2.4.4.0 Introductie

Dutch company directors can be held personally liable for harm to the company and to third parties. Both sources of directors’ liability may be reduced contractually. In the first case, an exoneration clause may waive the company’s right to sue its director for possible future losses arising from a breach of director duties. In the second case, an indemnification clause may serve to shift possible future losses arising from third-party claims to the company. Companies will likely then mitigate these risks by immediately transferring them to a D&O insurer. Moreover, statutory law provides liability limitation, and Dutch courts have developed a liability standard that functions to shield directors from liability.

The question now is how this liability protection influences attitudes held by directors concerning personal liability risks. The interviews revealed that liability protection has an important function, as it allows company directors to reduce the magnitude of their exposure to liability risks, at least to a tolerable level. The probability of liability is, however, difficult to adjust. In the following paragraphs, the various legal instruments provided by the Dutch legal system are discussed in terms of their effectiveness in mitigating defensive behaviour.