4.4.3 De Rouw v. Dingemans 2.0

De Rouw B.V. was a single-shareholder company with a metal business and a few employees in service. The company was directed and controlled by De Rouw sr., the company’s (indirect) sole shareholder and director. De Rouw B.V. went bankrupt, and the trustee in bankruptcy claimed that De Rouw sr. violated his duty of proper management of the company by depriving the company of its assets. The trustee alleged that De Rouw sr. acted fraudulently and therefore could be susceptible to serious reproach. In the course of the proceedings, it was established that De Rouw sr. had committed tax fraud and forgery and was sentenced to imprisonment. Moreover, De Rouw sr. deliberately deployed the company’s assets for private use and debited the company by arranging payments for phantom invoices. The fraudulent acts had remained concealed by manipulating the company’s books and accounts, and the litigious actions were not discernible in the financial statements. In his defence, De Rouw sr. invoked the discharge provision and argued that it covered the litigious, illegal actions, as the company’s general shareholders’ meeting, consisting solely of De Rouw sr. himself, was fully informed. In cassation, the Supreme Court accepted De Rouw’s full knowledge of the litigious actions,1 yet judged as follows:

The Supreme Court may or could have used the method in Ellem Beheer 2.0 to resolve the circumstances argued in De Rouw.

The first issue is De Rouw’s knowledge of the fraudulent actions regardless of their discernibility in the company’s records. In the particular circumstances of this case, the books and accounts were manipulated. De Rouw’s knowledge may be considered a relevant circumstance but did not evidently play a decisive factor in the court’s final judgment. De Rouw’s full knowledge did not convince the court to adopt a different view. On the basis of a contrario reasoning in relationship to Ellem Beheer 2.0, the judgment in De Rouw may be better explained by other additional circumstances, to wit: the nullity of the discharge resolution on the basis of good morals and public order (art. 3:40 DCC).

The second issue, accordingly, involves the immoral purpose of the discharge decision based on art. 3:40 DCC. In cassation, the Supreme Court could have explicitly taken De Rouw’s criminal offences as the starting point of the judicial review by applying, ex officio, art. 3:40 DCC in conjunction with art. 25 of the Code of Civil Procedure (CCP) when considering the validity of the discharge. If, pursuant to art. 25 CCP, a discharge proves to be null and void, a court must act on its own motion to consider the invalidity of the discharge even if not contested by one of the litigants.143 Hoeben v. Noord Nederlandse Metaalhandel3 may offer important guidance in considering the problematic issue of discharge in De Rouw 2.0 in view of art. 3:40 DCC. The casuistry in Hoeben is quite similar to that of De Rouw.

Hoeben concerns three companies involved in the metal businesses, all of which were directed and controlled by Hoeben, the companies’ sole shareholder and director. The companies’ shares were then sold to Voth. After the sale, the Fiscal Intelligence and Investigation Service (FIOD) and the Government Audit Department (RAD) launched an investigation into the companies on alleged tax liability. In the course of the proceedings, it was established that Hoeben had deprived the companies of their assets for his own private benefit and illegally evaded tax payments.4 The companies were then faced with additional tax assessments and instigated a claim for damages. In his defence, Hoeben asserted that he had acted on the basis of resolutions by the companies’ general shareholders’ meetings (i.e. Hoeben himself) ‘allowing the director to evade tax payments and, contrary to legal obligation, to appropriate companies’ earnings without accounting for it in the companies’ bookkeeping.’5 The Supreme Court confirmed the Court of Appeal’s judgment that the shareholders’ resolutions were null and void because they contained an immoral purpose, namely to allow illegal tax evasion.

In De Rouw 2.0, by analogy with Hoeben, it can be argued that the discharge decision may not have been directly prohibited by law; however, the legal act contained an immoral purpose: to shield a director from personal liability for fraudulent acts. Such discharge, with its intention of evading the legal consequences of fraudulent actions, does not serve any company interest.6 Indeed, allowing such a discharge in De Rouw 2.0 to cover fraudulent acts would be contrary to the doctrine of ‘limited scope’ of discharge, which was established to protect the company’ interests from certain undesirable effects of such a waiver of rights.7 Moreover, in the specific case, where a company employs other employees in addition to the director and bears obligations to creditors, it is difficult to ever accept that such discharge could pertain to intentional fraudulent acts detrimental to the interests of the company and the company’s stakeholders, despite the full knowledge of those who were authorised to grant the director discharge. Accordingly, the Supreme Court might or would likely have ruled that, contrary to De Bruin in Ellem Beheer 2.0, De Rouw sr. in De Rouw 2.0 could not rely on the discharge pursuant to art. 2:8(2) DCC.8