(NON)MANDATORY RULES INDUTCH CORPORA TE LAW Whereas partnerships are of a contractual nature, corporations are regarded as institutions under Dutch law. The company is perceived not merely as a shareholders instrument. but as an institution where numerous interests come together. shareholders, creditors and employees 4 Its institutional features can be deduced from various statutory prov isions. Both the executive and the supervisory board have a duty to act in the interest of the company. Furthermore, the company and all involved in its organisation have a legal duty to behave towards eachother according to reasonableness and faimess. Henceforth, all parties with a legitimate interest may start proceedings for the annulment of a resolution of a company s organ which is in breach of a statutory provision or the articles of association or contrary to reasonableness and fa iness. It is, however, questionable whether employees (or the works council) may in fact rely upon the above-mentioned provisions. Moreover, the general meeting of the shareholders is not regarded as the supreme organ of the company; it is bound by the statutory division of powers just as the otherorgans 6 In the case law, the intuitu personae character of small family companies o quasi-partnerships is recognized, most notably by increasing fiduciary duties in analogy with partnership aw. 7 Recent voices in the literature suggest a new emphasis on the instrumentary character of the company& Statutory and other mandatory rules The aw goveming NVs and B Vs can primarily be found in book 2 of the Dutch Civil Code(Burgerliik Wetboek, hereafter BW). Its mandatory na ture derives from art 2: 25 Bw, which states that the prov isions of Book 2 may only be modified to the extent allowed by the specific provision. Furthermore, NVs issuing securities to the public are subject to the Act on the Supervision of the Securities Trade(wet Toezicht Effectemerkeer 1995, hereafter Wte 1995). The Wte 1995 conta ins obligations on fling a prospectus and on disclosing information. It also prohibits insider dealing Economic Council(SER a consultative committee cons isting of employers employees and 4 governmental representatives)proposes more shareholder influence in the appointmentprocedure See VAn SCHILFgaarde, Van de bv en de nv, Ilth edition, Deventer 1998, Chapter I MAEIJER, Het belangenconflict inde naamloze vennootschap, Deventer 1964 The legal duty only exst towards the supervisory board, but is generally considered to apply to the executive board as well. ASSER-MAELJER 2-ll Vertegenwoordigingen rechtspersoon. De naamloze ende besloten vennootschap 2nd edition, Deventer 2000, nr 293 VAN DERGRINTEN, Handboek voor de naamloze en de besloten vennootschap, 12thedition, Zwolle 1992, nr 231 Hoge Raad 2 1 January 1955, Nederlandse urispridentie 1959, 43(Forumbankl Hoge Raad 31 December 1993, Nederlandse urispnentie 1994, 436( Verenigde Bootlieden) See abo PTLO-RAAIMAKERS, Vennootschap- en rechtspersonenrecht 4th edition, Deventer 8. Cf. BLANCO FERNANDEZ, Vennootschapsrechtelijke werk ing van stemovereenkomsten vennootschapsrecht RM Themis 1999, p. 43 ff. and RAAIJMAKERS, Rechtspersonen tussen contract en instituut Deventer 1987.(NON) MANDATORY RULES IN DUTCH CORPORATE LAW 3 Whereas partnerships are of a contractual nature, corporations are regarded as institutions under Dutch law. The company is perceived not merely as a shareholders instrument, but as an institution where numerous interests come together: shareholders , creditors and employees . 4 Its institutional features can be deduced from various statutory provisions. Both the executive and the supervisory board have a duty to act in the interest of the company.5 Furthermore, the company and all involved in its organisation have a legal duty to behave towards eachother according to reasonableness and fairness . Henceforth, all parties with a legitimate interest may start proceedings for the annulment of a resolution of a company s organ which is in breach of a statutory provision or the articles of association or contrary to reasonableness and fairness . It is, however, questionable whether employees (or the works council) may in fact rely upon the above-mentioned provisions. Moreover, the general meeting of the shareholders is not regarded as the supreme organ of the company; it is bound by the statutory division of powers just as the other organs.6 In the case law, the intuitu personae character of small family companies or quasi-partnerships is recognized, most notably by increasing fiduciary duties in analogy with partnership law. 7 Recent voices in the literature suggest a new emphasis on the instrumentary character of the company.8 3 Statutory and other mandatory rules The law governing NVs and BVs can primarily be found in book 2 of the Dutch Civil Code (Burgerlijk Wetboek, hereafter BW). Its mandatory nature derives from art. 2:25 BW, which states that the provisions of Book 2 may only be modified to the extent allowed by the specific provision. Furthermore, NVs issuing securities to the public are subject to the Act on the Supervision of the Securities Trade (Wet Toezicht Effectenverkeer 1995, hereafter Wte 1995). The Wte 1995 contains obligations on filing a prospectus and on disclosing information. It also prohibits insider dealing. Economic Council (SER a consultative committee consisting of employers , employees and governmental representatives) proposes more shareholder influence in the appointment procedure. 4. See VAN SCHILFGAARDE, Van de BV en de NV, 11th edition, Deventer 1998, Chapter 1. MAEIJER, Het belangenconflict in de naamloze vennootschap, Deventer 1964. 5. The legal duty only exists towards the supervisory board, but is generally considered to apply to the executive board as well. ASSER-MAEIJER 2-III, Vertegenwoordiging en rechtspersoon. De naamloze en de besloten vennootschap, 2nd edition, Deventer 2000, nr. 293. VAN DER GRINTEN, Handboek voor de naamloze en de besloten vennootschap, 12th edition, Zwolle 1992, nr. 231. 6. Hoge Raad 21 January 1955, Nederlandse Jurisprudentie 1959, 43 (Forumbank). 7. Hoge Raad 31 December 1993, Nederlandse Jurisprudentie 1994, 436 (Verenigde Bootlieden). See also PITLO-RAAIJMAKERS, Vennootschaps- en rechtspersonenrecht, 4th edition, Deventer 2000, nr. 1.93. 8. Cf. BLANCO FERNANDEZ, Vennootschapsrechtelijke werking van stemovereenkomsten, Ondernemingsrecht 1999, p. 151. See also TIMMERMAN, Over de toekomst van het vennootschapsrecht, RM Themis 1999, p. 43 ff. and RAAIJMAKERS, Rechtspersonen tussen contract en instituut, Deventer 1987