A characteristic feature of company structures is the tension between shareholders and the board. Shareholders have a say and control the board through the information available to them. In addition, shareholders are beneficial owners of the company’s profits. The board determines the company’s strategy, acting autonomously. Situations can arise where shareholders disagree with the (dividend) policy pursued by the board. The friction that then arises can, in certain cases, result in the board being held liable.
The board is not a pawn of the shareholders
Whilst there is an understanding that the board should listen to shareholders, it should not, however, be guided (only) by the interests of shareholders. This is where tension can arise. The board takes entrepreneurial risks. If there is any doubt about the management decisions taken, shareholders should refuse to grant discharge at the AGM. If the board takes irresponsible risks, shareholders thus reserve the right to hold the board liable at a later stage.
A high threshold for directors’ liability
In order to successfully hold the board liable, there must be mismanagement in respect of which the board can be held to have been seriously at fault. The threshold for directors’ liability is thus deliberately high. The board should not feel inhibited in defining and implementing the company’s strategy. Even if this involves taking risks. Anyone who, as a shareholder, wants to hold the company’s management liable should therefore be well prepared.
Need a directors’ liability lawyer? Get in touch with VIOTTA.
If you are in conflict with the board and are considering holding the board liable: get advice from the specialists at VIOTTA Advocaten. We regularly assist directors and shareholders in both national and international proceedings. Thanks to our specific expertise and years of experience in advising and litigating on directors’ liability, VIOTTA is ideally placed to assist you. For questions or a free consultation, please contact Arnoud Fioole or Martijn Kesler, who will be happy to assist you.
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