Directors who pay remuneration to themselves or their companies without a resolution to that effect by the General Meeting of Shareholders (GMS) run a serious risk. The District Court of East Brabant and the Court of Appeal in \u2019s-Hertogenbosch have left no room for doubt on this matter in a series of rulings: remuneration exceeding a reasonable salary is, in principle, unduly paid and must be repaid. Furthermore, any director who acts in breach of the articles of association exposes themselves to personal liability under Article 2:9 of the Dutch Civil Code.<\/p>\n
The facts<\/strong><\/p>\n The case centres on Monitor Management B.V. and SmartVital B.V., two companies in which directors\u2019 duties were carried out under management contracts with the directors. The articles of association of both companies stipulated that the remuneration and other terms and conditions of employment for each director were to be determined individually by the General Meeting of Shareholders (GMS). This provision in the articles of association was in line with Article 2:245(1) of the Dutch Civil Code, which assigns the power to determine remuneration to the GMS unless the articles of association provide otherwise. Despite this clear statutory basis, following the dismissal of a co-shareholder as a director by the Enterprise Chamber, the directors\u2019 remuneration was significantly increased from an average of \u20ac8,000.00 to between approximately \u20ac13,000.00 and \u20ac14,000.00 per month, without the AGM having resolved to do so (para. 4.8, District Court of Oost-Brabant, 28 August 2024, ECLI:NL:RBOBR:2024:3851).<\/p>\n The Enterprise Chamber (OK) of the Amsterdam Court of Appeal had previously found mismanagement in this case and annulled the relevant AGM resolutions concerning the remuneration. Pursuant to Section 2:16(1) of the Dutch Civil Code, those decisions are binding on all parties as soon as the legal entity was a party to the proceedings.<\/p>\n The court's assessment<\/strong><\/p>\n The District Court of East Brabant ruled that the absence of a legally valid AGM resolution renders the payments, in principle, unduly paid, unless there is a basis in a reasonable wage (para. 4.8). In doing so, the court applied Article 7:405(2) of the Dutch Civil Code: if the amount of the remuneration has not been determined by the parties, the customary or a reasonable remuneration is payable. Since the AGM had never passed a resolution on an amount higher than \u20ac8,000.00 per month, and Monitor and SmartVital themselves considered this amount to be reasonable, there were no grounds for setting a higher salary. The payments above that threshold were therefore deemed to be unduly paid (paragraphs 4.15\u20134.22).<\/p>\n In its final judgment of 31 March 2026, the Court of Appeal in \u2019s-Hertogenbosch confirmed this line of reasoning. The Court of Appeal held that the directors were seriously at fault. Acting in contravention of provisions in the articles of association intended to protect the legal person constitutes, in principle, serious culpability within the meaning of Article 2:9 of the Dutch Civil Code (paragraph 3.11), as follows from established case law of the Supreme Court (Supreme Court 10 January 1997, ECLI:NL:HR:1997:ZC2243, Staleman v Van de Ven; Supreme Court 29 November 2002, ECLI:NL:HR:2002:AE7011, Schwandt). The directors\u2019 argument that a third director had approved the payments did not detract from that conclusion. Section 2:9 of the Dutch Civil Code assumes that the board acts collectively, and in the event of a breach attributable to at least one director, all directors are, in principle, jointly and severally liable (para. 3.13).<\/p>\n The Court of Appeal also rejected the directors\u2019 argument that, pursuant to Article 7:405(2) of the Dutch Civil Code, they were entitled to a sum higher than \u20ac8,000.00 per month (para. 3.15). The system under that provision requires the parties to agree on the remuneration; if this has not been done, the customary or reasonable remuneration applies. Since the AGM never set a higher amount, and the directors themselves had ensured that this did not happen, there are no grounds for determining a higher amount. After all, it was partly due to the conduct of the directors themselves that no decision was reached at the AGM (para. 3.16).<\/p>\n The period of suspension: a special exception<\/strong><\/p>\n An interesting nuance arose during the period in which the directors were suspended by the Enterprise Chamber and a third party acted as an Enterprise Chamber director. The Court of Appeal considered that the suspension meant that the directors could no longer exercise their powers and that the management agreement could therefore not continue (grounds 3.17\u20133.18). During that period, the Enterprise Chamber director had taken a decision on the amount of remuneration on the basis of a separate agreement. As that basis existed, the payments made during that period were not regarded as undue.<\/p>\n Liability under Articles 2:9 and 2:11 of the Dutch Civil Code<\/strong><\/p>\n The Court of Appeal based the liability primarily on Article 2:9 of the Dutch Civil Code (paragraphs 3.9\u20133.14). That provision stipulates that every director is obliged towards the legal person to perform his duties properly and that, in the event of serious culpability, the director is jointly and severally liable for the damage suffered by the company as a result (Supreme Court 10 January 1997, ECLI:NL:HR:1997:ZC2243, Staleman\/Van de Ven). In principle, serious culpability arises where a director acts in breach of provisions in the articles of association intended to protect the legal person, such as a remuneration provision which vests the power with the General Meeting of Shareholders (Supreme Court 29 November 2002, ECLI:NL:HR:2002:AE7011, Schwandt).<\/p>\n Pursuant to Article 2:11 of the Dutch Civil Code, the liability of a legal person acting as a director also extends to the directors of that legal person. As the directors acted through their sole traders or management companies, the liability extended to the underlying (indirect) directors. In this respect too, the Court of Appeal followed the line previously set out by the Supreme Court (Supreme Court 8 April 2005, ECLI:NL:HR:2005:AS5010).<\/p>\n What does this mean in practice?<\/strong><\/p>\n This case demonstrates that paying directors\u2019 remuneration without a valid resolution of the general meeting of shareholders can have far-reaching financial consequences. Directors who pay themselves or their companies remuneration exceeding the statutory limit of a reasonable salary run the risk that such payments will be deemed undue and will have to be repaid. It does not matter whether the work was actually carried out: even for services actually rendered, only a reasonable wage may be claimed if there is no legally valid resolution authorising a higher amount.<\/p>\n Furthermore, acting in breach of the remuneration rules laid down in the articles of association entails the risk of personal liability under Article 2:9 of the Dutch Civil Code. This liability applies to all directors jointly, even if only part of the board was directly involved in the payments in question. As a director, you should therefore ensure that a remuneration resolution is adopted in a timely and proper manner, and that any increases in remuneration are always submitted to the AGM.<\/p>\n You can read the full judgment of the District Court of Oost-Brabant (28 August 2024) here<\/a>You can read the interim judgment of the Court of Appeal in \u2019s-Hertogenbosch (17 June 2025) here<\/a>You can read the final judgment of the Court of Appeal in \u2019s-Hertogenbosch (31 March 2026) here<\/a>.<\/p>\n If, as a director or shareholder, you have any questions about the correct procedure for determining directors\u2019 remuneration, or if you are facing a claim for undue payment, please do not hesitate to contact the corporate law solicitors at SPEE advocaten & mediation. We would be happy to advise you on your position and the steps to be taken.<\/p>\n mr. Diederick Luijckx, Attorney-at-law<\/p>","protected":false},"excerpt":{"rendered":" Bestuurders die zichzelf of hun vennootschappen een bezoldiging uitbetalen zonder dat de Algemene Vergadering van Aandeelhouders (AVA) daartoe heeft besloten, lopen een serieus risico. De rechtbank Oost-Brabant en het gerechtshof \u2019s-Hertogenbosch lieten daarover in een reeks uitspraken geen twijfel bestaan: een bezoldiging boven het redelijk loon is in beginsel onverschuldigd betaald en moet worden terugbetaald. 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