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Background: The Companies Act 2013 (“Act”) was recently enacted to meet the modern-day corporate governance challenges arising from stakeholders’ expectations. This note provides an insight into the duties and liabilities of the directors under the Act and the practical measures they may adopt to comply with these duties. Meaning of the term “Director.” The term “director” has been defined under Section 2(34) of the Act as a director appointed to the company’s board. The Act provides for different categories of directors, such as whole-time directors, managing directors, independent directors, nominee directors, alternate directors, and women directors. Concept of “officer in default” The Act attributes the liability on the ‘officer in default’, which may include the directors. The Act introduced the concept of the “officer who is in default”, and most of the sections prescribing a penalty for non-compliance hold the ‘officer in default’ liable for such a penalty. The term is defined in section 2(60) of the Act as under: Section 2(60) of the Act: “officer who is in default”, for any provision in this Act which enacts that an officer of the company who is in default shall be liable to any penalty or punishment by way of imprisonment, fine or otherwise, means any of the following officers of a company, namely: — Notably [refer point (vi)], the directors of the company who are not responsible for the day-to-day management of the affairs of the company can be held liable only in those cases where the default or the contravention of the provisions of the Act 2013 have occurred with the knowledge of such director, attributable through the board processes. Directors’ duties under Section 166[1] Besides the liabilities, the Act codifies directors’ duties and the relevant provisions of the Act, which apply to all categories of directors, including independent directors. These include acting in accordance with the articles of a company, acting in good faith to promote the objects of the company for the benefit of its members as a whole, and in the best interests of the company, its employees, the shareholders, the community and for the protection of the environment, avoid situations in which he may have a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the company and so on shall be void. Directors’ liabilities, in general Class action remedy The company can initiate legal action against directors if they breach their duties. The Act has also introduced the novel concept of ‘class action suits’ under the Act. Under this concept, a group of shareholders (constituting a minimum of 100 shareholders or such minimum percentage of total shareholders as may be prescribed) can bring an action on behalf of all affected parties, against the company and/or its directors, for any fraudulent or wrongful act or omission of conduct on its/their part. Further, the Act proposes to set up a National Company Law Tribunal, which is expected to provide a speedier and more efficient remedy. [1] Contravention of provisions of Section 166 (relating to codified duties) is punishable with a fine which shall not be less than Rs.1 Lakh but which may extend to Rs.5 Lakhs.

Main rule in Dutch law is that a director or an officer of a legal entity is not personally liable for the debts of the legal entity. However, situations can arise in which this limitation of liability will be breached (‘piercing the corporate veil’). In our legal system we distinguish internal liability and external liability. Internal liability Internal liability embraces liability to other bodies of the entity such as the General Meeting of Shareholders. A director or officer is obliged towards the legal entity to perform its duties properly. He is responsible for the general state of affairs and is fully liable in case of mismanagement. The latter charge can only be refuted in case, no serious accusations can be made to the director or officer (also in view of the tasks assigned to others) and he has not been negligent in taking measures to avert the consequences of mismanagement. External liability External liability embraces liability to third parties outside the legal entity. Once again, our legal system distinguishes two situations: the normal situation and the situation in case of a bankruptcy. Normal situationIn the normal situation a director or officer is legally liable, besides the liability of the legal entity itself, to third parties with whom the legal entity has traded if the director or officer has committed an unlawful act (onrechtmatige daad, art. 6:162 BW) against that third party. The director or officer must then be personally blameworthy for serious misconduct. Various criteria have been developed for this in Dutch case law. In this situation an unlawful act exists if the director or officer knew or ought to have known when entering into an agreement, that the legal entity would not be able to meet its obligations under the agreement and that the legal entity would not provide sufficient opportunity for recovery. Another situation which can result in an unlawful act is when the director or officer deliberately prevents the legal entity from fulfilling its obligations. BankruptcyIn case of a bankruptcy a director or officer is liable for the full deficit if the trustee asserts and proves that the board has manifestly improperly performed its duties and it is plausible that it is an important cause of the bankruptcy. Importantly, where there is no proper accounting or administration or when the financial statements and/or the annual report are not published in time, it is assumed that there is mismanagement. In that case, mismanagement is also presumed to be the cause of the bankruptcy. The director or officer can only escape liability by demonstrating a plausible cause for the bankruptcy other than mismanagement.   Special liabilities Apart from these general liabilities, numerous special liabilities are regulated in specific law. One of them should be mentioned here specifically. It concerns the case where the board executes a resolution to dividend distribution while it knew or should reasonably have foreseen that the entity would no longer be able to pay its debts after the distribution. Legal entity as director Another important point is that for directors’ and officers’ liability, one can look through the legal entity. That is, if a legal entity is the director, liability will also fall on the director of that legal entity, and so on. This is possible until a natural person is found, so that as far as liability concerned, a natural person cannot hide behind a legal entity as director. There is much more to say about directors’ liability in the Netherlands but if you are or will be dealing with it and would like to have more information about it, please contact my office by phone or e-mail. J.M.A.J. ThielenBierman AdvocatenTel. 0031 344  677188 thielen@bierman.nl      M.R. van de ZandBierman AdvocatenTel. 0031 344  677188zand@bierman.nl

There are many different situations in which a director can be personally liable under English law.

Be aware that:
Negotiating international contracts is more than negotiating prices, technical specifications and delivery dates: the commercial and financial success of any (international) contract will also depend on the legal framework (qualification of the contract, liability clauses, applicable law, jurisdiction, regulatory rules on data protection, AML, consumer protection…).

The new rules concerning the fast-track procedure for obtaining a permanent residence permit in Cyprus on the basis of Regulation 6(2) of the Aliens and Immigration Regulations (investment in the Republic of Cyprus) came into force on 2 May 2023.The new rules aim to ascertain the robustness and financial stability of the applicants.Read here the main provisions of the new policy for permanent residence by investment: https://lnkd.in/dm4Mt6T9

We are pleased to announce that Cuesta Law Firm and the firm’s lawyers have been recognized by the prestigious and one of the largest international legal review publications, The Legal 500. Law firm partners Lada Riisna and Britta Oltjer-Jaadla have been recognized as leading legal advisors in the field of dispute resolution. For the first time, Cuesta Law entered the list of Estonian law firms that have been recognized in the mentioned field. The publication highlights that Lada Riisna and Eva Mägi are experienced practitioners in the financial law disputes, as well as in project finance and banking law, specializing primarily in regulatory issues.  Jaak Siim was recognized as a next generation partner in the field of tax. The release states that the Cuesta Law Office covers a range of tax services, from defending tax-related actions to advising clients on matters such as VAT taxation on small boat transactions. Jaak Siim regularly engages with representing clients in tax disputes and audits before the Tax and Customs Board. We would like to thank all clients and partners for whom and with whom the work done has helped us to receive recognition!

The prestigious international independent professional legal research company Chambers Europe 2023 has recognized Cuesta Law Office for its high-quality work in the field of tax law.Individually, Cuesta attorney at law and partner Jaak Siim has also been recognized for outstanding results in the same field for several consecutive years. We thank our clients for their excellent cooperation and continued trust

Did you know that the Cyprus legislation on trusts does not impose any restrictions on neither the appointment nor the powers of protectors? This is something which gives a great degree of flexibility to the settlors on the one hand to appoint whoever they trust on this position and on the other hand to grant such person any powers, which under all circumstances should be explicitly provided in the trust deed. Our firm can provide advice and assistance on a wide array of issues concerning Cyprus International Trusts, including the appointment of protectors as well as drafting of specialised trust deed provisions. https://lnkd.in/ekpjkvJ6

When entering into an agreement, an attempt is usually made to record the rights and obligations of the parties as well and completely as possible. Even if the provisions of the agreement or the conclusion of the agreement itself have been thought through, it is natural that not everything goes as expected. What can you do then? Martijn van de Zand discusses the possibilities in the blog here. https://kennis.bierman.nl/blog/de-samenwerking-loopt-spaak-na-het-sluiten-van-de-overeenkomst-wat-nu

The Bundestag has passed a bill that allows the possibility of a virtual and hybrid general meeting even without a statute regulation! https://lnkd.in/eCF84pvD