The summer has officially begun and this is the time that also managing directors need to have a break and will leave the country for a nice holiday. What needs to be arranged so that business can continue as usual? How could it be arranged that the management board can duly resolve and the company can still be represented during the holiday season?
Article 2:244 paragraph 4 of the Dutch Civil Code states that the articles of association of the company must contain provisions in respect of the manner in which the company is temporarily managed if there are no directors in office (i.e. absent due to removal, resignation or death of the relevant managing director) or if they are prevented from acting / unable to act. Most articles of association have something stated like: “If a managing director is absent or unable to act, the remaining managing director(s) shall be temporarily charged with the management of the company. If the sole managing director is or all managing directors are absent or unable to act, a person appointed by the general meeting shall be temporarily charged with the management of the company.”
The question arises what should be understood under the term prevented from acting / unable to act? Does being on a holiday mean that you are unable to act and does it depend on whether or not you have internet access? The problem is that the answer to the question mostly depends on the circumstances of the situation.
In order to avoid any (legal) uncertainties and discussions, we recommend that all managing directors who will leave for a holiday, in advance of their departure, officially declare themselves unable to act for the holiday period. A written declaration addressed to the remaining managing director(s) or to the general meeting will be sufficient. In this manner the remaining managing director(s) shall be temporarily charged with the management of the company, and can therefore resolve and bind the company if necessary.
Another option would be to grant a written power of attorney to a co-managing director of the company, in order to represent the company and vote on your behalf on any board resolutions that must be taken during your absence. With respect to voting on your behalf on any board resolutions, please be aware that under Dutch law in principle resolutions of the board should be taken as a result of mutual consultation. Therefore, it should be considered that such power of attorney has a specific instruction of your vote and the subject to vote on.
We are happy to assist with your legal preparations for the holiday!
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