222 Towards governmental intervention in public interest.

Dutch corporate law provides various ultimate remedies against extreme cases of corporate mismanagement. In general, Dutch corporate law recognizes the fundamental freedom of contract of stakeholders to voluntarily join or exit the corporation based on their own interests.1 Additionally, boards may be held liable by stakeholders for severe mismanagement (onbehoorlijk bestuur) according to the general rules of liability law.2

In addition to these remedies for stakeholders to deal with corporate mismanagement themselves, governmental intervention may be possible in some situations. On the basis of competition law, a competition authority may impose sanctions on corporations for example when their strategies constitute an abuse of their dominant market position.3 In extreme cases, the Dutch Civil Code provides grounds for the public prosecutor (openbaar ministerie) to request the dissolution of a corporation whose purpose or activities violate public order (openbare orde).4 Similarly, the Dutch government interfered in the governance of Dutch banks after their bail-out in 2008 by appointing state supervisors onto their supervisory board.5 All in all, these legal instruments do provide ultimate remedies for limiting undesirable situations of excessive board autonomy, beyond the internal checks and balances provided in order to hold boards accountable.

In general, these remedies seem to provide opportunities for the protection of social and ecological interests from extreme cases of corporate mismanagement. In my assessment, the perspectives in Dutch corporate legal theory provide various standards for guiding such governmental interference. The underlying consensus seems to be that external interference in corporate governance should be guided by the general definition of success expected from the board, defined earlier as the evidence-based public purpose of the corporation aligned with the needs of profitability and the needs of the environment.6 In other words, governmental interference is only justified if corporate mismanagement provides a severe threat to the achievement of the public purpose of the corporation or to the integrity of the environment in which its enterprise is embedded.

The ultimate remedy of governmental interference should be confined to extreme situations in which boards fail to protect the social and ecological interests implied in the definition of success in their corporation. In principle, the other identified opportunities for reform should provide sufficient checks and balances in the process of decision-making by the board to prevent such severe mismanagement of social and ecological interests.7 Meanwhile, the ultimate remedies provided by Dutch corporate law function as an important rear guard to overcome extreme situations in which social and ecological stakeholders are involuntarily harmed by board decisions without sufficient opportunities to escape from such mismanagement. In sum, I articulate the following recommendation in relation to overcoming the potential of a severe mismanagement of social and ecological interests: