The Dutch corporate board model is generally based on a two-tier board principle. Directors operate in a hierarchical board organization with a supervisory board (“Raad van Commissarissen”) and a separate management board (“Raad van Bestuur”). The Dutch supervisory board is entirely comprised of supervisory directors. The management board is composed of managing directors. Supervisory directors within so-called “structure corporations” are nominated and appointed by the supervisory board through a system of controlled co-optation.
Shareholders at the annual meeting and employees in the works council have the right to propose supervisory directors in structure corporations. The Civil Code provides also for regimes that grant flexibility to foreign investors with respect to the governance structure of corporations incorporated in the Netherlands that belong to an international group of corporations. In these corporations, the annual meeting nominates and appoints managing directors.
Yet, the co-optation system is still in place in these so-called mitigated structure corporations. With the publication of the final forty recommendations of the Peters Committee, corporate governance has also been put on the agenda of institutional investors, legislators and directors in the Netherlands. Although it is too early to determine the impact of the recommendations on board practices of corporations listed at the Amsterdam Exchanges, research in this chapter suggests that developments take place in the structure and the composition of supervisory boards in the Netherlands.
Although managing directors and supervisory directors normally meet together, more emphasis is placed on separate supervisory board meetings. When justified for the size of the supervisory board, board committees have become more common. More emphasis is also put on independent supervisory board leadership and supervisory board composition. These developments suggest that supervisory directors are increasingly responding to pressures from commentators to adapt to new corporate governance standards in the Netherlands.
Current Trends in Corporate Governance in the Netherlands
Existing corporate governance framework:
Boards in listed corporations are undergoing changes:
Sources: Maassen and van den Bosch (1997, 1999a); Maassen (1998b, 1999a).
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