8.2.1.2 Supervisory board

Section 2: 140 DCC provides the possibility to establish a supervisory board of at least one natural person. The second paragraph of this section extends the task of the supervisory board. Besides the initial duty of ‘supervision of the policy of the management board and the general course of affairs of the company and the enterprise connected therewith [, the supervisory board] shall assist the management with advice.’ In this respect, the supervisory board should be led by the interest of the company and the enterprise connected therewith. Based on the fourth paragraph of this section, the articles of association may provide that a supervisory director is allocated more than one vote. As in the case of the management board, the number of votes of one single member may not exceed the accumulated votes of the other members of the supervisory board (Maeijer et al. 2009: 496).

Section 2: 140 DCC offers the option to establish a supervisory board. However, in some situations a supervisory board is mandatory. This is the case when the company falls within the ambit of the structure regime.1 The requirements for the structure regime are given in section 2: 153 paragraph 2 DCC: ‘according to the balance sheet with explanatory notes the sum of the issued capital of the company and its reserves amounts to an amount the level of which is set by Royal Decree;2 the company or a dependent company has, pursuant to a legal obligation, established a works council;3 and the company and its dependent companies together normally employ at least one hundred employees in the Netherlands’.4 If the criteria are fulfilled, the company must lodge a statement to that effect with the commercial registry (paragraph 1). The statement must be lodged within two months after the adoption of the annual accounts by the general meeting. If the company has fulfilled the criteria for a period of three years and has lodged a statement to that effect with the commercial registry, the structure regime becomes applicable (section 2: 154 paragraph 1 DCC).

Paragraph 3 of section 2: 153 DCC gives four circumstances that exempt a company from application of the structure regime:

Companies to which at least one of these situations applies are fully exempted from the structure regime. Another possibility is a part exemption from the structure regime (weakened regime).5 Sections 2: 155 and 2: 155a DCC provide the conditions for the weakened regime. According to section 2: 155 DCC, paragraphs 1 and 2, a company qualifies for the weakened regime if it fulfils the conditions of the structure regime, as provided in section 2: 153 paragraph 2 DCC, and fifty per cent of the issued capital is held by a Dutch or foreign legal person and/or dependent legal person which employs more than fifty per cent of its employees outside the Netherlands. However, when that legal person and/or its dependent legal person, in combination with the company, employs more than fifty per cent of its employees in the Netherlands, the company does not qualify for the weakened structure regime. Two other requirements in order to qualify for the weakened regime are provided in section 2: 155a DCC:

A company that falls within the ambit of the structure regime and a company that falls within the ambit of the the weakened structure regime are both obliged to have a supervisory board, which should consist of at least three members, according to section 2: 158 paragraphs 1 and 2 DCC. If at a certain point in time the number of members of the supervisory board is less than three, the board will take measures to supplement the number of its members to the desired level of three (Maeijer et al. 2009: 557, 559).

As in the case of the CEO, neither the Civil Code nor the DCGC provide for the selection of a chairman of the supervisory board (President-Commissaris), but the articles of association may provide for how a chairman of the supervisory board is selected. The other members of the supervisory board or general meeting may designate one of the members of the supervisory board as chairman. If the articles of association do not provide for the selection of the chairman, the members of the supervisory board may select one from their midst (Maeijer et al. 2009: 500). Whereas the task of the CEO is not explicitly specified, the task of the chairman of the supervisory board is provided for in principle III.4: ‘The chairman of the supervisory board shall ensure the proper functioning of the supervisory board and its committees, and shall act on behalf of the supervisory board as the main contact for the management board and for shareholders regarding the functioning of the management and supervisory board members. In his capacity of chairman, he shall ensure the orderly and efficient conduct of the general meeting.’ The best practice provisions elaborate further on his tasks.

An important part of his tasks is the information flow. The chairman shall ensure that the supervisory board receives in good time all information required for the task of the supervisory board, according to best practice provision III.4.1 DCGC. However, the supervisory board itself and its members have a responsibility to obtain all information required to execute their tasks properly (best practice provision III.1.9 DCGC). Moreover, the management board has a duty to provide the supervisory board with all necessary information (principle II.1 DCGC). This entails that the supervisory board is very dependent on the management board for its information.