Dismissal of managing directors in a Limited company

The managing board in Limited and public companies (“BV” and “NV”) consists of one or more managing directors. Legal entities are allowed to act as director, although their liability is jointly and severally vested with each individual(s) who is (are) managing director of the first legal entity. The Articles of Association may impose qualifications on managing directors. Lawyer Sander Schouten explains. 

Appointment of managing directors

The first directors are appointed in the deed of incorporation of the company. Upon incorporation, directors are (as a basic rule) appointed by the general meeting of shareholders, deciding by majority. The articles of association may provide otherwise, within certain limitations. For instance, the holders of priority shares (or better: the general meeting of the holders these priority shares) may have been granted the right to appoint one or more directors. Furthermore, the articles of association may grant another person or corporate body the right to make a binding nomination.

Dismissal of a managing director

Managing directors are dismissed (or suspended) by the general meeting of shareholders, unless the articles of association provide otherwise (within certain limits). The managing director has the right to be heard on his proposed dismissal. The articles may require a certain majority or quorum. If the company has a supervisory board, this supervisory board may (depending on the company) have been granted the right to appoint, dismiss and suspend managing director’s.

The managing director has an employment agreement

A managing director (usually) also has an employment relation with the company. His (corporate) dismissal also terminates his employment agreement, provided that this dismissal had been given in accordance with the applicable rules. For the termination of the employment agreement of a statutory director, no license of the UWV is required. More on Employment law can be read here.

Legal advice by a Employment and business lawyer

The Lawyers of Watson Arps & Wang Chan LLP specialize in corporate and business law. To prevent is better than to cure. Our corporate lawyers can help you to draw up all necessary corporate documentation, such as shareholders’ agreement or articles of association, customized to your needs.