Hoofdstuk 9 Section 2:11 of the Dutch Civil Code, a conduit for directors’ and officers’ liability. How deep can a director fall?

Section 2:11 of the Dutch Civil Code (Burgerlijk Wetboek (BW)) stipulates that the liability of a legal person in its capacity of the director of another legal person is also jointly and severally attached to anyone who is a director of that other person when the liability arises. Chapter 1 explains the major importance of this section. Under the laws of the Netherlands, the principal rule is that shareholders and directors are not liable for the acts or omissions of the legal person they are involved with. However, in (exceptional) circumstances, directors can be held liable for such acts or omissions. This concerns legal intervention. In Section 2:11 of the Dutch Civil Code, however, it is the legislator itself that makes an exception to the above principal rule. A study into this section of the law is appropriate and not only because of the fact that Section 2:11 of the Dutch Civil Code is a legal form of piercing. Tackling the abuse of legal persons is more topical than ever before. Among other things, I refer to the recent Civil-Law Director Disqualification Act (Wet civielrechtelijk bestuursverbod). In the fight against the abuse of legal persons, Section 2:11 of the Dutch Civil Code still – this section is more than 30 years old now – plays an important role. The central research topic is what the scope of Section 2:11 of the Dutch Civil Code is. The greater the scope of Section 2:11 of the Dutch Civil Code, the bigger the chance that the director or directors “behind” the legal person-director or a chain of legal person-directors are liable or jointly liable. The aforementioned research topic is divided into three sub- topics, namely what the personal scope of Section 2:11 of the Dutch Civil Code is (what “kind” of directors does the section apply to?), what the normative scope of that section is (what kinds of liabilities does the section apply to?) and what the international scope of that section is (to what extent does Section 2:11 of the Dutch Civil Code refer to foreign legal person- directors?). The analysis of Dutch law was conducted by means of research into legislation, case law and literature. Where appropriate, reference is made to regulations in other countries. However, this study is not a comparative law study. In principle, criminal-law and fiscal directors’ and officers’ liability are not discussed. In the United Kingdom, the concept of legal person-director is being outlawed. In this study, however, I regard the concept of legal person- director as a kind of fact.

In Chapter 2 I set out the general framework in which Section 2:11 of the Dutch Civil Code should be placed. In contrast with a lot of other countries, Dutch law recognises the concept of legal person-director. The statutory basis for the statutory basis can be found in Section 2:5 of the Dutch Civil Code. In practice, this concept is mainly found in intra-group and group relations, at joint ventures and trust offices. One of the advantages of using a legal person- director is the fact that the expertise required for management does not have to be united in a single natural person or in a number of natural persons. One of the disadvantages of a legal person-director is that the natural person who is a director of it will in principle “get away scot-free”. In certain circumstances, this legal entity may, therefore, be abused. Section 2:11 of the Dutch Civil Code serves to prevent a natural person from preventing directors’ and officers’ liability by the intermediary link of a legal person-director. In my research, I will discuss the term “legal person”, being a bearer of its own rights and obligations, not being a natural person. In a formal sense, a legal person is independent. In a material sense, the legal person depends on natural persons (such as its directors) to perform acts. So as to prevent mismanagement (to the greatest possible extent), so-called “anti-abuse legislation” was called into life.

Terms such as “piercing” (doorbraak) and “equation” (vereenzelviging) are discussed. These terms do not have a clear-cut content. Direct piercing concerns (involuntary) liability that is based on replacing the difference in identity between (legal) persons. The word “equation” implies that, for instance, a legal person and a natural person are similar to such an extent that no distinction can be made between the two. Equation is a ground for piercing of liability, as a creditor will be able to substantiate a claim against not only the actual debtor but also against another person who can be equated with that debtor. The “piercing” takes place towards that other person. At the end of this chapter, I will make a number of comments about the Second Abuse Act (Tweede Misbruikwet).

In Chapter 3, I will discuss Section 2:11 of the Dutch Civil Code in more detail. After a brief explanation of the history of Section 2:11 of the Dutch Civil Code, I will set out a number of classifications of that section. Among other things, I regard Section 2:11 of the Dutch Civil Code as a “statutory form of limited piercing of liability”. Each second-degree director (in short: the director of a first-degree legal person-director) should have the option to put up a limiting liability defence or even a liability-excluding defence, while such a defence is not necessarily or cannot necessarily be put up by that first-degree director. The aim of Section 2:11 of the Dutch Civil Code is that, despite the intermediary link of a legal person-director, at least one natural person can ultimately be designated as bearing management responsibility. The purport of Section 2:11 of the Dutch Civil Code is to prevent abuse of legal personality. Following the implementation of Section 2:11 of the Dutch Civil Code, it is more difficult for directors to hide behind a legal person when damage to a creditor is the result of poor management or mismanagement. Thanks to the implementation of Section 2:11 of the Dutch Civil Code it is possible to “see through” the legal person-director as it were and in cases where the liability of directors is regulated by law, directors (natural persons) are also liable, in addition to the legal person. If one of those directors is a legal person, the same applies to that legal person, and so on.

Section 2:11 of the Dutch Civil Code falls under mandatory law and does not contain any independent ground for directors’ and officers’ liability. The liability by virtue Section 2:11 of the Dutch Civil Code is of a “qualitative nature”. The fact is that for liability by virtue of Section 2:11 of the Dutch Civil Code, a person has to be a director of a liable first-degree legal person-director, or of a first-degree legal person-policymaker or first-degree legal person-co-policymaker. Other terms used include “derived liability”. Liability of (for instance) the first-degree legal person-director is in principle a condition for the liability of a second-degree director, which is based on the same principle. However, a second-degree director is not automatically (unconditionally) personally liable for commitment attached to the first-degree legal person-director pursuant to any directors’ and officers’ liability provision. A second-degree director can invoke the possibilities of exculpation that were also available to the first-degree legal person-director. In my opinion, we should call it a “quasi-derived” liability of the second-degree director: a liability derived from the liability of a first-degree director, linked to the independent power to to exculpate himself.

Section 2:11 of the Dutch Civil Code contains joint and several liability of second-degree directors. A creditor can individually address the managed legal person on the one hand and the (first-degree and second-degree) directors on the other. There is no subsidiarity. A creditor may also address the (first-degree and second-degree) directors individually. In that case, I feel the obligation to pay should in principle be vested in the first-degree legal person-director, who should be classified as the principal debtor. An exception to the aforementioned obligation to pay could, in my opinion, arise when the acts of a second- degree director towards a first-degree legal person-director can be regarded as an imputable shortcoming or as an otherwise improper performance. A director who has paid compensation to, for instance, the managed legal person, can have recourse against his jointly and severally liable co-directors, up to the amount of the debt that “concerns” his co-debtors/co-directors each time.

Second-degree directors have no liability – let alone any stricter liability – other than the liability that is attached to first-degree directors. A second-degree director does not have any different possibilities of exculpation than those that apply to the first-degree director in question. In my opinion, it is necessary to abstract from the management layer. In this abstraction theory, we look at a situation in which one management layer or several management layers are missing. The central question is how the second-degree director would be treated in the event that the first-degree management layer would be absent. However, as the second-degree director is positioned at a greater distance from the managed legal person, there may be more circumstances in exculpation.

Section 2:138/248, subsection 4 of the Dutch Civil Code contains two important grounds for mitigation. In my opinion, those powers relate not just to first-degree directors but also to second-degree directors who are held liable “by virtue of” Section 2:11 of the Dutch Civil Code. Again, the abstraction theory should be applied. The starting point of the abstraction theory does, in my opinion, justify the application of Section 2:138/248, subsection 4 of the Dutch Civil Code to second-degree directors who are held liable by virtue of Section 2:11 of the Dutch Civil Code. The result of an abstraction from the real situation and viewing the situation the way it would have been if the second-degree director in question would have been a first-degree director is that the court only has to consider the period during which the second-degree director in question was a director of the (now) insolvent managed company.

The power allocated to the receiver under Section 2:138/248, subsection 9 of the Dutch Civil Code to declare certain voluntary legal acts void is also referred to as “quasi-presumption of fraudulent preference”. In my opinion, Section 2:138/248, subsection 9 of the Dutch Civil Code is not a provision that increases liability. It is in my opinion “merely” a facility offered to the receiver in the event it is certain that it concerns such liability, that the director is unable to pay and this director has appeared to have undertaken voluntary legal acts as a result of which the possibility of recourse against him has been reduced. Within that context, I would call it a “liability plus” situation. In my opinion, the scope of Section 2:11 of the Dutch Civil Code is stretched too far if it is applied to the quasi-presumption of fraudulent preference.

In principle, Section 2:11 of the Dutch Civil Code relates to all legal persons who fall within the scope of Book 2 of the Dutch Civil Code. However, Section 2:11 of the Dutch Civil Code does not apply to legal persons under public law. If a legal person is controlled by regulations under public law despite an indication regarding structure and organisation under civil law, I feel the principal rule should be that Section 2:11 of the Dutch Civil Code applies. In certain circumstances, it should be possible to apply Section 2:11 of the Dutch Civil Code to churches by analogy. Section 2:11 of the Dutch Civil Code does in principle also apply to legal persons with a European law basis that fall under private law, provided these legal persons have their registered office in the Netherlands. However, Section 2:11 of the Dutch Civil Code does not relate to the European Economic Interest Grouping (EEIG).

Section 2:11 of the Dutch Civil Code relates to a legal person that is the director of another legal person. This section, therefore, does not apply if it concerns a legal person that is a partner in a partnership. Under prevailing law, partnerships are not legal persons, but agreements. If a partnership is the director of a legal person, Section 2:11 of the Dutch Civil Code does in principle not apply either. The section in question explicitly mentions the liability of a legal person in its capacity of the director of another legal person.

The topic (or sub-topic) that is the focus of Chapter 4 is that of the “personal scope” of Section 2:11 of the Dutch Civil Code, in other words, which type of directors Section 2:11 of the Dutch Civil Code relates to: formal directors and/or policymakers or co-policymakers and/or quasi-directors within the meaning of Section 2:151/261 of the Dutch Civil Code. It is beyond discussion that a formal director falls under the term of “director” in Section 2:11 of the Dutch Civil Code. A one-tier board has executive and non-executive directors. Executive directors are responsible for the “operations of the company” which, among other things, include representation. Non-executive directors are directors who have not been assigned with any specific executive duties and whose main duty it is to stipulate the main features of the policy and to supervise those in charge of day-to-day management. Although the position of a non-executive director is very similar to that of a supervisory director, a non-executive director is a full member of the management board. In my opinion, a non-executive director should be classified as a director and not as a supervisory director in terms of liability. I, therefore, feel Section 2:11 of the Dutch Civil Code applies to second-degree non-executive directors.

Section 2:138/248, subsection 7 of the Dutch Civil Code equates a policymaker or co-policymaker with a formal director for the application of that section. There is uncertainty about whether the requirement of a factual replacement of the management board should be stipulated in order to be able to call it a policymaker or co-policymaker. Section 2:138/248, subsection 7 of the Dutch Civil Code also equates the co-determination of a policy with formal management. I feel the management board should, therefore, not be replaced in order to be classified as “policymaker or co-policymaker”.

Based on prevailing case law (the Montedison and Lammers-Aerts rulings), a first-degree director can be either a legal person-formal director or a legal person-policymaker/legal person-co-policymaker for the application of Section 2:11 of the Dutch Civil Code and a second-degree director should always be a formal director. Also with a view to the parallel between the policymaker or co-policymaker and the quasi-director within the meaning of Section 2:151/161 of the Dutch Civil Code, I am inclined to interpret Section 2:11 of the Dutch Civil Code with regard to public limited companies and private limited companies so broadly that the first-degree directors referred to in that section should also include first-degree legal person-quasi-directors. However, I feel it would be taking things too far to declare Section 2:11 of the Dutch Civil Code – a provision explicitly written for directors – applicable to shareholders. In my opinion, this would be different only if and insofar as a shareholder can also be classified as a policymaker or co-policymaker.

According to current case law, the liability route “by virtue of” Section 2:11 of the Dutch Civil Code is closed for second-degree policymakers or co-policymakers. I will discuss arguments in favour and against extending the scope of Section 2:11 of the Dutch Civil Code with second-degree policymakers or co- policymakers. One argument in favour of extending the scope of Section 2:11 of the Dutch Civil Code with second-degree policymakers or co-policymakers for instance, is that it is inconsistent of the Supreme Court to include a first-degree policymaker or co-policymaker in Section 2:11 of the Dutch Civil Code, but not a second-degree policymaker or co-policymaker. Another argument in favour of that extension is that directors and policymakers or co-policymakers can be obliged to abide by bogus transactions. No matter the pros of that (and other) arguments, I feel that the applicability of Section 2:11 of the Dutch Civil Code is of no practical use in this situation. The concept of the second-degree policymaker or co-policymaker is “too vague”. Classifying a person as a second- degree policymaker or co-policymaker would in practice result in problems in terms of law of evidence. A redirection from liability to a second-degree policymaker or co-policymaker is from a practical point of view useful only if it is possible to determine fairly accurately in advance which persons can (in any case) be classed under that concept. I suggest including a rebuttable evidentiary presumption for classification as a second-degree policymaker or co-policymaker in Section 2:138/248 of the Dutch Civil Code. This would make it possible to classify certain (legal) persons who would avoid any liability without that evidentiary presumption as policymakers or co-policymakers on grounds that can be determined objectively, subject to proof to the contrary. Such persons would, in that case, be classified as first-degree policymakers or co-policymakers. This would increase the chances of being able to hold first-degree policymakers or co-policymakers liable. It would also increase the chance of dealing with second-degree directors by virtue of Section 2:11 of the Dutch Civil Code. In formulating the evidentiary presumption, I assume a shareholding of 75%. Insofar as it concerns natural persons, it would be possible to link up with the description of a UBO (ultimate beneficial owner) in the fourth Money Laundering Directive.

Part II of Chapter 4 discusses a number of procedural aspects of Section 2:11 of the Dutch Civil Code. In my opinion, the several liability of Section 2:11 of the Dutch Civil Code means that every director can be summoned individually. If the court that deals with the case in question feels that the first-degree legal person-director complies with the liability-establishing elements of the principle of directors’ and officers’ liability used, that would suffice. The disadvantage of not summoning a (first-degree) director is that the ruling passed during the proceedings against the (second-degree) director on whom a summons is served has no binding force on the (first-degree) director who has not been summoned. If legal proceedings against a first-degree legal person-director and a second- degree director are suspended because of the insolvency of the first-degree legal person-director, the court would, in my opinion, still have to pass judgement on substantive grounds about whether the first-degree legal person-director can be held liable as a director, if the claim is also based on Section 2:11 of the Dutch Civil Code. If the first-degree director appears in court but the second-degree director is declared to be in default of appearance, the liability of the second- degree director can be determined by virtue of Section 2:11 of the Dutch Civil Code. If the first-degree legal person-director fails to appear, but the second- degree director does appear, the defence put up by the second-degree director will have to be taken into consideration in the assessment in accordance with the criterion set out in Section 139 of the Dutch Code of Civil Procedure (Wetboek van Burgerlijke Rechtsvordering).

A creditor will be able to invoke interruption of the limitation period only towards the (jointly and severally liable) director who the creditor has addressed a written demand or notification to (Section 3:317 of the Dutch Civil Code), or who has made an acknowledgement within the meaning of Section 3:318 of the Dutch Civil Code. The prescription of the legal claim against the first-degree legal person-director does not have to preclude the conviction of the second- degree director. As for the (grounds for) extension of the prescription, I feel that Sections 3:320 and 3:321 of the Dutch Civil Code fail to take claims brought against those second-degree directors into account. In my opinion, one should not derive from Section 2:11 of the Dutch Civil Code that the ground for extension also applies in such cases. Section 2:11 of the Dutch Civil Code only means that liability is “passed on” to the second-degree director. No more, no less.

Liability pursuant to Section 2:138/248 of the Dutch Civil Code comes into effect the moment a company goes into liquidation. The underlying cause of the liability in question is (in part) the apparent mismanagement that preceded the insolvency. That is why I feel that “the moment of liability arising” within the meaning of Section 2:11 of the Dutch Civil Code includes not only the moment of insolvency itself but also the period of apparent mismanagement that preceded that insolvency.

In Chapter 5, I will discuss what forms of (directors’ and officers’) liability Section 2:11 of the Dutch Civil Code relates to (the normative scope of Section 2:11 of the Dutch Civil Code). The applicability of Section 2:11 of the Dutch Civil Code on the forms of directors’ and officers’ liability referred to in Book 2 of the Dutch Civil Code is beyond discussion. As in Sections 2:9 and 2:138/248 of the Dutch Civil Code, it concerns the overstepping of certain standards aimed at directors. In addition, Section 2:11 of the Dutch Civil Code relates to the liability ensuing from specific provisions of Book 2 of the Dutch Civil Code which give rise to liability for the director. In my opinion, Section 2:11 of the Dutch Civil Code does not apply to the liability of a first-grade legal person- director for the obligations that ensue for that director from an agreement. However, the parties to an agreement are entitled to come to an arrangement in that agreement, which arrangement corresponds with the provisions of Section 2:11 of the Dutch Civil Code. In order to come to a correct definition of the normative scope of Section 2:11 of the Dutch Civil Code, the research discusses a number of cases of liability that fall outside that scope, such as the liability ensuing from the “comfort letter”. This does not concern the liability of a director.

I am of the opinion that the regulation regarding the recovery of costs contained in Section 2:354 of the Dutch Civil Code does not affect a second-grade director by virtue of Section 2:11 of the Dutch Civil Code. The inquiry proceedings are not liability proceedings. Also, I cannot find any ground for directors’ and officers’ liability in Section 2:354 of the Dutch Civil Code. No recourse may be offered by a (first-degree) legal person-director, but I fail to see how any liability analysis would be influenced by the fact that it concerns a director.

In its ruling regarding Kampschöer/Le Roux the Supreme Court has confirmed that statutory bases for directors’ and officers’ liability regulated both in and outside of Book 2 of the Dutch Civil Code fall under the (normative) scope of Section 2:11 of the Dutch Civil Code. Within that context, I will further discuss Section 1:304, subsection 1 of the Dutch Civil Code and the special provisions within the framework of the Second Abuse Act, among other things. The fact that the Second Abuse Act has its own mutatis mutandis provisions with a wide effect does not preclude application of Section 2:11 of the Dutch Civil Code if and insofar as the scope of Section 2:11 of the Dutch Civil Code is greater than the scope of the mutatis mutandis provisions in question. However, the (mutatis mutandis) provisions are formulated so broadly that I suspect some tinkering on a theoretic issue is involved. In my opinion, Section 2:11 of the Dutch Civil Code can be applicable to the Financial Supervision Act (Wet op het financieel toezicht) only if and insofar as the Financial Supervision Act links private-law liability for directors of legal persons to regulations contained in that act and if that act itself does not contain any provisions that either explicitly or implicitly exclude the applicability of Section 2:11 of the Dutch Civil Code.

Discussion has arisen about whether Section 2:11 of the Dutch Civil Code relates to the liability of the legal person-director on the basis of an unlawful act (Section 6:162 of the Dutch Civil Code) and how in that case, Section 2:11 of the Dutch Civil Code has an effect on second-degree directors. Legislative history is vague in that respect. Until recently case law did not show a clear trend. I see no reason why Section 2:11 of the Dutch Civil Code could not apply to this ground of directors’ and officers’ liability. In certain cases, the liability pursuant to Section 6:162 of the Dutch Civil Code can be classified as directors’ and officers’ liability. If an individual is effectively addressed in his capacity of director, he is subject to a stricter liability threshold than when that capacity is lacking. Because of the capacity of director, the serious personal blame criterion applies. In its recent ruling regarding Kampschöer/Le Roux the Supreme Court gives its interpretation. The interpretation of the Supreme Court means that Section 6:162 of the Dutch Civil Code does fall within the normative scope of Section 2:11 of the Dutch Civil Code and that this liability “automatically” affects second- degree directors. Under that interpretation, the latter are as such “automatically” jointly and severally liable, unless they can exculpate themselves (reversal of the burden of proof). According to my interpretation however, Section 6:162 of the Dutch Civil Code does indeed fall within the normative scope of Section 2:11 of the Dutch Civil Code but the liability in question does not automatically affect second-degree directors.

When applying the abstraction theory, management layers are abstracted. In that case, one wonders how the second-degree director would have been treated had he been a first-degree director. In that case, it would be necessary to prove, among other things, serious personal blame with regard to the director in question – as this would also be done in the case of a first-degree director. If the liability of a first-degree director were to “automatically” transfer to the second- degree directors by virtue of Sections 6:162 and 2:11 of the Dutch Civil Code (as the Supreme Court suggests in its recent ruling regarding Kampschöer/Le Roux), it results in a (considerable) weighting of the liability of the second- degree directors. In that case, the second-degree directors in question suffer a procedural disadvantage. In my opinion, however, Section 2:11 of the Dutch Civil Code should have a neutral effect. Individual liability as that pursuant to Section 6:162 of the Dutch Civil Code should not become a collective liability under Section 2:11 of the Dutch Civil Code. In my view, Section 2:11 of the Dutch Civil Code is nothing more than Section 6:162 of the Dutch Civil Code being applied to second-degree directors. I feel that the applicability of Section 2:11 of the Dutch Civil Code on the liability by virtue of Section 6:162 of the Dutch Civil Code offers no practical advantages from a law of evidence point of view. To hold a second-degree director liable, the requirement still is that it has to be possible to put serious personal blame on him.

In my opinion, the liability pursuant to Section 2:216 of the Dutch Civil Code should within the framework of Section 2:11 of the Dutch Civil Code be handled in the same way as the liability pursuant to Section 6:162 of the Dutch Civil Code. Section 2:216, subsection 3 of the Dutch Civil Code contains a ground for joint and several directors’ and officers’ liability in the case of payments, as a result of which the managed legal person is unable to pay its due and payable debts. The text of Section 2:216 of the Dutch Civil Code strongly resembles that of Section 2:9 of the Dutch Civil Code. However, there is a (big) difference between Sections 2:9 and 2:216 of the Dutch Civil Code. Section 2:9 of the Dutch Civil Code contains a form of collective liability with options for individual exculpation. Section 2:216, subsection 3, first sentence, of the Dutch Civil Code limits its scope to directors who “should, at the time of payment know or reasonably have foreseen” that the managed legal person would be unable to continue to pay its due and payable debts after that payment. Only directors who knew about or could have foreseen matters can be held individually liable. They are the ones who are jointly and severally liable. Section 2:216, subsection 3 of the Dutch Civil Code contains – put differently – a form of individual liability. If you apply the abstraction theory, you look at the situation as it would have been if the second-degree directors had been first- degree directors. If it concerns a first-degree legal person-director, the “know or reasonably should have foreseen” stipulated in Section 2:216, subsection 3 of the Dutch Civil Code with regard to that director, should be argued and proven, if necessary. In my opinion, this should also apply to the second-degree directors.

The sub-topic discussed in Chapter 6 is the one regarding the international scope of Section 2:11 of the Dutch Civil Code In its rulings regarding D Group-Schreurs and MyGuide, the Supreme Court rules that the question whether Section 2:11 of the Dutch Civil Code applies must be answered on the basis of Dutch international private law. It follows from Section 10:119, preamble and under e, of the Dutch Civil Code that the law applicable to the first-degree legal person-director governs the question who, in addition to the corporate body, is liable by virtue of a certain capacity. If it concerns a first- degree foreign legal person-director (the situation of the MyGuide case), Section 2:11 of the Dutch Civil Code has no effect. The foreign second-degree director or legal person-director of a Dutch first-degree legal person-director (the situation of the D Group-Schreurs case) on the other hand can be held liable by virtue of Section 2:11 of the Dutch Civil Code. The corporate relationship between the foreign legal person-director and its director or directors is not governed by Dutch law, but by the applicable foreign law. Section 2:11 of the Dutch Civil Code lacks application in that relationship.

Although the international scope of Section 2:11 of the Dutch Civil Code is in principle limited, a foreign legal person can in certain cases be held liable (by virtue of Section 2:11 of the Dutch Civil Code). However, this only concerns exceptional cases. In my opinion, for instance, it should be possible to apply Section 2:11 of the Dutch Civil Code in separate abuse situations. However, proving such abuse meets with problems in terms of law of evidence. In some situations, the exception clause from Section 10:8, subsection 1 of the Dutch Civil Code can offer a solution. This section stipulates that the law designated by a statutory rule that is based on a presumed close connection with that law will by exception not apply if – given all the facts and circumstances of the case – the close connection assumed in that rule only appears to exist to a very small degree and that there is a much closer connection with a different law. In that case, that other law will be applied in accordance with Section 10:8 of the Dutch Civil Code.

In order to be able to hold directors of a foreign legal person-director liable, I argue the (continued) introduction of the permanent representative in Dutch law. In my opinion, the introduction thereof should not meet with insurmountable objections. For instance, the costs involved in the concept of a permanent representative are negligible and if there was any obstruction in free movement, that obstruction would be lawful. At the end of Chapter 6, I will discuss the powers of the permanent representative, the number of permanent representatives, the group from which the permanent representatives should be appointed and the question whether the obligation to appoint a permanent representative should also apply when a Dutch legal person-director is appointed.