Dismissing a statutory director: the advisory vote and the pitfall of the fait accompli
The CEO of a Dutch subsidiary of a Norwegian seafood producer is dismissed. Even before the general meeting takes the decision, the company has already circulated an internal message that he is leaving, blocked his phone, deregistered him as a director at the Chamber of Commerce, and offered him a settlement agreement. The court holds that the dismissal decision was not validly taken and that the company acted in a seriously culpable manner. Yet the fair compensation amounts to only €10,000 (ECLI:NL:RBOVE:2026:4528). That outcome shows how a director's dismissal goes wrong procedurally, and why a breached right to advise does not automatically yield high compensation.
The director's dual legal relationship
A statutory director (bestuurder) stands in a dual legal relationship with the company: as a director under company law, and as an employee under employment law. Dismissal as a director runs via Section 2:244 DCC; dismissal as an employee via employment law. Since the Supreme Court's judgments of 15 April 2005, a valid dismissal decision by the general meeting in principle also terminates the employment contract, unless a statutory prohibition on notice or a contrary agreement stands in the way (ECLI:NL:HR:2005:AS2030, Unidek). Disputes over that employment relationship go not to the subdistrict court but to the commercial court, even after the company-law bond has been severed (Section 2:241 DCC; ECLI:NL:HR:1995:ZC1887).
The right to advise and the fait accompli
In the general meeting the director has an advisory vote (Section 2:227(7) DCC), including where that meeting concerns his own dismissal. That right is not intended as a formality: the advice must still be capable of being meaningful. That means the director must be given the opportunity to give reasoned advice and that this advice can genuinely contribute to the decision-making. Where the advice is given merely for form's sake because the outcome is already fixed, the right to advise is breached and the decision is voidable for a defect in its formation (Section 2:15(1)(a) DCC).
That is precisely where it went wrong here. Before the general meeting had taken place, the company had already announced internally that the CEO would leave, blocked his phone, deregistered him as a director at the Chamber of Commerce, and discussed a final settlement and a settlement agreement with him. The court infers from this that the dismissal was already settled for the company and that the director's advice could no longer have any influence (paras. 5.9-5.10). The decision is therefore voidable (para. 5.10), and that conduct is seriously culpable (para. 5.11).
The error is not unique. In a Limburg case a dismissal decision failed on the same ground; because there the director claimed annulment of the decision, the decision fell away and the employment relationship continued (ECLI:NL:RBLIM:2019:125). That explains why it went differently here: the CEO withdrew his request for annulment (para. 5.6) and sought only fair compensation, so that the decision, though voidable, remained in force. It can also go well: where the meeting is convened in good time, the agenda names the dismissal, and the director can actually cast his advisory vote, the decision stands (ECLI:NL:RBNHO:2026:1375).
A reasonable ground for dismissal after all
A defectively taken decision does not mean the dismissal is groundless. For a statutory director too, the company needs a reasonable ground to give notice of the employment contract (Section 7:669 DCC). The company relied on the "h ground" (Section 7:669(3)(h) DCC): an irreparable breakdown of trust. The statements of the fellow board members and the parent company showed that the CEO had repeatedly been addressed about his performance, among other things around a product recall and a warning from the food-safety authority, without this leading to any change. The court finds that breakdown of trust sufficiently established (para. 5.23). Redeployment was not appropriate at board level (para. 5.24). The notice itself therefore stands; unlike with an ordinary employee, a defect here does not lead, for a statutory director, to restoration of the employment relationship, but at most to fair compensation.
The paradox: seriously culpable, yet low compensation
Here lies the heart of the matter. The procedural defect makes the company seriously culpable, which gives a right to fair compensation. Its amount is assessed by reference to the factors from New Hairstyle and ServiceNow (ECLI:NL:HR:2017:1187; ECLI:NL:HR:2018:2218): among others the degree of culpability, the "value of the employment contract" and the consequences of the dismissal. Decisive is that the ground for dismissal was fully made out. The court considers it implausible that the director's advice would have led to a different outcome, so that he would have been dismissed even without the defect (para. 5.27). There is, moreover, no serious loss of income, given his age and experience. That is why the court arrives, despite the seriously culpable conduct, at fair compensation of €10,000 (para. 5.29).
The bonus claim also failed. The court holds that its award was not entirely discretionary, so that the director could in principle claim it (para. 5.33). But the scheme required, for payment, a "non-terminated position" at the moment of payment in April, and at that moment the director had been dismissed. A reliance on reasonableness and fairness failed, because he had not sought annulment of the dismissal decision (paras. 5.34-5.35).
What does this mean for the company and the director?
For the company, the lesson is that a solid ground for dismissal does not save a sloppy process. Anyone who hollows out the advisory vote by presenting the director with a fait accompli renders itself seriously culpable, even where the dismissal is substantively justified. The safe route is to convene the meeting in good time and with a proper agenda, give the director a genuine opportunity to advise, and only then take irreversible steps.
For the director it works both ways. The procedural defect provides ammunition: a voidable decision and a ground for fair compensation. Anyone seeking to recover the full loss should, however, realise that this compensation remains modest where the ground for dismissal is fully made out and loss of income is absent, and that a claim such as a bonus may founder on a single "non-terminated" condition.
Frequently asked questions
Does a statutory director have a right to advise on his own dismissal?
Yes. In the general meeting the director has an advisory vote (Section 2:227(7) DCC), including where it concerns his own dismissal. That advice must be meaningful: it must still be able to genuinely contribute to the decision-making. Where the director is presented with a fait accompli, the right to advise is breached and the decision is voidable.
Does a breached right to advise lead to high compensation?
Not automatically. It makes the company seriously culpable, but the fair compensation remains low where the ground for dismissal is fully made out and there is no serious loss of income. In the case discussed, a breached right to advise led to compensation of €10,000, because the dismissal would have followed in any event.
Does the employment contract end automatically with the director's dismissal?
In principle, yes. Since the Supreme Court's judgments of 15 April 2005, a valid dismissal decision by the general meeting also terminates the employment contract of the statutory director, unless a statutory prohibition on notice or a contrary agreement stands in the way.
Cited case law
Supreme Court
- ECLI:NL:HR:2005:AS2030 (Unidek): a valid dismissal decision by the general meeting in principle also terminates the statutory director's employment contract
- ECLI:NL:HR:2017:1187 (New Hairstyle): factors for assessing fair compensation
- ECLI:NL:HR:2018:2218 (ServiceNow): fair compensation for seriously culpable conduct; weighing the expected duration of the employment contract
- ECLI:NL:HR:1995:ZC1887: the commercial court remains competent for employment disputes with a (former) director
District courts
- ECLI:NL:RBOVE:2026:4528: dismissal decision voidable for a breached right to advise (fait accompli); seriously culpable, but fair compensation of €10,000 given the fully made-out ground for dismissal
- ECLI:NL:RBLIM:2019:125: dismissal decision not validly taken for conflict with the advisory vote; the employment contract continued
- ECLI:NL:RBNHO:2026:1375: dismissal decision valid; convocation and agenda in order, advisory vote cast and the duty to hear observed
See also
- Shareholder disputes: disputes within the company and the route to court
- Buying out a fellow shareholder: three routes out of a conflict between shareholders