Corporate Social Responsibility (IVOR nr. 77) 2010/4.4.8:4.4.8 Legal consequences

Corporate Social Responsibility (IVOR nr. 77) 2010/4.4.8

4.4.8 Legal consequences

Documentgegevens:

Mr. T.E. Lambooy, datum 17-11-2010

Datum: 17-11-2010
Auteur: Mr. T.E. Lambooy
JCDI: JCDI:ADS363378:1
Vakgebied(en): Ondernemingsrecht (V)

The fact that a large company must now include non-financial key performance indicators in its annual report, rather than in an environmental, social or other type of report, has legal relevance. A company's non-compliance exposes it to certain legal risks. Under Dutch law, various parties, for instance stakeholders of the company, could commence an action against a company that fails to comply with article 2:391 DCC. Although there have been no cases tried in respect of the new obligation to include non-financial information in the annual report, in Table 4.1 a brief overview of the actions which are theoretically possible in respect of annual reports is provided.

*Table 4.1 Legal actions under Dutch law*
Type of action	Based on section(s)	By whom	Possible results
Annual report proceedings before Enterprise Chamber of the Amsterdam Court	447 up to 45 3,1 3 93 and 394, Book 2 DCC	Any interested party:2 shareholders, employees and, under circumstances, unions, creditors, financiers or NGOs. Advocate General of the Amsterdam Court of Appeals. AFM.	Respectively, Court order to adjust the contents of the annual report, to provide information (only AFM), to appoint an accountant, or to publish the report or
Enquiry proceeding before the Enterprise Chamber of the Amsterdam Court.3	344 up to 359, Book 2 DCC	Right to start action attributed in article 2:345-347, DCC to specific persons, such as shareholders holding 10 % or more of the company's capital, employee association/union. Advocate General of the Amsterdam Court of Appeals.	Investigation into the matters of the company by independent researchers appointed by the Court. Provisions imposed in accordance with article 2:356, DCC (f.i. to annul a general meeting resolution with relevance to the annual report)
Proceedings to establish directors liability re. misleading annual report	139 and 249, Book 2 DCC	Affected third party	Order to compensate damages
Tort proceedings (including prospectus liability)	162 (and 194), Book 6 DCC	Affected third party	Order to compensate damages
Fraud/forgery (valsheid in geschrifte)	225 and 51 of the Dutch Criminal Law Code (DCRC)	Public prosecutor	Judgement: imprisonment (up to 6 years), penalty (up to EUR 67,000). Section 23, paragraph 4 DCrC. Higher penalty possible pursuant to paragraph 7 provided with sufficient motivation.

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Since 31 December 2006, Staatsblad, nb. 569, pp. 10-13. See also: Kiersch, 2007, T&C BW, Article 2:447, DCC, note 3.b.

Slagter, supra note 3, pp.543-545; P. van Schilfgaarde and J. Winter, ' VandeBV ende NV (Kluwer: Deventer, 2006), §§ 109-110.

The enquiry proceeding is a typically Dutch proceeding at the Enterprise Chamber in Amsterdam. The Enterprise Chamber is part of the Amsterdam Court of Appeals.