International directors' liability is the personal responsibility of a director for damage suffered by the company, shareholders, or third parties due to improper management in a cross-border context. At Musch Legal, we observe that Dutch directors holding formal positions in foreign subsidiaries or joint ventures systematically underestimate this risk. Personal claims amounting to millions are not uncommon — especially under English and German law.
What is the legal problem? (Why does foreign management affect my private assets?)
In principle, a director acts on behalf of the company. In the event of a gross breach of duty or culpable conduct, this protective veil is lifted. Internationally, this veil is breached more quickly than is customary in the Netherlands. Bankruptcy trustees, the tax authorities, shareholders, and third parties can initiate proceedings in multiple jurisdictions. A Dutch director of a foreign subsidiary can be prosecuted criminally in the UAE or the US, whereas in the Netherlands he would only be civilly liable.
What does the law say? (Which articles of law apply to me as a director?)
Under Dutch law, Article 2:9 of the Civil Code governs internal liability towards the company; Articles 2:138/248 of the Civil Code govern liability in the event of bankruptcy due to manifestly improper management. Article 6:162 of the Civil Code covers external liability arising from tort. Under English law, the Companies Act 2006 and the Insolvency Act 1986 (wrongful trading, Section 214) regulate severe personal liability. German law applies Geschäftsführerhaftung under Section 43 of the GmbHG.
Furthermore, directors can be held personally liable for sanctions, anti-corruption, and the GDPR. Section 14 of the UK Bribery Act 2010 and the US Foreign Corrupt Practices Act contain direct personal criminal liability. For sources, see wetten.overheid.nl for the Civil Code and eur-lex.europa.eu for EU regulations.
Aspect
Netherlands
United Kingdom
Germany
Main rule
Article 2:9 Civil Code (serious misconduct)
Companies Act 2006 (duty of care)
Section 43 GmbHG (Sorgfalt)
Bankruptcy
Article 2:138/248 Civil Code (manifestly improper management)
Wrongful trading (section 214 IA 1986)
Insolvency dragging on (paragraph 15a InsO)
Threshold
Serious reproach required
Strictly: should have known
Gross negligence
Typical damage
Deficit in the estate
Amount that the director should have prevented
Damage to creditors
Aspect
Netherlands
United Kingdom
Germany
Main rule
Article 2:9 Dutch Civil Code (serious reproach)
Companies Act 2006 (duty of care)
Section 43 GmbHG (Care)
Bankruptcy
Article 2:138/248 Dutch Civil Code (manifestly improper management)
Wrongful trading (Section 214 IA 1986)
Insolvency dragging (Section 15a InsO)
Threshold
Serious reproach required
Strict: should have known
Grove Negligence
Typical damage
Deficit in the estate
Amount that the director should have prevented
Damage to creditors
What risks do companies face? (What damage threatens me personally?)
Personal liability can amount to millions. Directors lose private assets, home, and pension. Criminal prosecution leads to reputational damage and disqualifications from directors. In cross-border companies, multiple proceedings may run in parallel. Directors' and Officers' Liability (D&O) insurance often does not cover all scenarios, certainly not in cases of intent, fraud, or alleged corruption.
Practical example from our practice (How did this play out for a client of Musch Legal?)
Musch Legal recently advised a Dutch director who was formally a director of a British subsidiary without actively involving himself in that company. In the event of bankruptcy, the British insolvency practitioner initiated wrongful trading proceedings under Section 214 of the Insolvency Act 1986. The director was held personally liable for £1.2 million. With timely withdrawal as a director, a functional separation regime, and additional D&O coverage, this exposure could have been virtually entirely avoided.
What can you do? (What steps are you taking today?)
Review your formal directorships worldwide. Maintain corporate housekeeping: minutes, annual accounts, and board resolutions. Take out international D&O insurance with adequate coverage and without exclusions for the relevant countries. Document decisions, especially in the event of financial concerns or restructuring. For high-risk markets (UAE, China, US): consider a local director without Dutch exposure. Have your board position periodically reviewed by Musch Legal. See also our article on Joint Venture conflicts.