i Legal framework: laws and self-regulation

In the Netherlands, the general rules of civil law relating to the governance of companies and listed companies are laid down in Book 2 of the Dutch Civil Code (DCC). This sets out the duties and powers of the various corporate bodies, as well as rules on representation, conflicts of interest and the liability of management board members. The DCC also contains rules regarding financial reporting and disclosure. Compliance with the rules in the DCC can, if necessary, be forced through the courts. In this context, it should be mentioned that a right of inquiry was introduced in Book 2 of the DCC in 1994: shareholders with a specific capital interest (in some cases, even former shareholders)2 may request a court specially designated for this purpose – the Enterprise Chamber of the Amsterdam Court of Appeal (Enterprise Chamber) – to initiate an inquiry into the company's policy and affairs. Upon a showing of mismanagement, the Enterprise Chamber can intervene by, inter alia, suspending or nullifying a management board decision, suspending or removing management or supervisory board members, and appointing temporary board members. In practice, inquiry proceedings have played an important role in the development of law in the area of corporate governance, for example with regard to the issue of the respective roles of the management board and the shareholders in determining the strategy of the relevant company.

In addition, the Netherlands has rules on the supervision of the business conduct of listed companies, laid down in Chapter 5 of the Financial Supervision Act (FSA). The FSA contains rules on, inter alia, the disclosure of major holdings, financial reporting, the prevention of market abuse and the obligations of institutional investors. Supervision of compliance with these rules is carried out by a specially designated body, the Authority for the Financial Markets (AFM).

Alongside these statutory rules is a system of self-regulation consisting of codes of conduct containing principles and best-practice provisions drawn up by the sector itself. The first Dutch Corporate Governance Code containing governance rules for listed companies entered into effect in 2004. In December 2016, a revised version of the Corporate Governance Code was published, with more attention being paid to long-term value creation, culture, reporting of misconduct, risk management and how to apply the Corporate Governance Code in a company with a one-tier board.

Since the introduction of the first Corporate Governance Code, several sectors have set up their own specific codes, such as the Code of the Dutch Pension Funds and the Housing Corporations Code. In 2010, the Banking Code was introduced to govern Dutch banks. This mirrors the Corporate Governance Code in many respects, but also contains rules specifically targeted at banks (specific expertise of certain committee or board members, the treatment and interests of clients). The Banking Code (updated in 2015) applies to both listed and unlisted banks. Listed banks fall under the Corporate Governance Code, as well as the Banking Code.

Both codes adopt a comply or explain system: companies must state on their websites how they applied the principles and best-practice provisions and, if applicable, provide a reasoned explanation of why a provision has not been applied. For both codes, there is a separate monitoring committee that annually reports on the extent to which each code has been complied with, and on any problem areas that have emerged in this regard.

ii General: corporate governance developments

In October 2017, the new government presented several intended legislative changes as part of its coalition agreement. One of the measures announced relates to the protection of companies (in general, as well as in specific vital sectors). To this end, draft legislation was published on 7 December 2018 aimed at promoting a careful decision-making process in cases of shareholder activism or a hostile takeover. If enacted in its current form, the proposal would introduce a statutory cooling-off period of up to 250 days during which the shareholders' meeting would not be able to dismiss, suspend or appoint board members of a listed Dutch company under attack. The proposal was announced in 2017 together with a separate proposal to protect companies operating in vital sectors. Regarding the latter, so far only a draft proposal to protect the telecom sector has been published (in 2017). In August 2018, the Council of State commissioned its advisory report regarding this draft bill, but this has not been published to date. The announced proposal concerning selected companies working in (other) vital sectors to only be eligible for takeover after careful analysis of the risks to national security and following explicit approval (or by means of other suitable guarantees) has also not yet been published. Further, the announced investigation into whether such protection is likewise necessary for agricultural land and certain regional infrastructure works, in addition to the current list of vital sectors, has also not been published to date. Except for the additional measures audit firms bill, which entered into force on 1 July 2018, none of the legislation announced for 2018 entered into force that year. The bill introduced new measures for improving the quality of statutory audits and to strengthen the role of the AFM. The current status and planning of all other proposed legislation is discussed in Section VI.

The first Dutch Stewardship Code entered into force in January 2019, which is a form of self-regulation that does not have a statutory basis. Pension funds, insurers and asset managers have developed the Stewardship Code to emphasise the increasing importance of engaged and responsible share ownership and the role that institutional investors play in promoting long-term value creation at Dutch listed companies. In addition, the principles of the Stewardship Code offer pension funds, insurers and asset managers the opportunity to inform their beneficiaries and clients about how they have used their shareholder rights. All institutional investors holding shares in Dutch listed companies are expected to aim for the meaningful implementation of the principles of the Stewardship Code. They are also expected to report on compliance with the Stewardship Code from financial year 2019 onwards.

With regard to the implementation of the mandatory register of beneficial owners, in accordance with the Fourth Anti-Money Laundering Directive, the Netherlands is one many countries that did not meet the deadline of June 2017. Initially, the government announced it would have the register operational by the summer of 2018, but because of amendments in the Directive (resulting in the Fifth Anti-Money Laundering Directive) this target has not been met. The Fifth Anti-Money Laundering Directive was adopted in 2018 and has to be implemented no later than 10 January 2020. The government now plans to submit the bill establishing a register of beneficial owners to the Lower House of Parliament in early 2019. Within the same scope of combating tax evasion, fraud and the financing of terrorism, a private member's bill for the introduction of a central shareholders' register is still before Parliament. The register will contain information on shares in and shareholders of private limited liability companies (BVs) and unlisted public limited liability companies (NVs), and will be accessible by civil law notaries, governmental authorities and other designated bodies in connection with customer due diligence investigations, and monitoring, supervisory and enforcement duties. Despite the negative response of the Council of State, the bill has not been withdrawn because its proposers still believe in its purpose; further, in view of the growing focus on transparency and the developments relating to the ultimate beneficial owner register, the bill may still have a chance of crossing the finishing line. In this context, the bill to dematerialise bearer shares in all public limited liability companies (NVs) is also still before Parliament, and a new draft bill was published at the end of 2018 requiring social organisations to publish the receipt of large donations. This draft bill also proposes requiring foundations to publish their balance sheet with a list of their assets (transparency of social organisations).

In short, the subject of corporate governance remains on the agenda in the Netherlands. Overall, protection of businesses, but also the protection of the public from fraudulent businesses, remains an important area of attention, and an actual change in culture and behaviour is expected of companies generally and of the banking sector in particular, with legislative action being taken where self-regulation fails to deliver the desired result.


i Board structure and practices

Dutch corporate law has traditionally provided for a two-tier board structure consisting of a management board and a separate supervisory board (each of which is governed by different statutory provisions); however, the institution of a supervisory board is only mandatory for companies subject to the structure regime.3 A company is subject to this regime if, for a period of three consecutive years, its issued capital and reserves amount to not less than €16 million; it has a works council instituted pursuant to a statutory requirement; and it regularly employs at least 100 employees in the Netherlands.

Since 2013, Dutch corporate law has also provided a statutory basis for the one-tier board structure. However, through the influence of international developments, the one-tier board structure had made its way into Dutch corporate practice prior to this legislation. Therefore, the Corporate Governance Code of 2008 already contained provisions relating to listed companies with a one-tier board structure. In 2016, the new Code clarified how companies with a one-tier board must apply the Code by, inter alia, specifying that the current rules for supervisory board members also apply to non-executive directors.

The reasons for companies to opt for the one-tier model vary greatly. Generally, the model is considered to be suited to:

  1. companies in a highly dynamic environment such as the technology sector;
  2. complex companies that need to act quickly in crisis situations;
  3. companies that are in the process of being listed and in which a major shareholder is closely involved in the company's management or supervision (family businesses); and
  4. companies that form part of an international group or that have an international group of shareholders.4

In practice, the one-tier model and the two-tier model appear to be growing closer to one another: in companies with a two-tier board structure, the supervisory board is now expected to play a more active role, while in those with a one-tier structure it is often required that the majority of board members consist of independent non-executives. According to the new Code, the latter is also mandatory. For this reason, some commentators speak of a convergence towards a 1.5-tier structure.5

Management board

The management board is charged by law with the duty to manage the company, subject to restrictions imposed in the articles of association.6 It is generally accepted that management in any event includes directing the company's day-to-day affairs and setting out its strategy. It should be borne in mind that in accordance with the Dutch stakeholder model, the board must take into account various interests, not only those of the enterprise and shareholders, but also those of other interested parties, such as employees and creditors.

In recent years, the average size of the boards of Dutch listed companies has declined; a significant number of companies even have two-member boards. The rise of this CEO–CFO model can be explained by a number of factors, one of which is the popularity of the executive committee, in which board members as well as senior managers have seats; in these setups, a larger management board makes less sense. Although clearly desirable in terms of efficiency, executive committees also raise several governance issues that require due consideration. The new Corporate Governance Code Committee does embrace the executive committee; however, it requires companies to render account of governance issues, such as how the interaction between the executive committee and the supervisory board will be structured. Furthermore, the executive committee's role, duties and composition must be set out in the management report.

Supervisory board

The function of the supervisory board is to supervise and advise the management board and oversee the general state of affairs within the company.7 Like the management board, the supervisory board must take into account the interests of the company and its enterprise, as well as those of all other stakeholders.

The supervisory board of a structure-regime company has a number of important rights, including the right to appoint, suspend and remove management board members, and the right to approve (or refuse to approve) certain management board decisions, such as a decision to issue shares, enter into a joint venture, make a major acquisition or large investment, amend the articles of association or dissolve the company.8

To enable the supervisory board to perform its supervisory duties, the DCC requires the management board to provide the supervisory board at least once a year with information about the company's strategic policy, its general and financial risks and its internal control system. The Corporate Governance Code expands upon the supervisory duties: if the supervisory board consists of more than four members, it must appoint from among its members an audit committee,9 a remuneration committee and a selection and appointment committee, whose duties are also specified.

ii Directors (both management and supervisory board)

Appointment and removal

As previously stated, management board members of structure-regime companies are appointed and removed by the supervisory board. In companies not governed by this regime, the general meeting of shareholders has this power. Under the present Corporate Governance Code, management board members are in principle appointed for a maximum term of four years, but reappointment for successive four-year terms is permitted.

With regard to their removal, it should be noted that management board members have both a corporate and an employment relationship with their company. For a long time, it was unclear whether the removal of a management board member by the supervisory board or general meeting of shareholders terminated both of these relationships, or only the corporate one. In a decision rendered in April 2005, however, the Supreme Court ruled that removal also terminates the employment relationship.10 Every management board member having been employed for two years or more is entitled to claim a transition payment when the contract is terminated by the employer, dissolved in court at the employer's request or has ended by operation of law. Only in exceptional circumstances, such as in the event of any seriously culpable act or omission on the employer's part, or other extraordinary circumstances, could the board member be eligible for additional severance pay, referred to as fair compensation.

Under the Corporate Governance Code, the remuneration of a management board member in the event of dismissal in principle may not exceed one year's salary (fixed remuneration component). According to the reports of the Corporate Governance Code Monitoring Committee, however, compliance with this provision in particular has been limited since the Code took effect in 2004. The reason usually given for this is the need to respect existing agreements. In its report published in December 2012, the Monitoring Committee urged that employment contracts be amended on this point; however, as follows from its latest compliance report (2015, published December 2016), non-compliance remains relatively high. The new Code of 2016 introduced the best practice that no remuneration is justified if a board member ended a contract on his or her own initiative or in the case of seriously culpable or imputable acts.11

Supervisory board members of structure-regime companies are appointed by the general meeting of shareholders based on a nomination by the supervisory board.12 The general meeting of shareholders may, however, overrule such a nomination. The general meeting of shareholders and the works council may recommend persons for nomination. An individual supervisory board member of a structure-regime company may only be removed by the Enterprise Chamber at the request of the company, the general meeting of shareholders or the works council.13 However, the general meeting of shareholders may pass a vote of no confidence in the supervisory board as a whole, which results in the immediate removal of all board members. This has been attempted only once; in the Stork case (2007), the Enterprise Chamber ordered a standstill by freezing both the removal of the board scheduled by two dissenting hedge funds and the anti-takeover measures enacted by the company.14

Independence and expertise

The DCC and the codes contain several provisions intended to safeguard the independence of supervisory board members, such as the absence of family ties and business interests.15 The Dutch Central Bank (DNB), in its capacity as the regulator of banks and insurance companies, attaches great value to the independence of supervisory board members for the purpose of good corporate governance, and in 2012, further to the provisions of the code, developed its own policy rules. It requires that supervisory board members are independent in mind (independent with respect to partial interests), in state (formal independence) and in appearance (no conflicts of interest).

A great deal of attention is being paid to the expertise of supervisory board members. For example, under the Banking Code supervisory board members are expected to have knowledge of the risks of the banking business and of a bank's public functions. Moreover, banks are expected to introduce a permanent education programme, while legislation has also been enacted: since 1 July 2012, management and supervisory board members of financial institutions have been subjected to a stricter fit and proper test, to be applied by the AFM or the DNB. In 2016, an external assessment of this process of testing was conducted by the Ottow Committee.16 The Committee concluded in its report that the AFM and DNB 'adequately fulfil their statutory duties' in assessing members of management and supervisory boards. Nevertheless, the Committee has put forward several proposals aimed at improving and fine-tuning fit and proper assessments to allow the two supervisory authorities to fulfil their statutory mandates even better, such as communicating more transparently about their assessment procedures. The report also contains recommendations for preserving and better safeguarding careful decision-making, fostering diversity in the financial sector, and making assessment procedures more efficient and effective. The AFM and DNB reacted to the report with a list of internal follow-up actions, which correspond with the recommendations of the Committee.17 In 2018, the DNB started to carry out some of these follow-up actions, such as the start of a one-year pilot with the AFM relating to the involvement of external experts when assessing members of management.

In this context, European harmonisation is intensifying and will have an important impact on national legislation. This is evidenced by the 2017 guidelines on suitability assessments of the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA), and the ECB's 2017 guide to assessments of board members. The AFM and DNB support this development. As shown in 2015 by the EBA Peer Review Report on suitability, Dutch assessment procedures are considered good practice, and the proposed European assessment procedures are largely in line with the current Dutch take on assessments.18

Caps on the holding of multiple supervisory board memberships

In the Netherlands, no fewer than four different regimes apply governing maximum numbers of board positions held, depending on legal form and business activity. Notwithstanding these rules, overboarding is also under close scrutiny, by investors as well as regulators.

The number of supervisory positions a management board member or supervisory board member is allowed to hold at large legal entities is limited by the DCC. In principle, a management board member may hold a maximum of two positions as a supervisory board member in addition to his or her management board position; for a supervisory board member, the limit is a total of five supervisory positions, with a position as a management board or supervisory board chair counting double. The purpose of this is not only to improve the quality of supervision, but also to eradicate the old boy network.

For listed companies, the Corporate Governance Code also contains specific anti-overboarding provisions. A management board member may not hold more than two directorships at listed companies; for a director, the maximum number of directorships at listed companies is five. Under the new Code, the approval of the supervisory board is required for a management board member of the company intending to accept a supervisory board membership elsewhere.19

For banks and certain types of investment firms, the CRD IV Directive has introduced limitations for significant institutions (a concept that is elaborated upon at national level under guidance of the EBA).20 As a rule, a management board member is limited to two directorships, while a director can hold a maximum of four directorships (in total), or one management board position combined with one other directorship. The Dutch implementing rules, which stay very close to the CRD IV regime, entered into force in August 2014.21


Over and above these measures to improve the quality of management and supervision, rules to promote gender diversity within the management boards and supervisory boards of large companies have applied in the Netherlands since 1 January 2013, the target being a division within the board of at least 30 per cent females and 30 per cent males. The rules are of a comply or explain nature: if the target is not met this will not lead to the imposition of sanctions, but an explanation must be given in the management report as to why the target was not met and what steps will be taken towards meeting it. At the end of 2015 it was announced that these rules, which were originally meant to be abolished as of 1 January 2016, will be extended to 2019. In April 2017, the rules were formally adopted again.

At EU level, negotiations are still ongoing between the European Parliament and the Council on a draft directive promoting gender diversity within the management of large listed companies.22 Pursuant to the draft directive, by 2020 at least 40 per cent of the non-executive directors of such companies must be women, and heavy sanctions will apply in the event of non-compliance. However, there are strong objections on the part of a number of EU Member States, including the Netherlands, and it therefore remains to be seen in what form the directive will cross the finish line.

Finally, narrower in scope but still relevant, EU Directive 2014/95 requires large companies to have a description of the diversity policy applied in relation to the undertaking's administrative, management and supervisory bodies.23 This Directive was implemented in Dutch law in December 2016 and entered into force on 1 January 2017.24 Diversity under this Directive has a wider significance than gender alone, but also includes, inter alia, background, expertise, nationality and experience.

Collective responsibility

Under Dutch corporate law, the management of a company is in principle the responsibility of the board members collectively as well as of each board member individually. The company's articles of association or internal rules may, to some extent, assign certain specific duties to individual board members, but the board as a whole remains responsible. The Management and Supervision Act, which has created a basis for the one-tier board model, expressly authorises the allocation of duties between one or more non-executive members and one or more executive members of a one-tier board. In this case, too, however, the board as a whole remains responsible for the company's management, including the non-executive members (see below).


The power to manage the company entails, inter alia, the power to represent it in transactions with third parties.25 Under the DCC, both the management board as a whole and each board member individually have this power. The articles of association may, however, limit or exclude the individual representative power of one or more board members. For example, the articles may provide that the company may only be represented by the board as a whole or by the chair and the financial director acting together.

Conflicts of interest

Neither a management board member nor a supervisory board member will be permitted to take part in any discussion or decision-making that involves a subject or transaction in relation to which he or she has a conflict of interest. The DCC provides subsequently that if the board member nevertheless does take part, he or she may be liable towards the company, but the transaction with the third party will in principle remain valid.

Internal liability

A management board member who has performed his or her duties improperly may be held personally liable to the company. The same liability rules also apply to supervisory board members. In principle, each board member is liable for the company's general affairs and for the entire damage resulting from mismanagement by any other board member (under the principle of collective responsibility). A board member may, however, avoid liability by proving that he or she cannot be blamed for the mismanagement. The allocation of duties between the board member and his or her fellow board members is one of the relevant factors in that respect. With respect to the one-tier board model, the explanatory memorandum to the Management and Supervision Act specifically states that an internal allocation of duties among the board members is permitted, but that this does not change the directors' collective responsibility for the company's management. The non-executive board members (i.e., those not charged with attending to the company's day-to-day affairs) may therefore be held liable for the mismanagement of an executive board member. For that reason, it is advisable that board members keep each other informed of their actions and actively inform each other, sometimes also referred to as a monitoring duty.

Personal liability of directors (in particular of non-executive directors) is not established easily. It is a well-established concept of Dutch law that personal liability should only arise in situations of apparent mistakes or negligence. In this context, the concepts of, for example, severe fault and apparent mismanagement are developed in case law or are part of statutory provisions. Recent case law, however, reminds us that this does not imply immunity.26

The Supreme Court has held that only the company, or a bankruptcy trustee in cases of insolvency, may sue a board member for mismanagement under Article 2:9 of the DCC; there is no shareholder derivative action under Dutch law.27 However, in certain situations directors may incur personal liability as regards third parties, such as shareholders or creditors of the company on account of tort or on account of specific provisions in the law, such as in the case of insolvency caused by apparent mismanagement.

External liability

As a general rule, management board members will not be personally liable for the company's debts or other obligations as regards creditors or other third parties. Liability might only ensue if that board member can be seriously blamed for having conducted a wrongful act on the company's behalf towards a third party; is subject to liability pursuant to certain specific statutory grounds; or is penalised pursuant to criminal or administrative law. A parent company or its directors may, under certain circumstances, also be liable for the debts of a subsidiary. In an important case at the end of 2015 concerning a takeover of a listed company, both the management board members and the supervisory board members were held liable, the latter for inadequate supervision.28

If a company is declared bankrupt, special rules – including certain evidentiary presumptions – apply. Under these rules, each management board member is personally liable for debts that cannot be satisfied from the assets of the bankruptcy estate if the management board was guilty of clear mismanagement during the three-year period preceding the bankruptcy and it is likely that this was an important cause of the bankruptcy. Under Article 2:138(2) of the DCC, the failure of the management board to comply with its accounting obligations and its obligation to file the annual accounts constitutes an instance of clear mismanagement and a presumption that the mismanagement was an important cause of the bankruptcy. Persons who have co-determined the company's policy can also be held liable under these rules. Beyond the situations described above, clear mismanagement constitutes conduct that is seriously irresponsible, reckless or rash; the trustee in bankruptcy must show that no reasonably thinking board member would have acted in this way under the same circumstances. Supervisory board members are not immune in this respect. In two major bankruptcies of listed companies in 2013, both the management board members and the supervisory board members were held liable, the latter for inadequate supervision. Subsequently, in another large bankruptcy in 2015, the Enterprise Division of the Amsterdam Court of Appeal also held the management board members and supervisory board members liable, ruling that they were responsible for mismanagement.29

In an important ruling in 2016, the Dutch Supreme Court ruled that if, in the light of what is generally accepted in society, a tortious act committed by the founder of a private foundation (stichting particulier fonds: a specific variant of the legal form of a foundation) is to be considered an act of the private foundation, the private foundation can be held liable for the act, resulting in a tort liability of the private foundation.30

Standardisation of rules for all legal entities

As of 2014, draft legislation had been drawn up with the aim of standardising the rules on the responsibilities of management board members and supervisory board members for all the different types of legal entities. This also applies to the rules on conflicts of interest and on liability. The new legislation will not result in any substantive changes for companies with a share capital. A draft bill was presented to Parliament in 2016 and was expected to be implemented no later than July 2017. However, after a number of critical questions of Parliament, the draft bill was amended to a considerable extent, which has slowed down the process. A new date of entry into force is unknown.


Listed companies are subject to various disclosure obligations. The general rules on financial reporting can be found in Book 2 of the DCC, while the FSA contains additional rules applicable to listed companies. The Corporate Governance Code also lays down several specific financial disclosure obligations for listed companies.

The DCC contains rules with regard to the composition of the annual accounts and management report, the auditor's opinion (see below), the adoption of the annual accounts and the publication requirement. Listed companies are required to send their annual accounts to the AFM after adoption. If the AFM believes that the annual accounts do not comply with the relevant rules, it may initiate special annual accounts proceedings before the Enterprise Chamber. Shareholders and employees may also initiate such proceedings. In these proceedings, the Court may order the company to amend the annual accounts and management report in accordance with its instructions.

The transparency requirements can, in general terms, be divided into two categories: ad hoc disclosure obligations and periodic disclosure obligations.

i Ad hoc

The main example in this first category is the obligation to disclose as soon as possible inside information that directly concerns the issuer.31 Disclosure may be delayed if the following conditions are met:

  1. the immediate disclosure is likely to prejudice the legitimate interests of the issuer or emission allowance market participant;
  2. the delay of disclosure is not likely to mislead the public; and
  3. the issuer or emission allowance market participant is able to ensure the confidentiality of that information.

When the issuer or emission allowance market participant has delayed the disclosure of inside information it shall, immediately after the information is disclosed to the public, (1) inform the competent authority that the disclosure of the information was delayed, and (2) provide a written explanation of how the conditions set out above were met. Member States may stipulate that the written explanation under (2) is to be provided only upon request of the competent authority. The Netherlands has opted in for the requirement of a written explanation to be given only upon request of a competent authority. An issuer that is a financial institution or credit institution have additional grounds for delaying public disclosure of inside information where disclosure would risk undermining the financial stability of the issuer and of the financial system, the delay is in the public interest, confidentiality can be ensured, and the competent authority consents.32

ii Periodic

The periodic disclosure obligations consist mainly of the annual and half-yearly financial reporting requirements.33

In addition, shareholders of listed companies are required to notify the AFM if their holdings of voting rights or capital in listed companies reach, exceed or fall below particular thresholds.34 Gross short positions in excess of a certain threshold (3 per cent) must also be disclosed; this obligation is intended to give an insight into the shareholder's true economic interest and, at the same time, to shed light on empty voting.35 Moreover, since 1 January 2013 shareholders have been obliged to disclose the loss or acquisition of predominant control (30 per cent shareholding or voting rights), as a result of the mandatory bid regime arising from European legislation. The issuer is required to disclose certain information as well, such as changes in its issued capital or in the number of voting rights on its shares. Management and supervisory board members of listed companies are also required to notify the AFM of their holdings of shares or voting rights in the company and of any transactions in these shares or changes in the voting rights.

With regard to the auditing of financial disclosure, there is a new European development that entered into force with effect from 1 January 2017: statutory auditors are required to enact an extensive, supplementary control statement for the audit committee of the board of directors.36 This forms part of a shift in responsibilities to the audit committee. Audit committees have to explain how the audit contributed to the integrity of the financial reporting and what the audit committee's role has been in the process, and bear responsibility for the selection procedure regarding the auditor.

The Corporate Governance Code also contains provisions on the auditing of the financial reports and the position of the internal audit function and the external auditor. These provisions cover subjects such as the role, appointment, remuneration and assessment of the functioning of the external auditor, as well as the relationship and communication of the external auditor with the management board, supervisory board and audit committee. As from 1 January 2018, the revised Code is enshrined with the entering into force of the Decree on the content of financial reports. This Decree also clarified the way the auditor has to check the corporate governance statement of the company's financial reports. Instead of merely verifying the information is present, for years commencing on or after 1 January 2017, the auditor has to make sure the statement is consistent with the financial reports and does not contain any errors of material importance.


The Netherlands has traditionally followed the stakeholder model, under which management and supervisory board members are required to take into account the interests of all stakeholders when making decisions and performing their duties. According to its preamble, the Corporate Governance Code is based on the principle that a company is a long-term alliance between the various parties involved in the company, such as employees, shareholders and other investors, suppliers, customers, the public sector and public interest groups. The new Dutch Stewardship Code, which entered into force on 1 January 2019, also confirms the duty of asset owners and asset managers to take the interests of stakeholders such as banks, creditors, customers, suppliers, the works council and non-governmental organisations into account. With regard to the scope of the responsibility, the Stewardship Code states that in assessing Dutch listed investee companies' long-term value creation opportunities, risks, strategies and performance, it is critical to consider environmental (including climate change risks and opportunities), social and governance information (including board composition and diversity) in addition to financial information. This is in line with the views of the Corporate Governance Code Monitoring Committee. In the consultation for the Corporate Governance Code of 2016, the Committee explained that corporate social responsibility is not an isolated goal, but rather forms an integral part of companies' strategies regarding long-term value creation, which is a matter for management board members and supervisory board members collectively. In addition to the focus on carefully weighing up the interests of all stakeholders, this also includes a focus on non-financial issues that are relevant to the enterprise. This is also reflected in the 'in-control' statement, which concerns more than financial reporting risks, and is also in line with the current trend towards integrated reporting. The Code requires management boards to draw up a strategy on long-term value creation setting out, inter alia, any aspects relevant to a company, such as the environment, social and employee-related matters, the chain within which the enterprise operates, respect for human rights, and fighting corruption and bribery.37 The management board must engage the supervisory board early on in formulating the strategy. Thereafter, the supervisory board must supervise the manner in which the management board implements the long-term value creation strategy. A more detailed explanation of its view on long-term value creation and the strategy for its realisation, as well as a description of which contributions were made to long-term value creation in the past financial year, must be published in the management report. It should report on both short-term and long-term developments.

In light of the call for action on climate change, corporate responsibility is climbing the agenda of governments all over the world, as well as the agenda of regulatory authorities such as the DNB. In their Supervision Outlook 2019, the DNB states that, consistent with international, European and national trends, one priority for 2019 will be emphasising future orientation and sustainability. For example, in 2018 it developed an assessment framework for the management of climate-related risks by financial institutions. Several institutions were evaluated based on this assessment framework. In 2019, the DNB will continue to devote itself to increasing the financial system's role in managing climate-related risks and funding sustainable investments.38

On an international level, large public interest entities (in short, listed companies, banks and insurers) are required to include in their management reports a non-financial statement containing certain corporate social responsibility-related information. Based on the 2018 sustainable finance action plan, a draft proposal for a regulation was published in May 2018 on disclosures relating to sustainable investments and sustainability risks as well as a proposal for a regulation on the establishment of a framework to facilitate sustainable investment.39

We maintain that where socially responsible entrepreneurship initially appeared to be restricted to a small group of idealists, companies now seem to be increasingly aware of its importance also for commercial considerations.

i Risk management

Unsurprisingly, post-crisis governance reforms focus on risk management. In the revised 2015 Basel Committee Corporate Governance Principles for banks this is evident, but these are part of a broader trend towards an increased focus on risk and risk governance within financial institutions. Risk governance is also one of the pillars of CRR/CRD IV, the European project that as at 1 January 2014 raised the Basel III agreements to the level of legislation. In October 2017, the Basel Committee on Banking Supervision published the guidelines on identification and management of step-in risk as part of the G20 initiative to strengthen the oversight and regulation of the shadow banking system to mitigate systemic risks, in particular risks arising because of banks' interactions with shadow banking entities. In the Netherlands, this subject is also prominent on the political and public agenda even apart from the implementation of the European rules just mentioned, as follows from the 2015 Dutch Banking Code.

As a result of the financial crisis, risk management has also gained prominence in the Corporate Governance Code. Moreover, the new Code contains several best practices to further strengthen risk management and disclosure related to risk. The position of the internal auditor and the role of the audit committee regarding staffing, work planning and the functioning of the internal auditor are strengthened. Furthermore, the chief financial officer, the internal auditor and the external auditor should attend the audit committee meetings, unless the audit committee determines otherwise. Regarding risk disclosure, the scope of the in-control statement is widened to the functioning of internal risk control in general (not only regarding financial reporting risks), and to require the management board to state that in the 12-month period ahead the continuity of the company is safeguarded.

In practice, the Code also turns out to have a knock-on effect on other sectors. Often the rules of the Code are used by non-listed companies, serving as a model for codes of conduct in all sorts of sectors, including semi-public sectors such as healthcare and education. In addition, Article 2:391 of the DCC requires the management board to describe in the management report the main risks to which the enterprise is exposed. If necessary, to properly understand the results or position of the company and its group companies, the management report should also contain an analysis of both financial and non-financial performance indicators, including environmental and employment-related issues.

ii Client focus

The client focus principle forms part of the Banking Code and is regarded as a necessary precondition for the continuity of an undertaking. While with respect to 2010 the Banking Code Monitoring Committee was still reporting that banks were wrestling with how to put the client focus principle into practice and bring about the related changes in the culture, later it sounded a more optimistic note. In its latest report (January 2017), it credits the sector for improving internal processes and listing themes such as the customers' interests as being central, and for having developed a trust monitor that enables effective communication on progress relating to client focus towards society. Complementary to the Banking Code 2015, the Dutch Banking Association introduced a social statute setting out the sector's core values, a banking oath and disciplinary measures, in which the importance of client focus is stressed.

Alongside the efforts of the sector itself, both the DNB and the AFM, within their respective areas of competence, continuously monitor progress on client focus and press for further change.

iii Remuneration

According to the Corporate Governance Code, the purpose of the remuneration structure should be to focus on long-term value creation for the company and its affiliated enterprise. The remuneration must 'not encourage management board members to act in their own interests nor to take risks that are not in keeping with the strategy formulated and the risk appetite that has been established'.40 The Banking Code also contains a section on remuneration policies. Many of the detailed provisions regarding both fixed and variable remuneration components have been omitted in the latest version of both codes. However, three important new provisions have been added to the new Corporate Governance Code to provide further substance to the guidelines regarding remuneration policy. Management board members must give the remuneration committee input regarding their own remuneration. In addition, the remuneration of supervisory board members must be in line with time spent. Finally, severance pay is limited to one year's salary, and may not be awarded if the management board member terminates the agreement early or is guilty of seriously culpable or negligent conduct.

Both codes, and particularly the Corporate Governance Code, had extensive and complex remuneration provisions. Since various new pieces of legislation regarding remuneration have been introduced in the past few years, the monitoring committees of both codes no longer saw the need for such detailed provisions. In this regard, the legislator adopted the former Banking Code standard in relation to the variable remuneration of management board members of banks (a maximum of 100 per cent of the fixed salary) and subjected it to stricter conditions: if breached, the rate of a newly introduced bank tax will be increased by 10 per cent.41 The government, moreover, as of February 2015 introduced a maximum variable remuneration within the whole of the financial sector of 20 per cent of the fixed salary.42 This regime was intended as a transitional arrangement awaiting implementation of the CRD IV Directive, in which as a rule bonuses are subject to a cap of 100 per cent of the fixed annual salary. As of 1 January 2016, the rules implementing CRD IV entered into force.

For financial companies as well as Dutch public limited companies, legislation providing for the power to claw back bonuses from management board members entered into force on 1 January 2014.43 This power had already formed part of the codes of conduct, but its scope was narrower. The relevant Act was the subject of extensive parliamentary debate because of a controversial provision requiring listed companies in merger and takeover situations to deduct from a management board member's salary any increase in the value of the company's shares following the merger or takeover. As such, management board members with shares in the company were therefore precluded from profiting from the transaction. The (understandable) rationale behind this provision was to eliminate personal gain as the driving force behind decision-making in such situations.

This skimming off rule expired, pursuant to a sunset clause, on 1 July 2017. Although the Minister of Finance endorses the aim of the clawback and skimming off rules, he believes they are too complex and should be replaced. To this end, he announced the drawing up of a draft bill for consultation purposes. On 20 December 2018, he sent a letter to Parliament with regard to proposed measures for the modernisation of the corporate law. Both the skimming off and clawback rules are considered as possible new legislation for 2019. The Minister is considering giving the supervisory board an additional clawback power whenever a bonus is unacceptable within the standards of reasonableness and fairness, as well as additional clawback powers in connection with major corporate events such as a takeover. Furthermore, say on pay has been at issue, partly in the context of the revision of the Shareholders Directive (see Section V.i) and partly following the adoption of a law that introduced a say on pay right for works councils as of January 2019.44 Although the discussion specifically focuses on remuneration, in fact it is general behavioural and cultural changes that are expected. Political expectations are also high in this respect regarding the moral and ethical declaration contained in the Banking Code, which was enacted in 2013. Initially, the oath concerned management board members and supervisory board members, but as of 1 April 2015, a larger group is subject to the oath by law.


i Shareholder rights and powers

The general meeting of shareholders has important powers within the company, such as the power to amend the articles of association, dissolve the company, approve a merger, adopt the annual accounts and appoint supervisory board members. In addition to these specific powers, Article 2:107 of the DCC assigns all residual powers (i.e., those not assigned to the management board or other corporate bodies) to the general meeting of shareholders. The general meeting of shareholders of a Dutch public limited liability company (NV) is not, however, entitled to give the management board binding instructions regarding the manner in which the board carries out its duties. Under the influence of the corporate governance debate, the position of shareholders was strengthened in the early years of this century. Since 2004, management board decisions resulting in an important change in the company's identity or character have required the approval of the general meeting of shareholders.45 This applies, for example, to decisions to transfer the enterprise or almost the entire enterprise, enter into or terminate a significant long-term cooperation, or acquire or divest a significant holding. In 2007, the Supreme Court rendered a judgment interpreting Article 2:107a of the DCC restrictively. The Court held that this provision only applies to decisions that are so fundamental that they change the nature of share ownership, in the sense that the shareholder will, as a result of the decision, in effect have provided capital to, and hold an interest in, a substantially different enterprise.46

Another important shareholder right introduced in 2004 is the right to have items placed on the agenda of a general meeting.47 Originally the threshold was 1 per cent; with effect from 1 July 2013 it was raised to 3 per cent. With the implementation of the first Shareholder Rights Directive48 in July 2010, this right has been strengthened. Until then, the company could refuse such a request on the basis of a compelling interest. The consequences in practice of the right to have an item placed on the agenda of a general meeting are discussed further in Section V.iv.

At the European level as well, at the turn of the century the focus was on promoting greater shareholder participation in corporate governance. This was expressed in the first Shareholder Rights Directive, which grants shareholders in listed companies various rights aimed at facilitating voting (including cross-border), such as e-voting and proxy voting, which under Dutch law mostly existed already. The Directive also provides for the system – meanwhile mandatory in listed companies49 – of record dates, under which only shareholders registered on a particular date (approximately four weeks) before the general meeting are entitled to vote at that meeting. Most importantly, the introduction of a record date eliminates the need for share blocking, which discourages institutional investors from voting because it requires them to suspend their investment activity in respect of the blocked shares during the relevant period. As Eumedion, the interest group representing institutional investors, already concluded, this, in connection with the extended period for convening general meetings of shareholders (42 days), seems to have contributed to increased shareholder participation.

On 20 May 2017, the revised Shareholders' Rights Directive entered into force.50 Some of the rules are new to the Netherlands; others already apply under Dutch law, although these are generally the ones that have attracted the most media attention. For example, listed companies throughout the EU will have the right to identify their shareholders; in the Netherlands, this is possible under the Securities Book-Entry Transfers Act. Similarly, the 'new' right for shareholders to vote on the remuneration policy is already laid down in Section 2:135(1) of the Dutch Civil Code. Specific objectives of the revised Directive are to:

  1. increase the level and quality of engagement of asset owners and asset managers with their investee companies;
  2. create a better link between pay and the performance of company directors;
  3. enhance transparency and shareholder oversight on related-party transactions;
  4. ensure the reliability and quality of advice of proxy advisers; and
  5. facilitate the transmission of cross-border information (including voting) across the investment chain, in particular through shareholder identification.

The deadline for EU Member States to implement the Directive in national law is 10 June 2019. The bill implementing the revised Shareholders' Rights Directive was presented to the Lower House of Parliament in October 2018.

ii Equality of voting rights

The most fundamental right of a shareholder is the right to vote at meetings. In principle, Dutch corporate law adheres to the principle of equality of voting rights: all shares carry equal rights and obligations in proportion to their nominal value, and all shareholders whose circumstances are equal must be treated in the same manner.51 The articles of association may, however, provide otherwise. The principle of one share, one vote also applies.52 There are, however, important exceptions to these principles, a few of which are mentioned below.

The first exception is the use of loyalty shares to which extra voting rights or extra dividends are attached as a reward for long-term shareholders. The Supreme Court has held that the distribution of loyalty dividends is permitted.53 In the political arena, there have been various calls for the enactment of statutory rules on loyalty shares. In 2012, after consulting with experts and interested parties, the government decided to refrain from proposing new legislation for the time being. It concluded that the advantages of these shares are too uncertain, and that their limited marketability is a definite drawback. Legal commentators have also pointed out that a long-term shareholder is not necessarily an involved shareholder participating actively in the company's governance. Such shareholder would nevertheless profit from the extra dividends or voting rights. An important merger in terms of the corporate practice of two companies – Fiat Industrial and CNH Global – into a Dutch NV indicates that an enactment of the statutory rules on this issue is unnecessary. Based on the French model, the NV introduced loyalty shares with extra voting rights. In the context of the phased IPO of the nationalised bank ABN-AMRO (in November 2015), loyalty shares were contemplated, but for a number of reasons, including the fact that this would have been the first IPO to include such shares, the government decided against this.

A second exception to the principle of equality of voting rights is the issuance of protective preference shares: listed companies may protect themselves against hostile takeovers or shareholder activism by issuing preference shares to an independent foundation set up in advance for this purpose (see Section V.v).

A third exception to the principle of equality of voting rights is financial preference shares, which are used as a financing instrument. There is a disproportionate relationship between the voting rights acquired and the capital invested in respect of these shares, too. With respect to the issuance of financing preference shares, the Corporate Governance Code provides that the voting rights attached to such shares must be based on the fair value of the capital contribution.54 This represents an attempt to return to the one share, one vote principle.

iii Shareholders' duties and responsibilities

Under Dutch law, shareholders – unlike management and supervisory boards – are in principle not required to be guided by the interests of the company and its affiliated enterprise. Shareholders may, therefore, in principle give priority to their own interests, with due regard for the principles of reasonableness and fairness. Based on these principles, however, larger shareholders are considered to have a certain responsibility towards other parties. The Corporate Governance Code's preamble states: 'The greater the interest which the shareholder has in a company, the greater is his or her responsibility to the company, the minority shareholders and other stakeholders.' Institutional investors in particular are therefore being called upon to accept greater responsibility.

In this regard, the Corporate Governance Code seeks to increase the transparency of voting behaviour. Institutional investors must publish their voting policy on their website and report annually on how that policy has been executed in the preceding year. They must also report quarterly to the general meeting of shareholders on how they have exercised their voting rights.55 Furthermore, Eumedion adopted a set of Best Practices for Engaged Share-ownership in June 2011, which, inter alia, call on institutional investors to inform clients of conflicts of interest if, in relation to a particular matter, the investors have divergent roles that could affect their voting behaviour. According to its latest monitoring report regarding compliance with the Best Practices (December 2016), the concept of responsible and engaged share ownership has become common practice. A large majority of institutional investors applies a voting and engagement policy and reports on this (93 per cent). Compliance with the best practice of identifying conflicts of interest is improving (from 41 per cent in 2013 to 70 per cent).

At the European level, similar developments are taking place. In December 2012, the European Commission adopted the Corporate Governance Action Plan, which contains various initiatives to increase the engagement of shareholders with the corporate governance of undertakings. In this regard, the ESMA updated its guidelines in 2014 on acting in concert in the Directive on Takeover Bids (see Section V.v).56 In addition, the European Commission is of the opinion that institutional investors should be more transparent about their voting policies, as this would lead to better investment decisions and could also facilitate dialogue with the relevant company. In this context, the unclear role of proxy advisers is seen as a problem area. These issues are dealt with in the proposed revision of the Shareholders Directive (see Section V.i).

iv Shareholder activism

In practice, the shareholder rights described in Section V.i have also been actively exercised by hedge funds, most notably the right to have an item placed on the agenda of a general meeting.57 Although the aim of the new rights was to increase shareholder participation and strengthen the monitoring of management boards, the actions of hedge funds have also revealed a dark side to participation. In particular, the focus on short-term profits has had adverse effects in some cases. The most notable example of this was the role of the Children's Investment Fund (TCI), a hedge fund, in the acquisition of ABN-AMRO, one of the largest banks in the Netherlands (2007). TCI, which held only about 2 per cent of the shares, pressed ABN-AMRO management to sell all or part of the bank and distribute the proceeds as a bonus dividend. TCI managed to have this proposal placed on the agenda of the general meeting, and it was ultimately adopted. In the end, this led to the acquisition of ABN-AMRO by three foreign banks.

This transaction, in connection with a number of situations in which activist investors targeted companies with similar proposals, caused both government and Parliament to reconsider the desirability of shareholder activism. In May 2007, the Corporate Governance Code Monitoring Committee recommended certain legislative changes intended to counteract the short-term orientation of activist shareholders. To achieve a sustainable relationship between a company and its shareholders, the Monitoring Committee felt that shareholder conduct ought to become more transparent and that dialogue between the parties ought to be encouraged. The Corporate Governance Act, which entered into force on 1 July 2013, reflects this train of thought. The idea behind the Act is to enable the management board, through the introduction of disclosure obligations, to learn the identity and intentions of its shareholders at an early stage, so that it can enter into a dialogue with them. The minimum threshold for the obligation to disclose substantial holdings of capital or voting rights in listed companies has therefore been reduced from 5 to 3 per cent.58 In addition, the threshold for the right of shareholders to have items placed on the agenda for a general meeting has been substantially raised, from a capital interest of 1 per cent to a capital interest of 3 per cent; the alternative threshold in the case of an interest of €50 million for listed companies has been cancelled. Finally, the Act contains a mechanism enabling a listed company to identify its ultimate investors.

The issues of empty voting or securities lending, both of which have appeared to be important instruments for activists, have not been directly provided for in the Act. Hedge funds can use these devices to influence decision-making in the general meeting of shareholders without bearing any economic risk. The system of record dates provided for in the Shareholder Rights Directive (see Section V.i) is intended to discourage this practice. Furthermore, shareholders of listed companies are not only obliged to disclose their long positions in excess of a certain threshold, but also their gross short positions (see Section III), and should, when exercising the right to place an item on the agenda, disclose their full economic interests (both long and short). As a result, the shareholder's true motives for placing an item on the agenda should be revealed, which is supposed to discourage the practice of empty voting as well.

In limiting the right to have items placed on the agenda, the Corporate Governance Code goes further than the Act.59 The Code provides that a shareholder of a listed company may exercise this right only after having consulted the management board about this. If the item to be placed on the agenda may possibly result in a change in the company's strategy, the management board must be given a period of a maximum of 180 days to respond (the response time). The management board should use this period to confer with the relevant shareholder. The statutory period for such requests, however, is 60 days before the meeting – even for items relating to the company's strategy – and may, therefore, clash with the response time. A couple of years ago, the Enterprise Chamber issued an important ruling on the relationship between the code provision and the statutory provision. The court held that the response time is an elaboration of the statutory principles of reasonableness and fairness that shareholders are required to adhere to in their relations with the company, and must, therefore, be respected by an activist large shareholder.60 According to the court, the response time may only be disregarded on compelling grounds.

The trend towards limiting shareholder rights can also be discerned in Dutch case law. For example, the Supreme Court, in the summer of 2010, held that it is up to the management board to determine corporate strategy. Decisions of this nature need not be submitted to the shareholders for approval or consultation – not even on the grounds of reasonableness and fairness or non-statutory governance rules.61 This judgment limits the possibility for shareholders to demand strategic changes. This is echoed in a more recent judgment in which a large investor was denied the right to add a strategic item to the agenda.62

v Takeover defences and other protective measures

In Dutch practice, various (structural and ad hoc) defensive measures have been developed against, inter alia, the threat of hostile takeovers and shareholder activism, including the following:

  1. the incorporation of a protective foundation with a call option to acquire preferred shares;
  2. a binding nomination right for the company's board or another body regarding the appointment of directors;
  3. a proposal right for the board or another body in respect of certain resolutions of the general meeting of shareholders;
  4. imposing an ownership limitation on shareholders; and
  5. listing of depositary receipts instead of shares.

The most common takeover defence is the incorporation of a protective foundation with a call option to acquire preferred shares. The shares, which are issued when a threat materialises, change the balance of control within the general meeting of shareholders and make it possible to pass certain resolutions desired by management, or in some cases block certain undesired resolutions. Because preference shares are purchased for an amount less than their real value, the foundation acquires substantial control for little invested capital. The Supreme Court permits the issuance of protective preference shares provided they are necessary with a view to the continuity of the enterprise, and are adequate and proportional. The construction must be temporary in nature and intended to promote further dialogue.63 In the autumn of 2013, Dutch telecom company KPN successfully staved off a hostile takeover bid by Mexican company América Móvil with the help of such a foundation. In the wake of the bid, politicians again considered the question of whether the Netherlands is not too liberal and whether there should not be more possibilities for government intervention in takeovers of companies that serve a strategic public interest. A draft bill introducing the requirement for a declaration of non-objection for takeovers in the (vital) telecom sector was presented for online consultation in February 2017. So far, no bill has been presented to the Lower House of Parliament. Meanwhile, Research and Documentation Centre researchers under the Ministry of Justice investigated the way shareholdership, whether foreign or not, may have national security implications. In their research report of April 2017, they advocate a sector-specific check, such as currently exists for the energy and financial sectors, which is also proposed in the present draft bill regarding the telecoms sector. In this regard there has also been a new European development. In September 2017, the European Commission published a proposal for a regulation establishing a framework for the screening of foreign direct investments into the European Union, while allowing Member States to take into account their individual situations and national circumstances.64 Our government aspires to maintain an open investment environment, and suspects that the proposal will interfere with this objective. It believes that the proposal goes beyond what is necessary, and that guidelines would be more suitable than a regulation. As mentioned earlier, in late 2018 the government published draft legislation aimed at promoting a careful decision-making process in cases of shareholder activism or a hostile takeover. If enacted in its current form, the proposal would introduce a statutory cooling-off period of up to 250 days during which the shareholders' meeting would not be able to dismiss, suspend or appoint board members of a listed Dutch company under attack (see Section I.ii).

Shareholder and voting rights plans, and similar measures

As previously mentioned, Dutch law accepts a number of deviations from the one share, one vote principle (see Section V.ii). Instruments that are typically used as a defensive tool are dual-class structures, ownership limitations and – to a lesser extent – loyalty shares. The listing of depositary receipts instead of the shares themselves is not allowed as a defensive measure under the Corporate Governance Code,65 and its use by listed companies is slowly declining; it is expected that the relisting of ABN-AMRO (see above), where the government opted for this form of protection mainly because of complications connected with the more customary preference shares structure, will remain an exception.

White-knight defence

White-knight defences only occur occasionally in the Netherlands, probably because of the availability of preferable alternatives.

Staggered boards

Directors are typically appointed and reappointed on the basis of a rotation scheme, as required under the Corporate Governance Code.66 The concept of staggered boards, as far as we are aware, is not applied by Dutch listed companies.

vi Contact with shareholders

To avoid confrontations with the general meeting of shareholders, management boards may try to somewhat align corporate policy with the desires of shareholders and to seek out their opinions in advance. Although the general meeting has a statutory right to obtain information, based on which it is accepted that shareholders have the right to ask questions at the meeting, it is unclear from the relevant DCC provisions whether the management board can itself take the initiative to discuss its intentions with individual shareholders outside a meeting. In practice, such one-on-one meetings do take place. According to the Corporate Governance Code's best practice provision 4.2.2, companies should formulate a policy on bilateral contacts with shareholders and publish this policy on its website. It is important that particular shareholders are not favoured and given more information than others, however, as this would violate the principle that shareholders in the same circumstances must be treated equally. Price-sensitive information may not be disclosed. The fear of violating the market abuse rules causes some shareholders and companies to be hesitant about participating in one-on-one meetings.

Shareholders among themselves may in addition be afraid of being regarded as parties acting in concert, because under the provisions of the Directive on Takeover Bids67 such parties are obliged to make an offer for the listed shares of a company if they collectively acquire dominant control (30 per cent or more of the voting rights in that company's general meeting of shareholders). What exactly is meant by acting in concert is not very clear in practice, and may represent an obstacle in the path of cooperation among shareholders. For this reason, at the end of 2013 ESMA drew up a white list of activities on which shareholders can cooperate without being presumed to be acting in concert, which was updated in 2014 and again in 2019.68 However, if shareholders engaging in an activity on the white list in fact turn out to be cooperating with the aim of acquiring control over a company, they will be regarded as persons acting in concert and may have to make a mandatory bid. The sensitive subject of cooperation with regard to board appointments has been acknowledged, but was nevertheless left off the white list.


Several legislative plans are currently at the forefront of corporate governance in the Netherlands, some of which originated before 2017. For different reasons, many of these plans were delayed last year. For example, it was initially announced that a proposal for new legislation regarding partnerships would be presented in 2017, but this has not been published yet. The consultation is now scheduled for the beginning of 2019. Other bills containing corporate legislation have been at a standstill for most of 2018, such as the previously mentioned bill for the introduction of a central shareholders' register and the Management and Supervision Legal Entities Bill.

Looking at the 2019 legislative programme, the modernisation and simplification of corporate law, together with transparency and the prevention of malpractice, are still key. The modernisation of partnership legislation and of the rules governing public limited liability companies also continues, with proposals including a statutory cooling-off period for listed companies, the implementation of the Shareholders' Rights Directive and the dematerialisation of bearer shares. The Minister of Finance also announced in a letter to Parliament of 20 December 2018 his intention to organise a stakeholder meeting in the first quarter of 2019 to gauge the extent to which new tools, such as shares without nominal value and clawback arrangements, are needed. Other topics, such as the modification of the rights of depositary receipt holders, the introduction of non-voting shares and shares without dividend rights, and the shortening of the notice period for general meetings, may also be addressed.

Regarding transparency, a new draft bill published at the end of 2018 requires social organisations to publish the receipt of any large donations. This draft bill also proposes to require foundations to publish their balance sheet with a list of assets. By making such cash flows transparent, the government wishes to prevent financial and economic crime as well as the exertion of undesirable influence from abroad through cash donations to political, social and religious organisations.

Also with regard to the prevention of malpractice, the Management and Supervision Legal Entities Bill, as previously mentioned, is still before the Lower House of Parliament, although it was planned that it would enter into effect on 1 January 2018. The bill's purpose, in brief, is to harmonise a number of rules for all of the different types of legal entities so that they are in line with the rules currently applicable to private and public limited liability companies (BVs and NVs). This is to further strengthen public sector governance. In the same context of strengthening the governance of a specific sector, the Additional Measures Audit Firms Act was adopted in July 2018. The law introduced new measures for improving the quality of statutory audits and to strengthen the role of the AFM.

As mentioned before, new legislation is also on the horizon regarding additional scrutiny of takeovers of companies operating in vital sectors; and protection against improper shareholder activism, and hostile or risky (or both) takeovers (Sections I.ii and V.v). Protection against shareholder activism stems from the ongoing discussion concerning the position of shareholders, which previously led to the revised Shareholders' Rights Directive. Although the 2016 Corporate Governance Code requires companies to pay more attention to long-term value creation, no material changes were made to the new Code to alter the position of shareholders. Following the implementation of the revised Shareholders' Rights Directive and the proposed legislation regarding improper shareholder activism, the discussion about the position of shareholders will continue in 2019.

With regard to the financial sector, the Minister of Finance announced in a letter to Parliament a number of statutory measures to tighten up the remuneration policy in the financial sector in December 2018. The Minister announced the following legal measures:

  1. the obligation for (management) board members and employees of financial undertakings to hold shares and (certain) other components of their fixed remuneration for a period of five years;
  2. the obligation for each financial undertaking to describe in its remuneration policy the manner in which it renders an account of the relationship between the remuneration of its (management) board members and employees to the undertaking's function in the financial sector and its position in society; and
  3. the limitation of exceptions to the bonus cap for persons that fall outside of a collective labour agreement.

The Minister is further considering a statutory obligation to reclaim part of the fixed remuneration of board members of systemically important banks in the event of them requiring state aid (also referred to as clawback). Also within the financial sector, as previously stated, the DNB announced in its Supervision Outlook 2019 that, consistent with international, European and national trends, one of their top three priorities of 2019 will be emphasising future orientation and sustainability.

With this in mind, it seems clear that corporate governance remains a hot topic in the Netherlands. The goal is to create a proper balance between the interests of the various stakeholders within an enterprise without losing sight of the interests of society as a whole. In the end, a model will have to be found whereby risky conduct is discouraged and public confidence in the management boards of banks and companies is restored.


1 Geert Raaijmakers is a partner and Suzanne Rutten is a professional support lawyer at NautaDutilh NV.

2 SNS Reaal, 4 November 2016.

3 Book 2, Title 4, Part 6 of the DCC.

4 See Rients Abma (in Dutch), 'Naar de one-tier board', Goed Bestuur, 2012/3.

5 Willem J L Calkoen, 'The One-Tier Board in the Changing and Converging World of Corporate Governance', dissertation, Rotterdam, 2011, p. 305.

6 Article 2:129 of the DCC.

7 Article 2:140(2) of the DCC.

8 Article 2:164 of the DCC.

9 As a result of recently adopted EU legislation the responsibilities of the audit committee will increase in the future; see Section III.ii.

10 Unidek, 15 April 2005.

11 Best Practice 3.2.3 of the Corporate Governance Code 2016.

12 Article 2:158 of the DCC.

13 Article 2:161 of the DCC.

14 Stork, 17 January 2007.

15 Principle 2.1 of the Corporate Governance Code 2016.

16 Named after the chairperson, Professor Annetje Ottow. The Committee also comprised Professor Janka Stoker and Jan Hommen.

17 This detailed letter, named 'Eindrapport commissie Ottow', of 13 January 2017, can be found on www.dnb.nl (in Dutch only).

18 Report on the peer review of the 'Guidelines on the assessment of the suitability of members of the management body and key function holders' (EBA/GL/2012/06) of 16 June 2015.

19 Best Practice 2.4.2 of the Corporate Governance Code 2016.

20 Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms.

21 Act of 25 June 2014 implementing the Capital Requirement Directive and Regulation (Bulletin of Acts and Decrees 2014, 253).

22 Proposal for a Directive of the European Parliament and of the Council on improving the gender balance among non-executive directors of companies listed on stock exchanges and related measures (COM (2012) 614).

23 Directive 2014/95 of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups.

24 Directive 2014/95/EU amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups.

25 Article 2:130 of the DCC.

26 Fairstar, 30 September 2015.

27 Poot-ABP, 2 December 1994.

28 Dockwise/Fairstar, September 2015.

29 Landis, 19 June 2013,Van der Moolen, 15 February 2013 and Meavita, November 2015.

30 Resort of the World/Maple Leaf, 7 October 2016.

31 Section 17 Regulation 596/2014 of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 004/72/EC (MAR).

32 Section 17(5) MAR.

33 Section 5:25c et seq. of the FSA.

34 Section 5:38-44 of the FSA. The Netherlands used the Member State option to maintain a lower threshold (3 per cent as opposed to 5 per cent in the Directive): see previous footnote.

35 The absence of any economic interest with the party legally entitled to exercise the voting right at the general meeting of shareholders.

36 Audit Firms (Supervision) Decree.

37 Best Practice 1.1.1 of the Corporate Governance Code 2016.

38 Supervision Outlook 2019 of 29 November 2018, on the website of DNB: www.dnb.nl.

39 Proposal for a regulation of the European parliament and of the council on disclosures relating to sustainable investments and sustainability risks and amending Directive (EU) 2016/2341, Proposal for a Regulation of the European Parliament and of the Council on disclosures relating to sustainable investments and sustainability risks and amending Directive (EU) 2016/2341 COM/2018/354 final, Proposal for a Regulation of the European Parliament and of the Council on the establishment of a framework to facilitate sustainable investment, and Proposal for a Regulation of the European Parliament and of the Council on the establishment of a framework to facilitate sustainable investment COM/2018/353 final.

40 Principle 3.1 of the Corporate Governance Code 2016.

41 Banking Tax Act (Bulletin of Acts and Decrees 2012, 325); the Act entered into force on 1 October 2012.

42 Bulletin of Acts and Decrees 2015, 45.

43 The Clawback Act (Bulletin of Acts and Decrees 2013, 563).

44 Act amending the Works Councils Act regarding the competences of the Works Council on directors' remuneration, Stb 2018, 221.

45 Article 2:107a of the DCC.

46 ABN-AMRO, 13 July 2007.

47 Article 2:114a of the DCC was introduced by means of the Corporate Governance Act; see Section V.iv.

48 Directive 2007/36/EC.

49 Article 2:119(2) of the DCC.

50 Directive (EU) 2017/828 of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement.

51 Article 2:92 of the DCC.

52 Article 2:118(2) of the DCC.

53 DSM, 14 December 2007.

54 Best Practice 4.3.4 of the Corporate Governance Code 2016.

55 Best Practice 4.3.6 of the Corporate Governance Code 2016.

56 This statement was updated in June 2014.

57 To put things into perspective, Eumedion estimates that in the Netherlands between 2005 and 2011, in total 40 shareholder proposals (not just hedge funds) were submitted, against around 7,500 management proposals.

58 See Section III.

59 Best Practices 4.1.5 and 4.1.6 of the Corporate Governance Code 2016.

60 Cryo-Save, 6 September 2013.

61 ASMI, 9 July 2010.

62 Boskalis/Fugro, 12 January 2018.

63 RNA, 18 April 2003.

64 Proposal for a Regulation of the European Parliament and of the Council establishing a framework for screening of foreign direct investments into the European Union, COM(2017) 487 final.

65 Principle 4.4 of the Corporate Governance Code 2016.

66 Best Practice 2.2.4 of the Corporate Governance Code 2016.

67 Directive 2004/25/EC.

68 Public statement, Information on shareholder cooperation and acting in concert under the Takeover Bids Directive, ESMA31-65-682, January 2019.