Director disqualifications

You can check the public section of the Director Disqualification Register (Bestuursverbodenregister). This helps you do business safely and responsibly. There are 2 types of director disqualifications: under civil law and under criminal law. No criminal suspicion is required for a director disqualification under civil law. It is required under criminal law.

Director disqualification under civil law

Management board members and supervisory board members with a director disqualification under civil law may:

• not be a (supervisory) director of a legal entity, unless the judge in the ruling allows exceptions to this;
• not be awarded power of attorney;
• not represent a legal entity;
• not be appointed as a (supervisory) director when establishing new legal entities.

The court decides on the duration of the director disqualification.

There are 4 situations in which a court can impose a director disqualification under civil law.

1. If (supervisory) directors commit bankruptcy fraud or are guilty of mismanagement that leads to bankruptcy. The disqualification temporarily prevents directors from managing legal entities. The aim is to fight bankruptcy fraud and irregularities around bankruptcies more effectively. And to prevent directors who commit fraud from continuing their activities through workarounds or with new legal entities.
2. If (supervisory) directors repeatedly commit or seriously abuse a dissolution without assets (fast-track liquidation) and they disadvantage creditors. This happens when the director of a legal entity fails to comply with the filing requirement for fast-track liquidation, or deliberately disadvantages one or more creditors. Or if they have repeatedly been involved in a bankruptcy or fast-track liquidation in which creditors were not paid (in full), and the director can be personally blamed for that.
3. If a legal entity is declared prohibited.
4. A foundation disqualification (stichtingsverbod) is also a type of director disqualification under civil law. The court can dismiss a (supervisory) director for:
   • Neglect of duty;
   • Substantial change of circumstances that mean the management of the foundation no longer be tolerated. For example, a change in the purpose of the foundation or a different position of the director. The court assesses whether a change is substantial;
   • Failure to properly follow an order issued by the court in preliminary relief procedures (voorzieningenrechter);
   • Other important reasons;

A director dismissed from a foundation by the court cannot become a (supervisory) director of a foundation for 5 years after the dismissal.

Director disqualification under criminal law

The director disqualification under criminal law is a legal possibility to disqualify a director that is guilty of practices such as fraud, fraudulent bankruptcy (bedriegelijke bankbreuk), embezzlement, or forgery.

Why is a public Director Disqualification Register needed?

To make director disqualifications more visible, some information has been made public for everyone to see.

The Director Disqualification Register is intended to give guidance and peace of mind. You may search the register for several reasons:

• To prevent a disqualified director from being re-appointed. Suppose you want to appoint a director to your organisation. Through the public register, you can find out at an early stage whether that person has a director disqualification. This way, you avoid unnecessary costs and work.
• To know who is in charge of a business. If you do business with a company, it is important to know who is really in charge. Sometimes someone appears to be in charge, but the person making decisions is not officially registered as a director. This can happen if there is a so-called ‘straw man’ construction: someone is put in charge of a business on paper, but they actually make no decisions. Then it is a good idea to check if there has been a director disqualification in case the person who is in charge is not allowed to be a director. This helps prevent the use of a ‘straw man’ construction.
• To fight ‘straw man’ constructions, it is also smart to check if someone who contacts you and invites you to become a director has been disqualified from being a director themselves. This may prevent you from unknowingly becoming the ‘straw man’.
• Protection against fraud and abuse. Anyone can see in the register who has a director disqualification. Even if that person is not formally a director of a business. Because the register is public, it protects entrepreneurs and consumers against fraud and abuse. Without this transparency, such a person can work as a director in violation of the disqualification, often with the help of an accomplice or ‘straw man’.

Public knowledge versus privacy

The size of a business is often not known to outsiders. And also whether anyone other than the formal director is in charge. Usually, there is nothing to worry about. Only if a representative of a business has a director disqualification should that raise suspicions. And that alone does not mean that you cannot do business with that company. The business and its other directors may be trustworthy. However, being aware of a director disqualification may encourage you to carry out extra checks.

Anyone can access the register. This is deliberate. If information is not visible in order to protect the privacy of people with a director disqualification, all businesses may appear suspicious. This disadvantages entrepreneurs who follow the rules.

Consequences of fraud and the director disqualification

Fraud can have serious consequences for victims. It can even lead to the bankruptcy of their business. Often, these damages and consequences cannot be repaired, especially by the person found guilty.

When someone receives a director disqualification, this is made public. It alerts potential new victims and helps prevent the same person from committing fraud again. A specific warning about an offender is much more effective (in Dutch) than a general warning against fraud.