10.4.2 Appointment of supervisors

The appointment of supervisors in the United Kingdom, the Netherlands as well as Sweden is basically a task of the general meeting. However, the power of the general meeting, the way candidates are nominated and the influence of for example employees differ between the three countries.

The British situation is the least complex with a nomination committee that proposes nominees for positions on the board, who are appointed by the general meeting through the adoption of a resolution. Without any additional specifications in the company’s articles of association, such a resolution is adopted by a simple majority. A higher majority or even unanimity can be specified in the articles of association. Besides that, the articles of association can provide that the board itself may appoint directors. As mentioned before, a weak point is the possible involvement of executive directors or the CEO in the nomination committee.

The situation in the Netherlands is more complicated. Normally, the general meeting appoints supervisory directors. However, the articles of association may provide that one third of the supervisory board is appointed otherwise than by the general meeting, such as by the supervisory board or priority shareholders. In the case of a structure regime, the general meeting may appoint the candidates for the supervisory board, which are nominated in line with an outline profile by the supervisory board itself. A majority of the general meeting, representing one third of the issued capital, may reject the nominee. If the nominee is neither appointed nor rejected, the supervisory board may appoint the nominee. Furthermore, the works council and the general meeting have the right to recommend nominees in companies with the structure regime. However, this supervisory board is not obliged to nominate these recommended supervisory directors. The works council has an enhanced right of recommendation for one third of the supervisory board seats as well. However, the supervisory board may object to the recommendation under certain circumstances. In the Netherlands, therefore, the power of the supervisory board has become rather considerable at the expense of the power of the general meeting.

Although the Swedish board also consists of employee representatives, their appointment procedures are not taken into consideration here. In Sweden, the nomination committee proposes candidates that can be appointed by the general meeting. Since shareholders dominate the nomination committee and shareholders also decide about the appointments, the power of the shareholders in the appointment of board members can be regarded as considerable. The articles of association may provide that a part of the board, which is not a majority, may be appointed in a different way. For example, the government or a large shareholder can appoint these directors. Especially if a shareholder is allowed to appoint this group of directors, the power of shareholders is increased further. This has a negative influence on the board’s independence from shareholders.

(Consideration 10.7) If a certain person, group of persons or corporate body is responsible for the appointment of the supervisor, this certain person, group of persons or corporate body has a certain power over the supervisor and this might have a negative influence on the supervisor ’s independence. Therefore, not one single stakeholder may be dominant in the appointment of supervisors in order to have a strong preconditions building block of independence. Employees have a certain influence in the Netherlands and Sweden. Furthermore, the general meeting has a strongvoice in all three countries except for Dutch structure regime companies. But the influence of shareholders in Sweden is extremely strong and this situation should certainly be reconsidered.