D&O liability (directors’ and officers’ liability)
A legal entity, such as a private or public limited company, cannot undertake any action. Thus, the company director is expected to always act on behalf and in the best interest of the company, its enterprises and employees. Whenever a director fails to do so he or she may be held liable for damages. GMW Advocaten can advise in disputes involving D&O liability.
Just as any private individual, legal entities have rights and duties, most often having assets to their names, as well. The director of the company or the board of directors must fulfil its tasks in the best interest of the company; in cases of mismanagement the company can hold its director or board of directors liable for damages.
Improper managementDepending on certain circumstances, a director can be blamed for serious mismanagement. The nature and motivation of his or her actions and the risks associated with them, the applicable company guidelines and the accuracy of the available information at the time of action all must be taken into account when accusing a director of mismanagement.
Examples of such cases may be:
- The director disregards the law, regulations and administrative provisions
- The director puts his personal needs above the needs of the company
- The director takes unnecessary financial risks
- The director does not opt for the necessary insurances
- The director embezzles the (financial) means of the company
Being well preparedD&O liability is a controversial field within corporate law often having serious financial and even criminal implications, both for the director and the company. Most often disputes will end in court. Therefore one is well advised to seek legal counsel early on in the process, in order to evaluate the legal action needed and the risks associated. GMW Advocaten can help by evaluating every angle of the situation, also advising on the responsibilities involved. Where appropriate, GMW Advocaten will seek fast out of court settlement of the matter. If need be, they will litigate, always keeping the best economic and financial interest of their clients in mind.