A director is the person who, based on the articles of association, is in charge of the day-to-day management of a legal entity. The directors collectively are referred to as the board. In many companies, they are also referred to as directors and collectively as the board of directors.
The board and each director individually must manage the legal entity. That means not doing wrong things and not standing aside. If you do, you may face directors' liability.
The articles of association often stipulate how decision-making within the board takes place and what the powers of individual directors are. The general meeting may also be able to give instructions to the board.
A mutual division of tasks may be agreed within the board. This is usually done in board regulations. However, this does not mean that you are not responsible as a co-director.
Although a director may be employed and receive a salary from the company, regular employment law does not apply to a director. Thus, a director has no severance protection. If he wants severance pay, he must be expressly agreed.
Incidentally, it is important to know that working as a director through a management agreement does not automatically mean that you are not an employee for social security contributions. Even in the case of a management fee, there may be an obligation for the company to pay income tax and social insurance contributions.
In NVs and BVs, it is possible to work with executive and non-executive directors. The executive directors then have the same duties as ordinary directors. The non-executive directors do not have an executive role, but they help decide on everything. They have a more supervisory role within the board.
If you would like more information on the powers and responsibilities of a director or would like to know more about management agreements, please contact us. We will be happy to help.
