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    Can a director be held personally liable for not (correctly) invoking a financing arrangement clause (financieringsvoorbehoud)?

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  • Under Dutch law, directors of a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) (BV) are, in principle, not personally liable for any liabilities of the BV. One of the exceptions to this principle is that a director can be held personally liable for mismanagement in the event of a personal, seriously culpable act (persoonlijk ernstig verwijtbaar handelen).

    In a recent case, the Court of Appeal of Arnhem-Leeuwarden ruled that a director of a BV could be held personally liable because the BV, represented by the director, entered into a share purchase agreement subject to financing being arranged, knowing that the company would not be able to fulfil its obligations if  (i) the financing was not arranged and (ii) the condition subsequent (ontbindende voorwaarde) for the financing was not invoked in good time. Due to the fact the director did not arrange any financing and did not invoke the condition subsequent in good time (and correctly), the Court of Appeal held that the director could be held personally liable.

    On 6 February 2015 however, the Supreme Court argued that, as the Court of Appeal had not sufficiently examined whether there was serious personal culpability on the director's part, the  director could not be held personally liable. The Supreme Court referred the case to the Court of Appeal of 's-Hertogenbosch. We will keep you informed on any further developments in this matter. In the meantime, we would advise directors to be aware of the above when entering into an agreement that contains a financing arrangement clause.

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