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New insurance obligation for directors/major shareholders

On December 23, 2015 by WePayPeople

The rules for the insurance obligation for directors/major shareholders (DGA or “directeur-grootaandeelhouders” in Dutch) will change on 1 January 2016. This means that you will be classified as an employee in certain cases, which requires you to participate in employee insurance – specifically, the Sickness Benefits Act, the Law on Invalidity Insurance for Employees, the Law on Work and Income in Accordance with Capacity for Work and the Unemployment Act.

The new so-called Regulation Appointment Director/Major Shareholder only applies to statutory managers of a private limited liability company or a joint-stock company. It basically means that a director/major shareholder will be classified as an employee when he falls under the authority of the general meeting. As a director/major shareholder, you are the manager of a private limited liability company and you often possess a majority of the company’s shares. In that case, you are in control of the dismissal and appointment of directors, including yourself. This is recorded in the articles of the private limited liability company. There is no division of power and therefore no obligation to take out employee insurance.

Extension of the regulations

The old regulations resulted in a similar situation and the new rules strive to continue the old system as much as possible. Under pressure of jurisprudence, some changes will be implemented, however. It comes down to the fact that, starting in 2016, fewer directors/major shareholders will have an insurance obligation. This means the articles of the organisation give them authority and the power to decide about their own future and dismissal.

The regulations will therefore be expanded. A director/major shareholder who does not own a majority of the shares can still have authority and therefore not have an insurance obligation. According to the old system, this is the case when a director/major shareholder owns a majority of the shares together with his/her partner. This system will stay in place, but it will be extended to include children as well. In short, it will include more members of the director’s family. A director/major shareholder who owns a majority of shares together with his/her children will not be insured.

Equal suitability regulation

The equal suitablity regulation will also stay in place. When several directors own all shares together and these are evenly distributed between shareholders, no director can prevent his/her own dismissal. Nevertheless, the regulation states that they have no insurance obligation.

It should be noted that a private limited liability company can also assume the role of director. In that case, the director/major shareholder of the managing limited liability company is not insured. That has also been recorded in the new regulations.

Flex B.V. Act

If you still want insurance, you can take it out privately. The Flex B.V. Act also offers ways to record the director/major shareholder’s position of power in a statutory manner. You can also record the rules pertaining to the dismissal and appointment of directors.