Managing directors appointed under the articles of association of listed companies cannot perform work under an employment contract (See Section 2:132(3) Dutch Civil Code). A professional services agreement must be concluded with these individuals. In contrast, other managing directors appointed under the articles of association often have an employment contract in addition to a company-law relationship.
Dismissal of managing director appointed under the articles of association
The company body that is authorised to appoint a managing director under the articles of association is the same body that is authorised to effect their dismissal under company law. This is generally the annual general meeting (AGM) but it may also be Supervisory Board (SB) in the case of a full two-tiered corporate structure. Salary and remuneration is also established by the AGM or the SB, depending on the laws and articles of association that govern the company in question.
A dismissal under company law generally also constitutes a dismissal under labour law, provided that the company law rules (valid shareholder resolution regarding which the managing director was able to cast an advisory vote and both sides were heard). This situation is only different if a prohibition on termination applies or the parties have agreed otherwise. The notice period, however, must be duly observed.
The Dutch Work and Security Act (WWZ) provision requiring the presence of a reasonable ground – Section 7:669(3) Dutch Civil Code – also applies to the dismissal of managing directors. As was the case before it entered into effect, however, the WWZ does not require a preventive dismissal verification (by the Employees Insurance Agency (UWV) or a court). A managing director can simply be dismissed by the AGM without the intervention of a court or the UWV. If no reasonable ground is present, any sanctions imposed will comprise, at most, fair compensation but will not nullify the dismissal.
Advice regarding the position of a managing director appointed under the articles of association
Do you have questions about the position of a managing director appointed under the articles of association or about dismissing such a managing director? Please do not hesitate to contact us at +31202351150 or via the contact form. We would be glad to advise and assist you.