209 Board autonomy and its limits.

The second aspect of the position of the board in Dutch corporate law revolves around the autonomy of the board to pursue a strategy oriented towards social and ecological interests. In principle, the board has the legal autonomy to define and pursue its own strategy, in accordance with its general responsibility to achieve durable success for its corporation.1 Meanwhile, Dutch corporate law provides important limits upon the board’s autonomy, particularly in relation to the engagement of shareholders and other stakeholders.2 The global market for corporate control provides another extra-legal limit to board autonomy by allowing for a hostile takeover in situations of perceived inefficiency caused by the board.3 While the legal responsibilities of the board provide a minimum standard for the required inclusion of social and ecological interests in its decisions, the rules restraining board autonomy provide a maximum standard within which the board is free to pursue a strategy oriented towards social and ecological interests.

In my assessment, the potential inclusion of social and ecological interests in Dutch corporate governance raises four issues in relation to the autonomy of the board.4 The first issue revolves around the position of shareholders in corporate governance and the question of whether they should be expected to exercise their governance rights in accordance with stewardship responsibilities. A second issue focuses on the rights of other stakeholders to engage with the board concerning its strategy, particularly the representatives of social and ecological interests. In relation to the discipline of board autonomy provided by the market for corporate control, a third issue arises as to whether boards should be able to protect their social and ecological strategy against hostile takeover threats which pursue partial shareholder interests. This allocation of protective measures to the board raises a separate fourth issue of dealing with severe corporate mismanagement and whether other ultimate remedies are necessary to discipline board autonomy at the expense of social and ecological interests. In the coming sections I will reflect on these issues from the point of view of each perspective in Dutch corporate legal theory and I will articulate integrated recommendations to overcome them.5