Chapter 6 Summary

This dissertation adopts directors’ liability as a system of sanction and protection. Directors’ liability was examined in the light of corporate governance with emphasis on the potential of personal liability to control directors’ behaviour.

The dissertation consists of three research papers. The first research paper (Chapter 2) covers the issue of directors’ perceptions of directors’ liability. The central research question focusses on the relation between directors’ perceptions of liability and defensive behaviour. The research findings could not give conclusive answers. However, the research findings do clarify that directors are rather uncomfortable with facing uncertainty. Directors are not only unaware of the actual liability risks, they are also uninformed about the standards of liability. The research suggests that an attempt should be made to provide directors with an understanding of the prevalent standards with regard to directors’ liability.

The second research paper (Chapter 3) covers the issue of predictability of court decisions. The central research question focusses on whether the open norm of serious reproach invites or reduces uncertainty. Qualitative and quantitative analysis of court decisions involving directors’ liability were combined to develop a probability model and to identify the most relevant factors underlying a court’s decision to assign or reject directors’ liability. A sample of court decisions was coded for the purpose of the quantitative analysis. Based on the factors identified in the research, serious reproach was formalised as follows: a violation of a norm specifically addressed to the director pertaining to protect the company or the company’s creditors or shareholders is a prerequisite for assuming serious reproach. The research shows that based on the sample of court decisions under study, courts reach decision fairly consistently.

The third and final research paper (Chapter 4) covers the issue of discharge of directors for intentional harmful acts against the company by means of an informed shareholders’ resolution. The paper raises the question of why it is problematic that the existing legal doctrine on the limited scope of discharge [beperkte reikwijdte van de décharge] does not mention directors’ subjective good faith as a requirement for discharge from personal liability to the company. In response to the research question, discharge was examined as a corporate governance instrument. Comparative and empirical insights show that there is no reason why courts should not require directors’ subjective good faith as a condition to validate discharge. This, however, entails a different lens to review discharge claims. It is proposed in the paper to replace the rationale of shareholders’ informed discharge decision as the basis for discharge with directors’ subjective good faith. Directors’ subjective good faith is argued a more preferable rationale for discharge in the light of good corporate governance.