4.4.5 Non-executives in the majority on the future one-tier board

Generally supervisory boards are larger than management boards. At present, the point is not very important, because supervisory boards have their veto right even if they are small. The Frijns Code does stipulate for one-tier boards that non-executives must have a majority.1 The Act is silent on this item and this is regarded as remarkable by some. The fact that the Act has not made an explicit requirement of such majority can be seen against the background of Dutch culture, not to make a point about power and about majorities. In the VOC, the city of Amsterdam did not insist on having a majority, although Amsterdam had contributed most of the capital. The Dutch traditionally attempt to seek consensus; power is veiled. The fact that the Act does not explicitly stipulate that for a one-tier board the non-executives must be in the majority, does not mean that boards can ignore this requirement, because as mentioned before, the Frijns Code does stipulate such a majority and the Frijns Code is applicable for listed companies. There could be a problem for Structure Regime subsidiaries of large groups, such as Corus BV and Organon BV. If they would for example have had a one-tier board with five executives and three nonexecutives and the executives would vote for the parent's strategy, they would outvote the non-executives. Most likely the Works Council, when asked to advise2 on a change from a two-tier to a one-tier system, will advise positively under the condition that there will always be more non-executive directors than executive directors. For important resolutions in Structure Regime companies the consent of the majority of the non-executive directors is required by article 2:164a/274a(4) DCC. In his answer to the senate, "Eerste Kamer", the Minister of Safety and Justice, says that in practice it is unlikely that the non-executives will be smaller in number than the executives.3

Among those, who argue that there should be more non-executives than executives, is Professor Mr P. van Schilfgaarde. He has successfully advised the Netherlands Antilles to put this in their One-Tier Board article 18 of Book 2 of their Civil Code. His argument is that since the non-executives have a large responsibility and liability as directors, they ought to collectively have the majority. I would advise most NVs and BVs to provide for such a majority in their articles of association.