC. The common denominator of these provisions is that the directors must give their approval when any kind of distribution is made to the shareholders. This approval must be refused if the directors know or should reasonably foresee that the company will not be able to continue to pay its due debts at a later date. The author first discusses the circumstance that these provisions relate to an internal liability (vis-à-vis the company), while the other provisions that provide for an assimilation of (co-)policymakers with formal directors relate to an external liability (vis-à-vis creditors). The author is critical of this mixture of internal and external liability.