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Director Agreement
I need a director agreement for a newly appointed director who will oversee the marketing department, with a focus on digital transformation. The agreement should include a competitive salary, performance-based bonuses, a non-compete clause, and a 3-month notice period.
What is a Director Agreement?
A Director Agreement sets out the formal relationship between a company and its board member or managing director in the Netherlands. It details key responsibilities, authority limits, and compensation terms while working alongside the company's articles of association and Dutch corporate law requirements.
These contracts typically cover crucial elements like decision-making powers, non-compete clauses, and termination conditions. For Dutch businesses, they're particularly important because they help comply with the Civil Code's governance rules and protect both parties by clearly defining roles, reporting structures, and performance expectations.
When should you use a Director Agreement?
Use a Director Agreement when appointing new board members or managing directors to your Dutch company, especially during significant transitions like IPOs, mergers, or restructuring. It's essential to have this in place before the director begins their duties, as it protects both the company and the director from day one.
Companies often implement Director Agreements when expanding internationally, bringing in external expertise, or updating governance structures. The timing is particularly critical for Dutch BVs and NVs where directors hold significant legal responsibilities and need clear parameters around their authority, compensation, and obligations under the Civil Code.
What are the different types of Director Agreement?
- Director Employment Contract: Standard agreement for executive directors with day-to-day management duties, covering salary, benefits, and operational responsibilities
- Nominee Director Agreement: Used when appointing temporary or representative directors, often in holding structures or subsidiaries
- Non Executive Director Agreement: Focuses on supervisory and advisory roles, with different liability and time commitment terms
- Director Indemnity Agreement: Specialized agreement focusing on protection against legal risks and liability coverage
Who should typically use a Director Agreement?
- Board of Directors: Reviews and approves the final agreement, ensuring it aligns with company strategy and Dutch governance requirements
- Managing Directors: Primary signatories who negotiate terms and must comply with agreement obligations
- Corporate Lawyers: Draft and review agreements to ensure compliance with Dutch company law and Civil Code requirements
- HR Directors: Handle practical implementation and maintain records of director agreements
- Company Secretary: Manages documentation, ensures proper filing, and coordinates between board and management
- Shareholders: May need to approve certain terms, especially in smaller BVs or when agreements involve significant compensation
How do you write a Director Agreement?
- Director Details: Gather full legal name, address, and qualifications of the incoming director
- Role Specifics: Define exact position, responsibilities, reporting lines, and decision-making authority
- Compensation Package: Document salary, bonuses, benefits, and any share-based incentives
- Company Information: Collect official registration details, articles of association, and board resolutions
- Term Details: Specify start date, duration, notice periods, and termination conditions
- Legal Requirements: Check Dutch Civil Code obligations and industry-specific regulations
- Document Generation: Use our platform to create a legally compliant agreement that includes all mandatory elements
What should be included in a Director Agreement?
- Party Details: Full legal names and addresses of both company and director, plus registration numbers
- Appointment Terms: Specific role title, duties, and scope of authority under Dutch law
- Remuneration: Detailed compensation structure, including salary, bonuses, and benefits
- Duration Clauses: Term length, renewal conditions, and notice periods for termination
- Confidentiality: Protection of company information and trade secrets
- Non-Compete: Restrictions on competitive activities during and after directorship
- Liability Provisions: Clear outline of director's legal responsibilities and indemnification terms
- Governing Law: Explicit reference to Dutch corporate law and jurisdiction
What's the difference between a Director Agreement and a Director Services Agreement?
While both documents govern director relationships, a Director Agreement differs significantly from a Director Services Agreement in several key aspects under Dutch law. Let's explore the main distinctions:
- Employment Status: Director Agreements typically establish a formal employment relationship with full benefits and protections under Dutch labor law, while Director Services Agreements create a contractor-like arrangement
- Scope of Authority: Director Agreements grant broader corporate powers and board-level decision-making rights, whereas Service Agreements usually limit authority to specific project or advisory duties
- Legal Obligations: Director Agreements carry statutory duties under Dutch company law including fiduciary responsibilities, while Service Agreements focus mainly on deliverables and performance metrics
- Tax Treatment: Director Agreements involve payroll tax withholding and social security contributions, while Service Agreements typically treat the director as a self-employed professional for tax purposes
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