Einde inhoudsopgave
The One-Tier Board (IVOR nr. 85) 2012/1.2
1.2 Introduction: one-fier board as alternative
Mr. W.J.L. Calkoen, datum 16-02-2012
- Datum
16-02-2012
- Auteur
Mr. W.J.L. Calkoen
- JCDI
JCDI:ADS600685:1
- Vakgebied(en)
Ondernemingsrecht (V)
Voetnoten
Voetnoten
This One-Tier Board Act is called 'Wet van 6 juni 2011 tot wijziging van Boek 2 van het Burgerlijk Wetboek in verband met de aanpassing van regels over bestuur en toezicht in naamloze en besloten vennootschappen'.
Parliamentary Papers II, 2008/09, 31763 no. 6, p. 3.
Please note that in this book the words he/his/him also cover she/her/her, as appropriate.
Pieter Couwenbergh and Hein Haenen, De Regels van het Spel: Gesprekken met Morris Tabaksblat [translated title: Rules of the Game], 3'1 ed. (2008), p. 138 ('Couwenbergh and Haenen, Tabaksblat (2008)').
All former Commonwealth countries, North and South American countries, Spain, Sweden, Switzerland, Belgium and Luxembourg have one-tier boards. France has the altematives of one-tier and a two-tier system, but mostly uses one-tier boards. Italy traditonally has one general director and statutory auditors and has added one-tier and two-tier altematives, but usually practices the traditional system. The Netherlands, Germany, Norway, Denmark, Finland and the Middle European countries (some, like Hungary and Romania have introduced the altemative one-tier) and China and Russia have two-tier boards, see Alexander Loos (ed.), Directors' Liability: A World Wide Review (2010) ('Loos (2010)').
Erasmus said: 'If no one would be ill, there would not be good doctors or good medicine'.
The Netherlands has had a two-tier board system — i.e. a management board and a supervisory board — for nearly 400 years.
A draft act presented by the Dutch government, to make a provision for one-tier boards in Dutch company law as an altemative option to a two-tier board structure, was passed by the House of Representatives of Parliament ("Tweede Kamer") on 8 December 2009 and the Upper Chamber or Senate on 6 June 2011. This confirmed the optional One-Tier Board Act, which is an amendment to Book 2 of the Dutch Civil Code (DCC),1 is hereinafter called the "Act". Under the new legislation, companies will be able to choose between a two-tier board (a management board and a separate supervisory board) and a one-tier board (executive and non-executive directors on a single board). The main reason for introducing this alternative is to have a flexible law for foreign shareholders,2 since over 70% of the shareholders in the total of Dutch listed companies are foreigners. There are many foreign board members and institutional investors who favour a one-tier board.
The Act proposes that the different functions of the members of a one-tier board of a one-tier company (executive and non-executive members) should be described in the company's articles of association. Non-executive members always perform a monitoring role, determine the remuneration of the executive members and one of them holds the position of chairman.3 If a company chooses to have a one-tier board structure, the position of CEO and chairman in each company must be fulfilled by two separate persons.
There are special two-tier board rules, which are mandatory in the Netherlands for large companies that meet certain criteria, structuurvennootschappen. Those supervisory boards have specific extra powers and are nominated and elected according to specific rules set out in the DCC. These rules will also be applicable to non-executive directors on the new one-tier board of such large companies, which fall under the regime for "structuurvennootschappen".
This is a good moment for the Dutch corporate world to look at the practice of one-tier boards in the UK and the US. It can help the Dutch to decide whether to opt for a one-tier board and, if so, what type of one-tier board and, if not, what Dutch boards can learn from the British and US practice of corporate governance in general. Finding "instances that might be instructive" for Dutch practice in British and US corporate governance practice is one of the main questions to be investigated in this study. Even Dutch companies that retain a two-tier board can learn from the British and US theory and practice of corporate governance. For example, Morris Tabaksblat, retired CEO of Anglo-Dutch Unilever and chairman of Anglo-Dutch Reed Elsevier, has said "a two-tier system with a managing board and a supervisory board is a preferable arrangement, but with a 'turbo on it'; this can happen by having the Dutch supervisory board chairman's tasks move more towards those of the UK chairman."4
We can learn as well from the practice of US non-CEO chairmen and "lead" directors. It will be an advantage if Dutch supervisory directors could be inspired by some of the examples of how British non-executive directors and US independent directors to receive timely information, have access to staff, spend time on regular evaluation and have set up succession procedures; in short, how to play a more active role in developing strategy and long-term planning and follow a framework for dealing with company matters and with each other.
Giving Dutch directors a glimpse of the British and US corporate world can be useful for their understanding of expectations of their own UK and US shareholders. In addition, the present book can be of interest to the many foreign, often British or American, directors of Dutch companies, enabling them to compare situations in the three countries: Britain, the US and The Netherlands. It will give them an insight in Dutch practice. A comparison of UK and US practice as observed by a Dutchman might be of value to them. At the same time, I hope this study can foremost be of use to Dutch directors, lawyers and students.
Why have I chosen Britain and the US besides the Netherlands? After all, many other countries have one-tier boards. Indeed, more countries have one-tier boards rather than two-tier boards.5 The choice of Britain and the US came up for the following reasons.
The British and the Americans have put a lot of thought into corporate governance over the last 40 years:
Britain has taken the lead in the area of corporate governance since 1992, with the first Code of Best Practice, the Cadbury Code, introducing such concepts as balanced boards, separate board chairmen, hard-working, wellinformed outside directors, strategy debate, evaluation and succession;
the US has actively used the term "corporate governance" since 1977 and was the first to prescribe an audit committee and to develop the practice of executive sessions; furthermore, the US have developed a clear line of case law on the duty of directors; US shareholder activists and institutions have been active since the 1990s, especially in the last 5 years, developing codes of best practices and fighting for shareholder rights.
The second reason is that by far the most investors are organized by way of US and UK investment institutions.
Each of the three countries, the UK, the US and The Netherlands, has had its scandals, such as BCCI, Maxwell, Penn Central, Enron, WorldCom and Ahold; they are lessons how not to go about it.6 Each country, of course, has many hard-working and trustworthy directors and companies that set good examples for best practices in corporate governance. Other directors can learn from all of this. The recent credit crisis has made everyone — especially people connected with banks — reassess whether boards and board supervision function properly.
The chapters about each country will have sections on history, culture, who holds the shares, corporate law and informal codes, the composition of boards, the role and duties of directors and their liability. These items are briefly described below.