8.2.2.2 Structure regime

The election of supervisory board members in companies that fall within the ambit of the structure regime is different. These companies are obliged to have a supervisory board of at least three people, according to section 2: 158 paragraphs 1 and 2 DCC. When the number of supervisory board members falls below this number, the board shall take measures to supplement the number without delay. The general meeting appoints the members of the supervisory board on the nomination of the supervisory board itself. However, the supervisory board nominates these candidates to the extent that their appointment was not already made in the deed of incorporation or prior to the moment the structure regime applied to the company (paragraph 4). If there are no supervisory board members, the general meeting appoints the members (section 2: 159 paragraph 1 DCC). According to the second paragraph of section 2: 159 DCC, the works council may recommend persons for appointment as supervisory director (Maeijer et al. 2009: 574).

The nomination must be accompanied by reasons provided by the supervisory board and the articles of association may not restrict the circle of candidates (2: 158 paragraph 4 DCC). However, the supervisory board must adopt an outline profile of the supervisory board and its size, which must take into account the nature and activities of the company and the required expertise and background of the supervisory board members (2: 158 paragraph 3 DCC). In this sense it is possible for the supervisory board to influence the circle of candidates, but the initial outline profile and changes to it must be discussed with the general meeting and works council. The nomination and proposal, together with the reasons, must be announced to the general meeting and works council at the same time.

Section 2: 158 paragraph 5 DCC offers the opportunity for the works council and general meeting to recommend persons to the supervisory board which it may nominate as supervisory directors. In order to offer the works council and general meeting enough opportunity to find a suitable candidate, the supervisory board shall inform both parties in good time for what reason and according to which profile the vacancy must be filled. The supervisory board is not obliged to nominate the recommended supervisory directors (Maeijer et al. 2009: 562).

For one-third of the supervisory board seats – or the closest lower number divisible by three – the works council has an enhanced right of recommendation (section 2: 158 paragraph 6 DCC). The enhanced right of recommendation entails that the supervisory board shall nominate, for one-third of the supervisory board positions, candidates who are recommended by the works council. The supervisory board may object to a recommendation if it expects that the recommended candidate is not fit for the job or if the supervisory board will not be constituted properly if an appointment is made according to the recommendation. If the supervisory board objects to the recommended candidate, it will notify the works council, accompanied by reasons. The supervisory board will immediately attempt to reach agreement on the nomination and proposal with the works council. If no agreement can be reached, a representative of the supervisory board shall – at least four weeks after the start of the consultation – apply to the Enterprises Division of the Court of Appeal in Amsterdam to declare the objection of the supervisory board well-founded. If the Enterprises Division declares the objection well-founded, the works council may make a new recommendation for the vacancy. Otherwise, the supervisory board shall give the recommended candidate a place on the nomination list (paragraph 7). Paragraph 8 states that there shall lie no remedy against the decision of the Enterprises Division.

Section 2: 158 paragraph 9 DCC provides that the general meeting appoints the new supervisory board members. It may reject the nomination by an absolute majority of votes, which should represent more than one-third of the issued capital. If the general meeting rejects the nominated candidate with an absolute majority of votes, but if that majority does not meet the one-third requirement of the issued capital, a further meeting may be convened at which the nomination – for which the supervisory board shall recommend other candidates – may be rejected with an absolute majority of votes. If the general meeting neither appoints the nominated candidate nor rejects the nominated candidate, the supervisory board shall appoint the nominee (Maeijer et al. 2009: 568, 569). According to section 2: 158 paragraph 12 the articles of association may provide alternative provisions for the nomination of supervisory directors in a structure regime; approval of the supervisory board and consent of the works council is required to amend the articles of association. Maeijer et al. (2009: 577-579) elaborate on the possibilities and implications of this paragraph.