On 17 February 2011, the Netherlands Authority for the Financial Markets ("AFM") levied an administrative fine on a brokerage service company O&B Finance Nederland B.V., and a director of a company controlling O&B Finance Nederland B.V. for violation of the Door-to-Door Sales Act (Colportagewet). Although the AFM and the Dutch Central Bank ("DNB") have had the authority to impose administrative sanctions on directors since 1 July 2009, this is the first time the AFM has fined such an individual for a violation.
The AFM and DNB are authorised to levy administrative sanctions, including fines, on individuals such as board members and other officers who exercised actual control over offences committed by legal entities or who gave instructions for that purpose. Offences which have occurred as of 1 July 2009 are subject to such sanctions. Several criteria must be met for an individual to be deemed having exercised actual control over offences committed by the legal entity. Most importantly, the individual must have had knowledge of the violation and the authority to take appropriate measures to prevent the offence from being committed, but failed to do so and accepted the risk that the offence could occur.
In respect of O&B Finance Nederland B.V., the AFM decided to fine not only the company but also the director based on the following facts:
- the director was aware of the violation because the AFM had raised concerns about possible violations by the company during an inspection visit
- the director was also the CFO of the company and had the authority to take measures to prevent the violation
- the director had failed to take measures to end the violations.
We also refer to our Legal Alert on the new penalty regime for companies and management under Dutch financial supervision laws, of August 2009.