223 Reappraising the role of shareholders.

Shareholders play a key role in the internal governance structure of Dutch corporations, alongside the executive board and the supervisory board. Through the provision of extensive corporate legal rights, the general meeting of shareholders is uniquely positioned to provide important limits to the autonomy of the executive board as part of the triangular structure of Dutch corporate governance. It seems to me that both the institutional and ecosystem perspectives have no principled objection against such a central role for shareholders, thereby honouring the path dependence of the development of Dutch corporate law. Instead of challenging the triangular structure of corporate governance, the central question is which responsibilities shareholders have in relation to larger social and ecological interests involved in the corporation.

In recent years, multiple legal initiatives have allocated stewardship responsibilities to shareholders, often adopted voluntarily by large financial investors themselves. In my assessment, such shareholder stewardship fits well with the approach of all perspectives in Dutch corporate legal theory. For the partnership perspective, the main shift that I identify is from shareholder governance in pursuit of its own partial interests towards shareholder stewardship oriented towards the interests of all strategic stakeholders as equal partners of the corporation. The institutional and ecosystem perspectives further extend this stewardship responsibility to all relevant social and ecological interests involved in the corporation.

Building on the earlier discussion about the definition of durable success, I argue that aligning shareholder stewardship with the definition of durable success expected from the board would integrate the approach of all perspectives. Such durable success includes the need for profitability, honouring the interests of shareholders, while also including the needs and limits of the larger environment in which the corporation operates. By legally requiring shareholders to exercise their governance rights in pursuit of such durable success, the executive board is free to pursue a social and ecological strategy without the need to prioritize the partial interests of shareholders. Meanwhile, shareholders are free to disagree with the board about the best way to achieve such durable success, enabling them to provide limits to board autonomy and to hold the board accountable for its strategy. All in all, such a binding responsibility of shareholder stewardship in alignment with the responsibility of the board to achieve durable success would overcome the risk of shareholder-oriented corporate governance at the expense of other interests while leveraging the existing role and capacity of shareholders to provide checks and balances on board autonomy.

Such an allocation of binding stewardship responsibilities to shareholders would also overcome the threat of a hostile takeover in pursuit of shareholder interests at the expense of other interests. In effect, a binding form of shareholder stewardship decouples the free transfer of shares from the transfer of corporate control in pursuit of shareholder interests. Since a controlling shareholder remains bound by its stewardship responsibilities after a hostile takeover, the threat of a hostile takeover resulting in the abandonment of a social and ecological strategy is mitigated. Meanwhile, shareholders remain free to join or exit the corporation by transferring their shares, acknowledging their freedom of contract in relation to the corporation. The allocation of binding stewardship responsibilities to shareholders therefore acknowledges their unique position in corporate governance to discipline board autonomy while aligning their dominant position with the durable success expected from the board.