Article 2:239 of the Dutch Civil Code (Burgerlijk Wetboek) sets out the management duty (bestuurstaak) of the board of a private limited company (BV). The board manages the company, subject to restrictions in the articles of association. In performing their duties, directors must act in the interest of the company and the business connected to it.
Table of contents
Whose interests must directors serve?
The interest of the company and its business, not only that of the shareholders. This includes the interests of creditors, employees and other stakeholders, and the continuity of the business. A director-major shareholder therefore cannot simply use the company for his own purposes.
Can shareholders instruct the board?
Yes, if the articles of association say so. Unlike in an NV, where instructions may only concern general policy lines, the articles of a BV may allow another body, such as the general meeting, to give specific instructions. The board must follow them unless they conflict with the interest of the company and its business. A director who follows an instruction that clearly harms the company can still be held liable.
What happens if a director has a conflict of interest?
A director with a direct or indirect personal interest that conflicts with the interest of the company and its business may not take part in the deliberations and decision-making. If no board resolution can be adopted as a result, the supervisory board decides, or, if there is none, the general meeting, unless the articles provide otherwise. Breach of this rule makes the resolution voidable. Record the conflict and the abstention in the minutes.
How does the board take decisions?
Each director has one vote, unless the articles provide otherwise. The articles may give some directors more votes, but not one director more votes than all others together.
Frequently asked questions
Can a minority shareholder rely on this rule?
Indirectly. A policy that ignores the company’s interest can support inquiry proceedings or a claim for withdrawal.
Can the articles restrict the board’s powers?
Yes, for example by requiring approval of the general meeting for large transactions.
Related terms
- Conflict of interest of directors
- Article 2:9 Dutch Civil Code (proper performance of duties)
- Articles of association
- Supervisory board
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