Towards Context-Specific Directors' Duties and Enforcement Mechanisms in the Banking Sector?

Abstract

The global financial crisis gives reason to revisit the debate on directors’ duties in corporate law, mainly with regard to the context of banks. This article explores the need, rationale and the potential for the introduction of context-specific directors’ duties and enforcement mechanisms in the banking sector in the Netherlands from a comparative perspective.

Chiefly, two legal strategies can be derived from the postcrisis developments and calls for legal reforms for the need and rationale to sharpen directors’ duties in the context of the banking sector in order to meet societal demands. The two strategies consist in shifting the scope of directors’ duties (i) towards clients’ interests and (ii) towards the public interest.

Subsequently, this article explores the potential for contextspecific directors’ duties and accompanying enforcement mechanisms. Firstly, it is argued that the current legal framework allows for the judicial development-specific approach. Secondly, such context-specific directors’ duties should be enforced through public-enforcement mechanisms to enhance the accountability of bank directors towards the public interest but currently there are too much barriers for implementation in practice.

In conclusion, this article argues that there is indeed a need, rationale and potential for context-specific directors’ duties; yet there are several major obstacles for the implementation of accompanying public-enforcement mechanisms. As a result, the introduction of context-specific directors’ duties in the banking sector may as yet entail nothing more than wishful thinking because it will merely end in toothless ambitions if the lack of accompanying enforcement mechanisms remains intact.