Managing and Supervisory Directors in The Netherlands

For companies with operations in the Netherlands, it is essential to fully understand the legal frameworks and governance expectations for directors and supervisory directors to ensure that those roles and responsibilites are properly fulfilled.

Under Dutch law, directors are responsible for the overall management of the company. This includes developing and implementing the business strategy and ensuring adequate risk management and control mechanisms. The Netherlands are known for the Rhineland model. This means that directors should focus on the interests of the company and its business, while taking into account the interests of stakeholders such as shareholders, employees and society as a whole. Directors are expected to make decisions based on careful consideration of interests, and to have a good understanding of the company's financial position. In case of improper performance of duties, a director can be held personally liable.

Supervisory Board

Supervisory directors in the Netherlands have a supervisory and advisory role. They are primarily responsible for supervising the management board's policy and the general course of affairs within the company. This duty extends to topics such as risk management, compliance with laws and regulations and the sustainability of the business model. Supervisory Board members should also focus on the interests of the company and its business and not a partial interest. The Supervisory Board thus acts as a checks and balances mechanism within the company's governance.

In addition to their supervisory role, supervisory directors are also valuable advisors to the management board. They are expected to use expertise, experience and a critical eye to evaluate strategic decisions and support the company in achieving its long-term objectives. Supervisory board members thus contribute to the stability and sustainable success of the company.

Liability risks for Directors and Supervisory Directors

Both directors and supervisory directors can be held liable in case of mismanagement or poor supervision. The liability risks are not small, especially if there is bankruptcy or a situation where serious damage occurs to the company or third parties. The complexity of the company and the extent to which the relevant sector is regulated also play a role. A good knowledge of Dutch corporate law and corporate governance expectations is therefore essential.