International Law

TRANSACTIONAL POWER OF THE MANAGING BOARD OF A DUTCH CARIBBEAN CORPORATION (II)

By Karel.Frielink

Only corporations may plead absence of representative authority

Under the Netherlands Antilles Corporate Code, i.e. Book 2 of the Civil Code, transactions with third parties that violate either the law or any limitations on the transactional powers of the board of directors of a corporation, are not enforceable against the corporation if the limitations are properly disclosed at the trade register. According to Article 2:10(3) Netherlands Antilles Civil Code only corporations may plead the absence of representative authority.

A counterparty wishing to withdraw from a legal act on that ground, may only rely on the fourth paragraph of Article 2:10 CC. This fourth paragraph was inspired by the thought that it is generally difficult for a counterparty to verify whether the representative authority has fulfilled its conditions, for instance an approval requirement according to the articles of incorporation, even if he knows or ought to know of the existence thereof.

It should be noted that Article 2:10(4) Civil Code deals with more or less factual questions, e.g. as to whether a certain condition has been fulfilled, and does not cover legal questions, e.g., as to whether an acting managing director is legally authorized to represent the company.

Karel Frielink
Attorney (Lawyer) / Partner

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Full post as published by Karel's Legal Blog on May 30, 2009 (boomark / email).