Appointment and dismissal of statutory directors

Legal advice regarding the position of directors

The position of a statutory director, such as a managing director-major shareholder (DGA), differs fundamentally from that of a regular employee. This director has both a corporate law and an employment law relationship with the company. It is precisely this dual position that makes appointment and dismissal legally complex.

Dual relationship: corporate law and employment contract

The statutory director is appointed by the general meeting of shareholders (GM) or, in the case of a foundation, by the competent body. This appointment gives the director the authority to represent the company externally.

At the same time, there is often an employment contract that outlines agreements regarding working conditions, remuneration, notice periods, and any severance arrangements (such as a so-called ‘golden parachute’). It is essential that these two relationships are legally correctly documented to avoid risks upon termination.

Dismissing a statutory director: simpler, but risky

A statutory director can in principle be dismissed at any time by the body that appointed them, without prior permission from the UWV or the court. If the dismissal is legally valid, the employment contract also automatically ends, unless the parties have agreed otherwise or a dismissal prohibition applies.

Note: if the appointment decision was not legally valid, there is a risk that the director is legally not a statutory director (the so-called titular director). In that case, the regular dismissal rules apply, and prior permission is indeed required.

Rights upon dismissal

A statutory director cannot contest the dismissal with a request to restore the employment contract. However, they can make a claim for a reasonable compensation through the court if there is no valid reason or in cases of severely blameworthy conduct by the company.

Our support

We provide advice on:

• Legally correct appointment and dismissal procedures;
• Employment contracts for directors, including differing conditions;
• Assessment of dismissal prohibitions and compensation arrangements;
• Termination of management participations or combined positions.

Would you like to ensure that the appointment or dismissal of a statutory director is legally correct? Contact us for tailored advice.