The motto of the Curaçao Monuments Fund Foundation captures very well what is a regulator’s most important task: “It is a matter that concerns you”. This also applies to the management and Supervisory Board members of a company. According to the law, they must put the company’s interests first in all of their actions and decisions. Preservation for the future is the company’s ultimate interest, as is the case for a monument. It must remain intact. Supervisory Board members are the watchdogs of everything that could endanger the company’s continuity. Three recent court rulings in Curaçao cases in July 2018 have made this abundantly clear once more.
“Supervisory Board members are the watchdogs of everything that could endanger the company’s continuity.”
In its ruling of July 6, 2018, the Supreme Court rejected the appeal in cassation of, among others, the then Supervisory Board members of IUH and RdK against the inquiry decisions of the Common Court of Justice in 2016 and 2017. In these decisions, the Court had ruled that Aqualectra (IUH N.V.) and RdK N.V. had been mismanaged. Thus, it was definitively established in court that the former bodies, including the Supervisory Board of Aqualectra and RDK, were guilty of mismanagement. What did these Supervisory Boards do wrong? They started to run the companies themselves. In doing so, they neglected the legally defined division of roles (the Management Board manages and the Supervisory Board members supervise the management). They gave priority to interests other than the company’s preservation. As a result, the continuity of these companies was seriously compromised. Now, the next step is that these Supervisory Board members can be held personally liable.
The second case concerned the dismissal of former Central Bank president Emsley Tromp. In its decision of July 13, 2018, the Court of First Instance of Curaçao considered that the then Supervisory Board of the Central Bank of Curaçao and St. Maarten (which by now has stepped down) had failed to update the (outdated) staff regulations. The existing ambiguity about the legal position of the former Central Bank president is, according to the Court, a direct consequence of the absence of these updated regulations. It didn’t help Tromp, though: all of his claims against the Central Bank were rejected by the Court. What did these Supervisory Board members do wrong? According to the Court, they failed to carry out the duties that were assigned to them under article 20, paragraph 6 of the Banking Statute. What can all Supervisory Board members learn from it? As a Supervisory Board you must be well aware of the things that you are legally and statutorily obligated to do. You must actually perform those tasks, otherwise you could get into trouble.
In the third case, on July 4, 2018 the Court of First Instance of Curaçao rejected the defense of the Ennia non-life and life insurance companies against the application submitted on July 3, 2018 by the Central Bank of Curaçao and St. Maarten requesting the imposition of the emergency measure. In the context of this emergency measure, the Central Bank invoked, among other things, the permits of these companies. In addition, all directors but one and all members of the Supervisory Board were dismissed, including shareholder Ansary (who, in addition to being an (indirect) shareholder, also was a Supervisory Board member). What did these Supervisory Board members (as co-policymakers) do wrong? According to the Central Bank (as stated in the decision of July 4), they had failed, among other things, to follow the instructions of the Central Bank and of the silent administrators. Also, assets were said to have been withdrawn from the Central Bank’s supervision. As a result, the continuity of the companies had been jeopardized. What can all Supervisory Board members learn from it? Supervisory Board members have their own responsibility, independent of the wishes of the shareholder or the management, to monitor whether the company is sufficiently solvent and whether the management acts in accordance with the instructions of regulatory authorities such as the Central Bank. If the management or the shareholder doesn’t listen to the advice of the Supervisory Board, it must either take measures against the directors or resign. “I just watched and let it happen” is no longer an option.
Within a short time span of just one month, these basically unrelated court rulings have made something very clear. Supervisory Board members must autonomously safeguard the company’s interests. They must carry out their own tasks and responsibilities in a proper manner. When doing so, they must place the interests of the company first. They must thereby resist other interests and influences. The message of the Court is very clear: Tua res agitur!