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Conflict of interest within company: Dutch Supreme Court sets rules

14/10/2011

If a director has a personal interest in a transaction carried out by the company, such transaction may be considered invalid under Dutch law. On 14 October 2011, the Dutch Supreme Court confirmed that the criterion is that there are reasonable grounds to question that the director acted solely in the interest of the company, thereby obeying the required level of integrity and objectiveness. Furthermore, the Dutch Supreme Court ruled that a director is obliged to inform the Shareholders’ Meeting of a (potential) conflict of interests, even when the articles of the company state that a director may nonetheless represent the company despite the existence of a conflict of interests. However, if the director fails to do accordingly, this does not automatically mean that he can no longer represent the company.

 Click here to read the judgment.

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