Dismissal of a statutory director: how to manage it

When do you address a statutory director?

Dismissing a statutory director is a significant event for any organization. When the collaboration deteriorates, you as a shareholder or fellow director want to act quickly. Nevertheless, a careful legal route is essential to prevent later claims due to irregularities.

Statutory appointment versus management authority

A statutory director is formally appointed via the articles of association, creating a legal distinction compared to a regular employee. While the labor law process often runs separately, the corporate law dismissal forms the core of the termination. Ensure that the general meeting has been correctly scheduled and that all decision-making rules are strictly followed.

How to manage the dismissal properly?

A formal dismissal resolution by the general meeting is necessary to break the corporate bond. Do not forget that, in addition to this corporate resolution, there is often a labor law dissolution route. It is advisable to have both processes align seamlessly through a settlement agreement.

Departure arrangement and liability

When terminating the directorship, you want to avoid unnecessary discussions about damage claims afterward. A solid departure arrangement that covers both the corporate and labor law aspects is therefore crucial. This allows you to enforce a final discharge and limit the risk of future legal proceedings.

Director's liability after dismissal

Even after departure, a former director can be involved in (alleged) misconduct from the past. ECLI:NL:HR:2023:635 shows how the court assesses whether a director has acted with serious personal culpability. Proper transfer and file construction can protect your company against such claims.

Points of attention at a glance

• Always check the provisions in the articles of association regarding the dismissal procedure.
• Ensure a correct convocation for the general meeting.
• Properly document the reasons for the dismissal in the minutes.
• Combine the dismissal resolution with a settlement agreement where possible.
• Think about the correct settlement of pension and employment conditions.
• Make agreements about the transfer of company assets and access to accounts.
• Seek advice on the final discharge clause to exclude subsequent claims.

What should you do now?

Dismissing a statutory director is complex and entails major financial risks if not executed correctly. Therefore, engage a specialized corporate lawyer at an early stage to protect your position.