Whether it concerns the top of the company or the General Meeting of Shareholders, a decision to change leadership always raises important questions. What are the steps and considerations?

Dismissing an ‘ordinary’ employee often requires going to the UWV or the court. For statutory directors, this is different. The General Meeting of Shareholders (GMS) can decide to dismiss a director without prior permission. However, there must be reasonable grounds for the dismissal. If these are lacking, the employer must pay fair compensation. In recent years, many directors have been awarded such compensation.

But fair compensation is no guarantee. In a recent case, the court ruled that the requirements for dismissing a statutory director are less strict than for an ordinary employee. The court emphasized the unique position of the director as the highest executive with great responsibilities. The GMS must have the freedom to replace the director if necessary for the company. Such dismissals are therefore primarily business decisions, where the court can only review to a limited extent.

This ruling aligns with the saying ‘tall trees catch much wind’. Although this limited review does not directly follow from the law, it is understandable that a statutory director is more readily held accountable for disappointing business results. However, dismissing a director is not a foregone conclusion. It remains crucial to approach this carefully and to involve employment law dismissal grounds in this process. A thorough investigation into reasonable dismissal grounds is important. Both employers and directors facing dismissal would do well to seek sound legal advice to protect their interests and take the right steps.

You can find the full ruling here: https://lnkd.in/eggK2E7t