Einde inhoudsopgave
Corporate Social Responsibility (IVOR nr. 77) 2010/2.8.1.2
2.8.1.2 Enforceability of transparency
Mr. T.E. Lambooy, datum 17-11-2010
- Datum
17-11-2010
- Auteur
Mr. T.E. Lambooy
- JCDI
JCDI:ADS370621:1
- Vakgebied(en)
Ondernemingsrecht (V)
Voetnoten
Voetnoten
Lambooy, supra note 59.
Supra note 63, Dutch Modernisation Directive Implementation Bill (new text Article 2:391 paragraph 1 DCC). This new obligation is inapplicable only if information about environmental and human resources issues is not necessary for a proper understanding of the developments, the results, or the position of the legal entity and group companies of which the financial performance-indicators have been included in the annual accounts.
If the information that is lacking not only should have been included in the annual report, but also has a bearing on the figures in the annual accounts, for example on the balance sheet item Provisions, an action for the revision of the annual accounts is also an option. Articles 999-1002 Dutch Code of Civil Procedure [Wetboek van Burgerlijk Rechtsvordering].
Articles 2:139/249 DCC. If the information that is lacking also has an influence on the figures in the annual accounts, the action may also be brought against members of the supervisory board pursuant to articles 2:150/260 DCC.
Articles 6:162 DCC; 6:194 DCC. See also Prospectus Directive 2003/71/EC, OJ 2003 L 345/64, Article 6 paragraph 2 (1) and Article 11. The Prospectus Directive Implementation Bill was approved by the Dutch government on 12 November 2004, but has not yet been published (source: ' Orde van de dag', 18 November 2004).
Article 2:345 etseq in conjunction with Articles 2:14 and 2:15 DCC. Cf. Enterprise Division of the Amsterdam Court of Appeal, 17 April 1997, JOR 1997/81 (Bobel) and Enterprise Division of the Amsterdam Court of Appeal, 9 July 1998, JOR 1998/122 (Vie d'Or).
Should the information that is lacking also have an influence on the figures in the annual accounts, Article 336 in conjunction with Article 51 and Article 225 in conjunction with article 51 Dutch Penal Code may also apply.
See: § 2.6.1.3.
Enterprise Division of the Amsterdam Court of Appeal, 7 November 2002, JOR 2003/6 (KPN/SOBI), with annotation Van der Zanden, legal ground 3.32 (an appeal to the Dutch Supreme Court has been filed). Cf. Enterprise Division of the Amsterdam Court of Appeal, 20 November 2003, JOR 2004/10 (ReedElsevier/SOBI), with annotation Van der Zanden, legal ground 3.8.
Supra note 123.
Companies must observe legal norms regarding the transparency of their conduct with respect to environmental and social issues. The Environmental Management Act (Wet Milieubeheer) and the Dutch Labour Conditions Act 1998 (Arbeidsomstandighedenwet 1998) contain obligations for companies in the Netherlands in this respect.1 Also of importance is new legislation obliging large companies to report on environmental and human resources issues in their annual reports. This regards both matters concerning the company and matters concerning its (foreign) subsidiaries (see section 2.6.1.2).2 Non-compliance with this legal obligation may be a reason for:
an action to revise the content of the annual report;3
an action for damages against one or more directors in case of misrepresentation of the company's profile in the annual report resulting in loss suffered by a third party;4
an action for damages arising from a wrongful act or prospectus liability;5
an inquiry procedure if there are well-founded reasons to doubt a correct course of action;6 and possibly even - criminal prosecution.7
Besides this future legal obligation, there is the recommendation of the Dutch Council for Annual reporting's Guideline 400.8 Guideline 400 recommends that medium-sized and large companies include elaborate information on environmental, social, and economic issues in their annual reports as per financial year 2004. This reporting requirement concerns matters regarding the company as well as matters concerning its (foreign) subsidiaries (see section 2.6.1.3). Guideline 400 does not represent a legal obligation. It nevertheless has some legal significance because (i) Guideline 400 signals an increasing social expectation for companies to report on the social aspects of their operations in their financial reports, and (ii) courts may take into consideration public opinion when interpreting the statutory regulations.9
Another point to bear in mind is that if a company includes guarantees in agreements with banks and other private parties, it will probably have to declare that its annual account and annual report are accurate and complete, as required by law because other parties rely on those guarantees when they enter into an agreement. Should the annual report later turn out to be incomplete or incorrect, the company could be exposed to civil lawsuits, such as the termination of the agreement, modification of the terms of contract, the forfeit of a penalty, or a claim for damages; all this depending on the terms of the contract.
Of additional importance in the procedure on the annual discharge of the board of directors and the supervisory board by the general meeting of shareholders, is whether the company has reported on environmental, social, and ethical issues in its annual report. If this is not the case, the discharge will not pertain to those issues. After all, a discharge does not cover events not included in the annual report, the annual accounts and additional documents, or information that was not conveyed to the general meeting before the discharge.10
In summary, it may be concluded that a company that fails to meet the obligation to include information on environmental and social issues in its annual report risks being exposed to legal proceedings and annulment of financing agreements. In addition, its directors may be held personally liable if the annual report misrepresented the company's profile and caused damage to a third party.