Reinier advises national and international companies
reinier.russell@russell.nl +31 20 301 55 55Many large companies – two-tier board companies – are required to establish a supervisory board. May the court require a company to establish a supervisory board so that the general meeting of shareholders will lose part of its powers?
Large BVs and NVs – two-tier board companies – are required to establish a supervisory board. In brief, a two-tier regime applies if a company:
When a company meets these requirements it should inform the chamber of commerce accordingly. If the company is registered as such with the chamber of commerce for three years uninterruptedly, the company will automatically become a two-tier company.
Companies must take measures for the application of the structural regime. The articles of association have to be modified and a supervisory board must be set up by the general meeting of shareholders. The powers of the supervisory board include the appointment of the directors of the company. One third of the supervisory board members will be appointed upon recommendation of the works council. The supervisory board can object to the recommendation of the candidates.
However, if the company does not introduce a structural scheme and establish the supervisory board voluntarily, can it be ordered by the court to do so?
The North Nederlands district court in preliminary relief has recently expressed its views on this question. Several works councils had claimed in preliminary relief proceedings to order the holding company to establish a supervisory board. To this end, the works councils had adopted the position, among others, that the company would qualify as a two-tier company.
Though the district court gave priority to the general meeting’s exclusive power to establish the supervisory board, the district court considered itself authorized to order the company to establish a supervisory board. According to the district court, the company will then have to ensure internally that the order will be carried out.
Do you have any questions about the establishment of a Works Council, or any other questions regarding corporate law and employee participation, please contact us:
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