The Source March 2020

LEGAL
SO YOU WANT TO BE
A DIRECTOR OF
A COMPANY?
This article will use as its basis the new corporate law that has been adopted by the parliament
of Aruba, the new Book 2 of our Civil Code. This new corporate law is awaiting its
implementation by a separate implementing law (invoeringsverordening), hopefully within
the next few months. This new law has been long overdue (in Curaçao it was introduced in
2004), to replace our old corporate laws contained in the Commercial Code, and stemming
from the early part of the last century. This article is based on the version of the law and the
implementing law was offered to the parliament on December 18, 2019 by the Minister of
Justice, so it is still subject to change.
Who is a director?
Foremost, a director is a person that is appointed by the shareholder or the supervisory board
of a company to act as such. More broadly, a director is also considered to be anyone that
has the authority to represent a legal entity and that manages and controls the affairs of that
legal entity. So even if a person is not officially appointed as a director, but does (co-)determine
the policies and decisions within the entity, then this person will still be considered a
director (bestuurder) for purposes of the law. For example, in the event of a bankruptcy, a
person that can be considered a director but is not formally appointed as such can also be
held responsible and liable for mismanagement that led to the bankruptcy. Another example
is a supervisory director (commissaris) that involves himself in the day-to-day operations
and decision-making within the company and thereby takes on the role of a director without
being appointed as such.
Having the position of director or being a de facto director is relevant in the tax laws as well,
where the director of a legal entity is personally liable for unpaid taxes, unless the legal entity
(through the director) has informed the tax department of its inability to pay in a timely
fashion and the inability to pay is not due to mismanagement by the director.
The director (bestuurder) has a duty of care towards the legal entity, more specifically:
- To properly perform his duties within his responsibilities (behoorlijke taakvervulling);
- To keep a proper administration of the financial condition of the legal entity and preserve
the administrative records for at least ten years;
- To prepare and produce the annual accounts (balance sheet and expense and income statement)
within eight months of the end of the fiscal year.
When a director does not comply with these duties of care, it can lead to personal liability
of the director, especially in case of bankruptcy of the legal entity. Furthermore, as stated
before the director can also be personally liable for any unpaid taxes.
It is therefore important that the director takes his responsibilities and potential liability
seriously and makes sure that he is personally involved in the day-to-day affairs of the legal
entity, so that he also knows what is going on in the company and can take action if there is
something untoward. All too often, it happens that someone is appointed as a director only
in name, as a figurehead to act as a (local) representative, but that the actual decisions are
taken by other people. If that person has no idea what is actually going on in the company,
and is subsequently made personally liable for unpaid taxes or other debts, then ignorance
will likely not be a sufficient defense.
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