Article 2:11 of the Dutch Civil Code (Burgerlijk Wetboek) applies when a legal entity is itself a director of another legal entity. If that corporate director is liable as director, the liability also rests jointly and severally (hoofdelijk) on every person who was a director of the corporate director at the time the liability arose.
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Why does this rule exist?
To prevent liability from stopping at an intermediate company. Many entrepreneurs run their operating company through a personal holding or management company (management BV), which is the formal director. Without Article 2:11, a liability claim against the director would hit only that holding company, which often has few assets. The rule lets creditors and trustees reach the natural person behind it.
Does it apply to several layers?
Yes. If the corporate director is itself managed by another legal entity, the liability passes through each layer until it reaches the natural persons at the top. A chain of holding companies therefore offers no protection against director liability.
Which liability does it cover?
All forms of director liability: internal liability towards the company (Article 2:9), liability in bankruptcy (Article 2:248), liability for distributions (Article 2:216) and liability towards third parties based on tort. The rule applies regardless of whether the natural person was personally involved in the conduct.
What should you keep in mind?
The moment the liability arose is decisive. Someone who becomes director of the holding company later is not liable for earlier conduct, while someone who resigns remains liable for the period in which he was director. Document changes in management carefully and consider liability alongside tax and control when designing a structure.
Frequently asked questions
Does a holding structure still have benefits?
Yes, for tax planning and flexibility, but not as a shield against director liability.
Does D&O insurance help?
It can cover defence costs and some claims, but check the exclusions carefully.
Related terms
- Directors’ liability
- Article 2:248 Dutch Civil Code (director liability in bankruptcy)
- Article 2:9 Dutch Civil Code (proper performance of duties)
- Joint and several liability
Our corporate lawyers advise on structuring and defend directors and holding companies against liability claims. Want to know what this means for your situation? Book a free introductory meeting.
