Dutch law has extremely broad liability for corporates and their directors for regulatory and criminal sanctions. A brief overview.

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Corporate liability for regulatory &
criminal sanctions under Dutch law
When it comes to regulatory and criminal liability, Dutch law does not distinguish between
natural persons and bodies corporate. In this respect, the Dutch system is fundamentally
different from all other legal systems in Europe.
Overview
The Dutch Criminal Code holds a general provision on
corporate criminal liability. In theory, corporates can commit
and be prosecuted for all statutory criminal offences. In
addition, the Dutch Criminal Code creates personal criminal
liability for officers, directors and management that have
“factually directed” the conduct of a guilty corporate. In
recent years, this corporate and personal liability has been
expanded to also encompass all regulatory and administrative
fines.
When has a corporation ‘committed’ an offence?
Only natural persons can act in the physical sense. However,
acts that fall “within the sphere” of a corporate can be
attributed to that corporate. For example, employees’ acts
within the course of the corporate’s everyday ‘normal
business’ may lead to corporate liability, or if the corporate
benefits (financially or other ways) from the employee’s
wrongful acts. By way of illustration, if an employee of a
chemical plant carelessly causes a chemical spill, that conduct
will generally be attributed to the corporate, resulting in
criminal liability for the corporate negligently causing the spill.
Liability for management, officers and directors
All persons that are aware of the risk that a criminal act
may be committed by the corporate, that have the authority
to take preventive or remedial action, but fail to do so
adequately, can be held liable for having “factually directed”
the corporate’s act. Formal authority is not a prerequisite.
So, for example, a founder of a corporate may no longer
have any formal link to the business, but in practice may still
control the corporate’s policies. Such an informal leader may
well be considered to have factually directed the corporate’s
misconduct if that leader was aware that those policies
created the risk of an offence being committed. In practical
terms, this means that all officers, directors and management
that were aware of the risk of an illegal act occurring but
failed to take adequate remedial action, can be held directly
and personally liable in both regulatory and criminal matters.
This liability can extend “up the chain” to encompass
individuals within a holding company – whether domestic
or abroad –where the acts were committed by a Dutch
operating company. If, for example, an Italian director of a
Luxemburg holding company is aware of the risk of an illegal
act occurring in a Dutch subsidiary, but fails to take adequate
preventive measures, that director is liable in the Netherlands.
Penalties
A corporate can be sentenced to the administrative or criminal
fines as set out in the statute for that specific offence.
Individual officers, directors or management can be sentenced
to all the statutory penalties for the relevant offence, including
a prison sentence in criminal cases.
More information
For more information please contact:
Dr. Mr. D.V.A. (Dian) Brouwer
Investigations & Corporate Criminal Defence
T +31 30 2121 740
M +31 6 52 643 924
E dian.brouwer@cms-dsb.com

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