Unqualified Directors in Insolvency: A Comparative Study on the Desirability of Civil Law Directors' Disqualification in the Netherlands
| Published date | 01 June 2014 |
| Date | 01 June 2014 |
| DOI | http://doi.org/10.1002/iir.1224 |
| Author | Tom Reker |
Unqualified Directors in Insolvency: A
Comparative Study on the Desirability of Civil
Law Directors’Disqualification in the
Netherlands
Tom Reker*
Leiden Law School, Leiden University, Leiden, The Netherlands
Abstract
The current global economic, and therefore political, climate has given rise to legisla-
tive responses within insolvency law, aiming to increase the legal arsenal against fraud-
ulent behaviour. A recent proposal of the Dutch government to introduce a civil law
disqualification instrument is a quintessential example of this tendency. In this article,
the usefulness of this proposal is questioned. The usefulness of the civil law instrument
is tested by comparing it with its Dutch criminal law equivalent. Furthermore, several
proposals for alteration, based on foreign counterparts, will be formulated in order to
increase the effectiveness of the aforementioned arsenal as a whole. Comparisons are
made with similar instruments in Australia, England, Germany and the USA.
Throughout the article, it will be asserted that, in order for the proposal to optimally
reflect the principles of effectiveness and its civil law nature, a reallocation of certain
elements of the proposal to its criminal law equivalent is required. Copyright ©
2014 INSOL International and John Wiley & Sons, Ltd
I. Introduction
Governmental policy, both nationally and internationally, has always been influenced
by economic tendencies. Although an accurate response to short-term and somewhat
known macroeconomic problems is generally considered as a daily task of the legisla-
tive branch of any government, it is beyond doubt that certain large-scaled and long-
termed incidents require a response that can drastically changethe law as we know it.
*E-mail: tomreker_1@hotmail.com
Tom Reker recently graduated from the Leiden Law
School, Leiden University, Leiden, The Netherlands.
He has been working as a junior researcher under
the supervision of Professor Bob Wessels. He thanks
professor Wessels for his comments on an earlier draft.
The opinions expressed in this article are the personal
views of the author.
Copyright © 2014 INSOL International and John Wiley & Sons, Ltd Int. Insolv. Rev., Vol. 23: 144–169 (2014)
Published online 12 June 2014 in Wiley Online Library
(wileyonlinelibrary.com). DOI: 10.1002/iir.1224
The current global economic recession is a quintessential example of such an incident.
AndnowheremorethanintheEuropeanUnion(EU),bothwithinitsstatesandthe
Union itself, do we find proposals to increase the arsenal of legal instruments in order
to respond more effectively to fraudulent behaviour.
One of the more recent manifestations of this tendency is a proposal of Fred
Teeven, the Dutch State Secretary of Security and Justice, to create a European
register of fraudulent directors. Such a register wouldbe used to prevent disqualified
directors to continue their practices in other member states. This proposal can be
considered as part of an approach within Dutch policy to respond firmer to bank-
ruptcy fraud within the Netherlands. It can also be directly linked to another part
of this approach: the introduction of a civil law disqualification of directors in the
event of a bankruptcy.
1
The introduction of this instrument raises several questions. Because disqualifica-
tion of any director within the Netherlands is alreadypart of Dutch criminal law, it is
interestingto wonder how this proposal can be consideredinnovative. Moreover, one
might question to what extent the proposal specifically differs from the sanction in
criminal law. Moreimportantly, does the proposal addany value to the current arse-
nal at all, and to what extent might it require alteration? This final question can, in
my opinion, best be answered from an international and comparative perspective.
This article will first examine the Dutch proposal to create a civil law disqualifi-
cation of directors in the event of a bankruptcy. Following this examination, it will
proceed to compare the proposal with the already existing Dutch criminal sanction
of disqualification. After that, several possible alterations to the proposal will be
discussed, on the basis of differences between the proposal on one hand and its
British, American, Australian and German equivalents on the other. The question
whether a Dutch civil law directors’disqualification instrument can be considered
desirable (and to what extent this is the case) will be a recurring question in these
examinations. This article will end by concluding that the proposal does indeed
add value to the existinglegal arsenal and can thereforebe considered to be desirable.
It will, however,also assert that the currentstate of the proposal might not adequately
conform to the system of Dutch law and general indications concerning the effecti-
veness of disqualification instruments. As such, this article will formulate several
considerations regarding the improvement of the proposal. In doing so, it will also
contribute to sketching a general model of a directors’disqualification instrument
in insolvency law.
II. The Dutch Proposal
A. Reasons for and objectives of the proposal
It is important to first understand the underlying reasons for and objectives of the
Dutch proposal. The most prominent cause for the creation of a civil law directors’
1. The online version of the proposal (in Dutch;
hereinafter, proposal) can be found at Dutch Central
Government: <http://www.rijksoverheid.nl/
documenten-en-publicaties/kamerstukken/2013/03/
29/wetsvoorstel-civielrechtelijk-bestuursverbod.html>
accessed 19 December 2013.
Unqualified Directors in Insolvency 145
Copyright © 2014 INSOL International and John Wiley & Sons, Ltd Int. Insolv. Rev., Vol. 23: 144–169 (2014)
DOI: 10.1002/iir
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