Briefly speaking, Corporate Governance is about ensuring proper management and effective supervision within a legal entity. To that end, it is important how control is arranged between the executive board, the shareholders (or members), and the supervisory board of the legal entity, and how the management and supervision are accounted for. The function of the legal entity within society may be important in this regard.

Arrangements

Arrangements must be made within every legal entity as to how the governance is organised. This concerns the relationship between various stakeholders, such as the executive board, the shareholders’ meeting, and the supervisory board. The employees are also important stakeholders of a legal entity and can exert influence on the company’s management through a Works Council or participation council [medezeggenschapsraad]. The arrangements regarding governance are laid down in the company’s articles of association [statuten] and internal regulations, such as executive or supervisory board regulations. Among other things, these specify who has what powers, whether certain decisions must be approved by another body, and how conflicts of interest must be dealt with.

Governance Code

The law offers a great deal of scope as regards how the management and supervision are organised within a legal entity. Listed companies in the Netherlands are subject not only to the general legal provisions but also to the Dutch Corporate Governance Code. That Code lays down various rules for the relationship between the executive board, the supervisory board, and the general meeting of shareholders. Listed companies are legally obliged to comply with the Code.<0} The “comply or explain” rule applies: if a rule of the Code is not applied, the company’s annual report must explain why. In addition to the Corporate Governance Code, there are various sector-specific governance codes, for example those for the care sector, education, and housing corporations. These sector codes lay down principles and basic assumptions for good governance..

Advice needed?

Ideas as to what constitutes good governance are constantly changing. The lawyers in our Corporate Advisory Team have extensive experience in this field and are always up to date with the current situation. If necessary, they collaborate closely with our Education, Care and Housing Corporations sector teams, meaning that the right sector-specific knowhow is always available.

Services

Our Corporate Advisory Team can assist you with a wide range of legal issues:

  • advice and guidance on how governance is organised within a legal entity;
  • checking the governance structure of your legal entity;
  • identification of the need to amend or draw up articles of association, shareholder agreements, and/or internal regulations.

If you have any questions, please contact one of the lawyers in our Corporate Advisory Team.