Book 2 Legal Persons
Section 2.5.5 The Board of Directors of a Closed Corporation and the supervision of the Board of Directors
Article 2:239 Tasks and powers of the Board of Directors
- 1. Subject to any restrictions under the articles of incorporation, the Board of Directors is charged with the governance (management) of the Corporation
- 2. The articles of incorporation may provide that a particular Director designated by name or function (position), may cast more than one vote. One Director may not cast more votes than the other Directors combined.
- 3. Resolutions of the Board of Directors can only be subjected by or pursuant to the articles of incorporation to the approval of a body of the Corporation.
- 4. The articles of incorporation may provide that the Board of Directors has to behave itself according to the instructions of another body of the Corporation. The Board of Directors is compelled to follow the instructions, unless these are in conflict with the interests of the Corporation or of the enterprise connected with it.
- 5. The Directors shall in the performance of their duties direct their attention to the interests of the Corporation and of the enterprises connected with it. *)
- 6. A Director does not participate in the deliberations and decision-making if he has a direct or indirect personal interest therein that is contrary to the interests meant in paragraph 5. If, as a result, no Board resolution can be passed, the resolution shall be passed by the Supervisory Board. In the absence of a Supervisory Board, the resolution shall be passed by the General Meeting, unless the articles of incorporation provide otherwise.*)
*) In force as of 01-01-2013.
Article 2:239a Division between non-executive and executive Directors*)
- 1. The articles of incorporation may specify that the duties of the Directors are divided between one or more non-executive Directors and one or more executive Directors. The duty to supervise the performance of duties by the Directors cannot be taken away from a non-executive Director by a division of duties as meant in the previous sentence. Te chairmanship of the Board of Directors, the making of proposals for the appointment of a Director and the adoption (assessment) of the remuneration of the executive Directors may not be assigned to an executive Director. Non-executive Directors are always natural persons.
- 2. The executive Directors do not participate in the decision-making on the adoption (assessment) of the remuneration of executive Directors.
- 3. It is allowed to specify by or pursuant to the articles of incorporation that one or more Directors may decide (pass resolutions) legitimately in regard of subjects belonging to his or their duty. When such specification is made pursuant to the articles of incorporation, this must be done in writing.
*) In force as of 01-01-2013.
Article 2:240 Power of representation
- 1. The Board of Directors represents the Corporation as far as the law does not provide otherwise.
- 2. Each Director may also individually represent the Corporation. The articles of incorporation may, however, provide that only one or more of the Directors may represent, next and in addition to the Board of Directors, the Corporation. The articles of incorporation may provide furthermore that a Director only has the power to represent the Corporation in cooperation with one or more other persons.
- 3. The power of representation of the Board of Directors or of the Directors to whom such power is granted, either individually or jointly with others, is always unrestricted and unconditional, as far as the law does not provide otherwise. A legally permitted or required restriction or condition regarding the power of representation can only be invoked by the Corporation.
- 4. The articles of incorporation may also grant other persons than Directors the power to represent the Corporation.
Article 2:241 Jurisdiction in relation to the (employment) contract between the Corporation and its Director
The District Court within whose district the Corporation is domiciled (has its seat), has jurisdiction over all legal actions (lawsuits) based on the contract (employment agreement) between the Closed Corporation ('besloten vennootschap') and one of its Directors, including the legal claim referred to in Article 2:248 of which the amount is undetermined or exceeds € 25,000. The same District Court has jurisdiction over applications (requests) meant in Article 7:685 related to a contract (employment agreement) as referred to in the first sentence of the present Article. Legal claims (lawsuits) as meant in the first two sentences are not considered or decided by the Subdistrict Court.
Article 2:242 Appointment of Directors
- 1. The first Directors of the Corporation are appointed in the notarial deed of incorporation; the following (succeeding) Directors are appointed by the General Meeting. If the Corporation has made use of the possibility to apply Article 2:239a, the General Meeting shall decide whether a Director is appointed as an executive or non-executive Director. The previous two sentences do not apply if the Supervisory Board has the right to appoint the Director pursuant to Article 2:272.
- 2. The articles of incorporation may limit the circle of persons qualified to be appointed as Director by setting requirements which such Directors have to meet. The requirements may be set aside by a resolution of the General Meeting passed in conformity with the rules that apply to the validity of a resolution for an amendment of the articles of incorporation.
Article 2:242a Persons who cannot be appointed as Director
- 1. The following persons cannot be appointed as a Director of a Closed Corporation (‘besloten vennootschap’) which at two consecutive balance sheet dates, without interruption afterwards at two consecutive balance sheet dates, has not met at least two of the requirements meant in Article 2:397, paragraph 1 and 2:
a. persons who are a Supervisory Director or a non-executive Director for more than two legal persons;
b. persons who are chairman of the Supervisory Board of a legal person or of the Board of Directors of a legal person if the tasks of the Directors are divided between executive and non-executive Directors.
- 2. For the purpose of the present Article:
a. a person who is a member of a supervisory body instituted by or pursuant to the articles of incorporation of a legal person is equated with a Supervisory Director;
b. the appointments for various legal persons which are connected with each other in a group count as one appointment;
c. the reference to legal persons concerns: the legal type of an Open Corporation (‘naamloze vennootschap’) and a Closed Corporation (‘besloten venootschap’) that at two consecutive balance sheet dates, without interruption afterwards at two consecutive balance sheet dates, has not met at least two of the requirements as referred to in Article 2:397, paragraph 1 and 2, and a Foundation ('stichting') as meant in Article 2:297a, paragraph 1.
d. an executive Director is equated with a Director within the meaning of the preamble of paragraph 1, if the tasks of the Directors are divided between executive and non-executive Directors;
e. a temporary appointment in accordance with Article 2:249a, paragraph 2, or Article 2:356 under (c), is not regarded as an appointment;
f. the appointment of a member of the Supervisory Board or a non-executive Director of a fund as meant in the Order in Council on the basis of Article 105a of the Pension Act and Article 110a of the he Obligatory Occupational Pension Schemes Act is counted in conformity with the standardisation in that Order in Council.
- 3. Where an appointment is null and void pursuant to the previous paragraphs, this has no effect on the validity of the decision-taking (passing of resolutions) in which is participated.
Article 2:243 Nomination of candidates to be appointed as Director
- 1. The articles of incorporation may provide that an appointment by the General Meeting is done on the basis of a nomination.
- 2. The General Meeting, however, may at all times overrule the binding effect of such nomination by means of a resolution passed with two-thirds of the votes cast, which two-thirds represent more than one half of the issued share capital.
- 3. Where the nomination contains one candidate for a vacant position to be filled, the resolution on the nomination shall have the effect that this candidate is appointed, unless the binding effect of the nomination was set aside.
- 4. Paragraph 1, 2 and 3 do not apply if an appointment is done by the Supervisory Board.
- 5. Paragraph 1, 2 and 3 apply accordingly if an appointment is done by a meeting of holders of shares of a certain type (class) or indication.
Article 2:244 Suspension or removal of a Director
- 1. Each Director may at all times be suspended or removed (dismissed) by the body which is empowered to appoint him. The articles of incorporation may specify that a Director can be removed (dismissed) also by another body of the Corporation, unless the appointment of the Director takes place by the Supervisory Board in accordance with Article 2:272. Where use is made of the possibility to apply Article 2:239a, the Board of Directors is at all times empowerd to suspend a Director.
- 2. If the articles of incorporation specify that a resolution to suspend or remove (dismiss) a Director may only be passed by an enhanced majority of the votes cast at a General Meeting where a certain part of the capital is represented, then this enhanced majority may not exceed two-thirds of the votes cast, which two-thirds represent more than on-half of the issued share capital.
- 3. A judicial order to restore the contract (employment agreement) between the Closed Corporation ('besloten vennootschap') and its Director [see Article 7:682] cannot be rendered by the court.
- 4. The articles of incorporation must contain provisions for the way in which the Board of Directors is to be provide for temporarily in the event of an absence or inability to act of one or more Directors.
Article 2:245 Remuneration of Directors
- 1. As far as the articles of incorporation do not provide otherwise, the General Meeting shall determine the remuneration of the Directors.
- 2. Article 2:135 applies accordingly to a Closed Corporation (‘besloten vennootschap’) that is a bank within the meaning of Article 2:415.
Article 2:246 Request for a bankruptcy order for the Closed Corporation
Unless the articles of incorporation provide otherwise, the Board of Directors is not empowered, without an instruction of the General Meeting, to request for a declaration of bankruptcy to be rendered against the Closed Corporation ('besloten vennootschap').
Article 2:247 Written record of juridical acts performed between the Corporation and its sole shareholder
- 1. All juridical acts of the Corporation performed with or towards the holder of all shares in the capital of the Corporation or with or towards a co-proprietor of a marital community of property or a community of property of a registered partnership to which all shares in the capital of the Corporation belong, must be recorded in writing if the Corporation, when it performs such juridical acts, is represented by such shareholder or by one of such co-proprietors. For the purpose of the preceding sentence, shares held by the Corporation or its subsidiaries shall not be taken into account. If the first sentence has not been observed, the juridical act is voidable in the sense that it may be nullified by or on behalf of the Corporation.
- 2. Paragraph 1 shall not apply to juridical acts which under the stipulated conditions are to be regarded as being performed in the ordinary course of business of the Corporation.
Article 2:248 Liability of the Directors in the event of a bankruptcy of the Closed Corporation
- 1. In the event of a bankruptcy of the Closed Corporation ('besloten vennootschap'), each Director is towards the liquidation estate jointly and severally liable for the amount of the debts as far as these cannot be recovered after the assets of the Corporation have been wound up, if the Board of Directors has performed its duties clearly improperly and it is likely that this is a major cause of the Corporation's bankruptcy.
- 2. If the Board of Directors has not complied with its obligations under Article 2:10 or 2:394, then it shall have performed its duties improperly and it is presumed that this improper performance of duties is a major cause of the Corporation's bankruptcy. The same applies if the Corporation is a fully liable partner in a general partnership ('vennootschap onder firma') or a limited partnership ('commanditaire vennootschap') and the obligations of Article 3:15i have not been complied with. An insignificant omission (default) is, however, not taken into account.
- 3. A Director who proves that the improper performance of duties by the Board of Directors is not attributable to him and that he has not been negligent in taking measures to avert the consequences thereof, is not liable.
- 4. The court may reduce the amount for which the Directors are liable if it regards this amount to be excessive, given the nature and seriousness of the improper performance of duties by the Board of Directors, the other causes of the bankruptcy and the way in which the liquidation estate has been wound up. The court may furthermore reduce the amount of liability of an individual Director if it regards this amount to be excessive in view of the time during which that Director has been in office in the period when the improper performance of duties took place.
- 5. Where the amount of the deficit of the liquidation estate is still unknown, the court may determine, whether or not under application of paragraph 4, which part of the deficit has to be paid by the Directors personally, and it may order the preparation of a deficit list in accordance with the provisions of Title 6 of Book 2 of the Code of Civil Procedure.
- 6. A legal action (claim) against one or more Directors can be filed only on the basis of the present Article on the ground of an improper performance of duties which took place in the period of three years preceding the Corporation's bankruptcy. The fact that a Director has been discharged from liability, does not preclude the filing of a legal action (claim) as meant in the previous sentence.
- 7. For the purpose of the present Article, a person who has actually determined or co-determined the policy of the Corporation as if he were a Director, is equated with a Director. A legal action (claim) as meant in the present Article cannot be filed against an administrator appointed by the court.
- 8. The present Article does not affect the possibilities of the liquidator in the bankruptcy of the Corporation to file a legal action (claim) against a Director on the basis of the agreement between the Corporation and the Director or on the basis of Article 2:9.
- 9. Where a Director is liable pursuant to the present Article, but he is unable to pay the debt which has arisen as a consequence thereof, the liquidator in the bankruptcy of the Corporation may, on behalf of the liquidation estate, nullify by means of an extrajudicial declaration all juridical acts which have been performed by the Director without any legal obligation to do so, and which have harmed the recovery rights against his own property, if it is plausible that these juridical acts have been performed only or mainly with the intention to harm these recovery rights. Article 3:45, paragraph 4 and 5, applies accordingly.
- 10. Article 2:138, paragraph 10, is applicable as well.
Article 2:249 Liability of Directors for giving misleading annual accounts and figures
If the financial condition of the Corporation has been misrepresented in the annual accounts or in the interim figures as published by the Corporation or in the annual report, then the Directors are jointly and severally liable towards third persons for the damage which they have suffered as a result thereof. A Director who proves that such misrepresentation is not attributable to him, is not liable.
Article 2:250 Supervisory Board
- 1. Unless use is made of the possibility to apply Article 2:239a, the articles of incorporation may specify that the Corporation shall have a Supervisory Board. The Supervisory Board shall consist of one or more natural persons.
- 2. The Supervisory Board is responsible for exercising supervision over the administration (management) and policy of the Board of Directors and over the general course of events within the Corporation and its affiliated enterprise. It shall advice the Board of Directors by word and deed. In the performance of their duties the Supervisory Directors (members of the Supervisory Board) shall be guided by the interests of the Corporation and its affiliated enterprise.
- 3. The articles of incorporation may set additional provisions regarding the duties and powers of the Supervisory Board and its members.
- 4. The articles of incorporation may provide that a particular member of the Supervisory Board, designated by name or function (position), may cast more than one vote. One member of the Supervisory Board may not cast more votes than the other members of that Board combined.
- 5. A Supervisory Director does not participate in the deliberations and decision-making if he has a direct or indirect personal interest therein that is contrary to the interests meant in paragraph 2. If, as a result, the Supervisory Board cannot pass a resolution, the resolution shall be passed by the General Meeting, unless the articles of incorporation provide otherwise.
Article 2:251 Duty of the Board of Directors to inform the Supervisory Board
- 1. The Board of Directors provides the Supervisory Board in time with the information the Supervisory Board needs for the performance of its duties.
- 2. At least once a year the Board of Directors shall inform the Supervisory Board in writing about the basic principles of the strategic policy, the general and financial risks and the administrative and audit system of the Corporation.
Article 2:252 Appointment of the members of the Supervisory Board
- 1. The Supervisory Directors (members of the Supervisory Board) who are not already designated as such in the notarial deed of incorporation, shall be appointed by the General Meeting or, if the articles of incorporation provide so, by a meeting of holders of shares of a certain type (class) or indication, provided that each shareholder with voting right participates in the decision-taking with regard to at least one Supervisory Director. Article 2:228, paragraph 4, third sentence, shall apply accordingly to an arrangement in the articles of incorporation as meant in the previous sentence. The first sentence of the present paragraph does not apply if the appointment takes place in accordance with Article 2:268. The articles of incorporation may limit the circle of people qualified to be appointed as Supervisory Director by setting requirements which the Supervisory Directors have to meet. These requirements can be set aside by a resolution of the General Meeting, passed in accordance with the rules applicable to a resolution passed for the amendment of the articles of incorporation.
- 2. Article 2:243, paragraph 1, 2 and 2, applies accordingly if a Supervisory Director (member of the Supervisory Board) is appointed by the General Meeting or, if the articles of incorporation provide so, by a meeting of holders of shares of a certain type (class) or indication.
- 3. Where a candidate is recommended or nominated for an appointment as Supervisory Director, his age and profession are mentioned, as well as the amount of shares in the capital of the Corporation held by him, and the positions he holds or has held insofar as these are of importance for the fulfilment of his duties as Supervisory Director. Mentioned as well are the legal persons of which he is already a Supervisory Director; if there are legal persons amongst them that belong to the same group, it is sufficient to mention that group. The reasons for a recommendation and nomination for an appointment or reappointment will be substantiated. In the event of a reappointment account is taken of the way in which the candidate has fulfilled his duties as Supervisory Director.
- 4. The articles of incorporation must contain provisions for the way in which the performance of duties and powers is to be provide for temporarily in the event of absence or the inability to act of one or more Supervisory Directors. The articles of incorporation may specify when there is a situation of an inability to act.
Article 2:252a Persons who cannot be appointed as Director
- 1. The following persons cannot be appointed as a Supervisory Director of a Closed Corporation (‘besloten vennootschap’) which at two consecutive balance sheet dates, without interruption afterwards at two consecutive balance sheet dates, has not met at least two of the requirements meant in Article 2:397, paragraph 1 and 2: persons who are a Supervisory Director or a non-executive Director for five or more legal persons. The chairmanship of the Supervisory Board and of the Board of Directors shall count twice if the tasks of the Directors are divided between executive and non-executive Directors.
- 2. For the purpose of the present Article:
a. a person who is a member of a supervisory body instituted by or pursuant to the articles of incorporation of a legal person is equated with a Supervisory Director;
b. the appointments for various legal persons which are connected with each other in a group count as one appointment;
c. the reference to legal persons concerns: the legal type of an Open Corporation (‘naamloze vennootschap’) and a Closed Corporation (‘besloten venootschap’) that at two consecutive balance sheet dates, without interruption afterwards at two consecutive balance sheet dates, has not met at least two of the requirements as referred to in Article 2:397, paragraph 1 and 2, and a Foundation ('stichting') as meant in Article 2:297a, paragraph 1.
d. a non-executive Director is equated with a Supervisory Director within the meaning of the preamble of paragraph 1, if the tasks of the Directors are divided between executive and non-executive Directors;
e. a temporary appointment in accordance with Article 2:249a, paragraph 2, or Article 2:356 under (c), is not regarded as an appointment;
f. the appointment of a member of the Supervisory Board or a non-executive Director of a fund as meant in the Order in Council on the basis of Article 105a of the Pension Act and Article 110a of the he Obligatory Occupational Pension Schemes Act is counted in conformity with the standardisation in that Order in Council.
- 3. Where an appointment is null and void pursuant to the previous paragraphs, this has no effect on the validity of the decision-taking (passing of resolutions) in which is participated.
Article 2:253 Supervisory Directors appointed by others than the General Meeting
The articles of incorporation may provide that one or more Supervisory Directors, yet not more than one-third of the total members of the Supervisory Board, are to be appointed by others than the General Meeting or a meeting of holders of shares of a certain type (class) or indication, provided that each shareholder with a voting right may participate in de decision-taking in respect of the appointment of at least one Supervisory Director. Article 2:228, paragraph 4, second sentence, applies accordingly to an arrangement in the articles of incorporation as meant in the previous sentence. Where the appointment of Supervisory Directors is regulated in accordance with Articles 2:268 and 2:269, the first sentence of the present paragraph shall not apply.
Article 2:254 Suspension or removal of Supervisory Directors
- 1. A Supervisory Director may be suspended or removed (dismissed) by the one who is empowered to appoint him. The articles of incorporation may provide that a Supervisory Director can be removed (dismissed) also by the General Meeting. The previous sentences do not apply where Article 2:271, paragraph 2 and 3, or Article 2:271a is applicable.
- 2. Article 2:244, paragraph 2 and 3, applies accordingly.
Article 2:255 Remuneration for Supervisory Directors
The General Meeting may grant a remuneration to the members of the Supervisory Board.
Article 2:257 Suspension of a Director by the Supervisory Board
- 1. Unless the articles of incorporation provide otherwise, the Supervisory Board is empowered to suspend at any time any Director who has been appointed by the General Meeting.
- 2. The General Meeting that is empowered to appoint the Director may at all times lift such suspension.
Article 2:259 Jurisdiction of the District Court; liability of Supervisory Directors
The provisions of Articles 2:9, 2:241 and 2:248 apply accordingly to the way in which the Supervisory Board has performed its duties.
Article 2:260 Liability of Supervisory Directors for giving misleading annual accounts
If the financial condition of the Corporation has been misrepresented in the annual accounts, then the Supervisory Directors are, next and in addition to the Directors, jointly and severally liable towards third persons for the damage which they have suffered as a result thereof. A Supervisory Director who proves that such misrepresentation is not the result of a failure on his part in the exercise of supervision, is not liable.
Article 2:261 Performance of managerial acts by others than Directors
- 1. All persons, Supervisory Directors as well as others, who, pursuant to any provision of the articles of incorporation or any resolution of the General Meeting, have performed for a certain period of time or under certain circumstances one or more acts which normally belong to the duties of a Director, without being a member of the Board of Directors of the Closed Corporation ('besloten vennootschap'), are to this extent legally regarded as Directors as far as it concerns their rights and obligations towards the Corporation and third persons.
- 2. The approval of certain acts which normally belong to the duties of a Director or the granting of an authorisation to perform such acts is in itself not regarded as the performance of an act which normally belongs to the duties of a Director.
Article 2:262 Definitions
In this Section (Section 2.5.6), a ‘dependent company’ means:
a. a legal person to which the Closed Corporation ('besloten vennootschap') or one of its dependant companies has provided, for its own account, either solely or jointly, at least one-half of the issued share capital.
b. a commercial partnership of which an enterprise is registered in the commercial register and in which the Closed Corporation ('besloten vennootschap') or its dependant company participates as a partner who is fully liable towards the creditors of that commercial partnership for all debts
Article 2:263 Mandatory registrations at the commercial register; ‘large’-criteria
- 1. An Open Corporation ('naamloze vennootschap') to which paragraph 2 applies, must, within two months after the date on which its General Meeting has adopted the annual accounts, lodge a declaration with the commercial register in which is stated that the Corporation meets the requirements of paragraph 2 of the present Article. Until Article 2:264, paragraph 3, becomes applicable, the Board of Directors mentions in all subsequent annual reports the moment on which that declaration was lodged; if such declaration is removed from the commercial register, then this will be mentioned in the first annual report that is made after that removal.
- 2. The obligation to lodge a declaration as meant in paragraph 1, exists:
a. when the total sum of the issued capital of the Closed Corporation ('besloten vennootschap') and the reserves, according to the balance sheet with explanatory notes, amounts up to at least a level as set for this purpose by Royal Decree [as of 1 October 2004 this level is set at € 16,000,000];
b. when the Closed Corporation ('besloten vennootschap') or its dependant company is obliged, pursuant to law, to establish a Works Council, and;
c. when the Closed Corporation ('besloten vennootschap') and its dependant companies jointly employ on average at least one hundred employees in the Netherlands.
- 3. The obligation to lodge a declaration as meant in paragraph 1 does not apply to:
a. a Corporation which itself is a dependant company of a legal person to which Articles 2:63f up to and including 2:63j, or Articles 2:158 up to and including 2:161 and 2:164, or Articles 2:268 up to and including 2:271 and 2:274 apply;
b. a Corporation of which the activities are restricted exclusively or almost exclusively to the management and financing of group companies and of its or their participating interests in other legal persons, provided that the employees, in service of the Corporation and the group companies jointly, in majority work outside the Netherlands;
c. a Corporation which exclusively or almost exclusively provides management and financial services to a Corporation as meant under (b) or in Article 2:153, paragraph 3, under (b), and to group companies and legal persons mentioned in these provisions;
d. a Corporation of which at least one-half of the issued share capital is held as a participating interest, under a mutual arrangement to cooperate, by two or more legal persons to which Articles 2:63f up to and including 2:63j, or Articles 2:158 up to and including 2:161 and 2:164, or Articles 2:268 up to and including 2:271 and 2:274 apply or which are a dependant company of such a legal person.
- 4. Not more than once every two years the level mentioned in paragraph 2, under (a), shall be increased or decreased in proportion to the movements of a price index set by Order in Council, and as of a date set by that Order in Council; it will be rounded to the nearest one million Euros. The level will not be re-established as long as the level, calculated on the basis of the price index without application of any rounding off, differs less than one million Euros from the last fixed level.
- 5. In paragraph 2, under (a), the part of the sentence with the words ‘issued share capital of the Closed Corporation ('besloten vennootschap') and the reserves’ means, as far as it is related to a limited partnership (commanditaire vennootschap): the total of the contribution which is made or still has to be made by limited partners in dependant companies that are a limited partnership (commanditaire vennootschap) themselves, as far as this does not lead to any double counting.
Article 2:264 Mandatory application of the statutory two-tier structure
- 1. Articles 2:268 up to and including 2:127 apply to a Corporation with regard to which a declaration as referred to in Article 2:263 has been registered at the commercial register for three continuous years. This period is deemed not to have been interrupted if a removal of the declaration, which had occurred wrongfully during that period, has been made undone.
- 2. The removal of such registration on the ground that the Corporation no longer meets the requirements of Article 2:263, paragraph 2, shall only end the applicability of Articles 2:268 up to and including 2:274 when three years have passed since that removal, without any obligation for the Corporation to lodge such a declaration once again in the meantime.
- 3. The Corporation brings its articles of incorporation in agreement with Articles 2:268 up to and including 2:274, which must be accomplished at the latest on the date as of which these Articles become applicable pursuant to paragraph 1.
- 4. In the first General Meeting which is held after the moment on which the Corporation, to which Articles 2:268 up to and including 2:274 or 2:268 up to and including 2:271 and 2:274 are applicable, has met for the first time the requirements specified in Article 2:263, paragraph 3, 2:264, paragraph 2, 2:265 or 2:265a, the Board of Directors shall propose to the General Meeting to regulate in the articles of incorporation the appointment and removal (dismissal) of the Supervisory Directors and the duties and powers of the Supervisory Board without application of Articles 2:268 up to and including 2:274, respectively, of Articles 2:268 up to and including 2:271 and 2:274, or it shall propose to the General Meeting to continue the application of those Articles in full or with the exception of Article 2:272. The resolution for the adoption of such proposals must be passed with an absolute (normal) majority of the votes cast. The right of the General Meeting to adopt a resolution for the implementation of the present Article cannot be limited.
- 5. No later than twelve months after the resolution referred to in paragraph 4 has passed, the Board of Directors shall submit to the General Meeting a proposal to amend the articles of incorporation. If the General Meeting does not adopt a resolution to amend the articles of incorporation, then the Enterprise Chamber ('Ondernemingskamer') of the Court of Appeal of Amsterdam shall adopt the articles of incorporation instead upon the request of the person who, according to the next paragraph, is entitled to make such a request. The last two sentences of paragraph 4 shall apply in that event as well.
- 6. A request to adopt the articles of incorporation may be lodged with the Enterprise Chamber ('Ondernemingskamer') by a representative of the Board of Directors or of the Supervisory Board who has been designated for this purpose, and by a person who is entitled to make a request as meant in Article 2:224a.
- 7. If necessary, the Enterprise Chamber ('Ondernemingskamer') shall regulate the consequences of the decision that is taken upon such request. The clerk of the Enterprise Chamber ('Ondernemingskamer') shall deposit a copy of the decision of the Enterprise Chamber at the office of the commercial register.
Article 2:265 First exception regarding the applicability of the statutory two-tier structure
- 1. In derogation from Article 2:264, Article 2:272 does not apply to a Corporation in which a participating interest of at least one-half of the issued share capital:
a. is held by a legal person of which the majority of employees work outside the Netherlands, or is held by one or more dependent companies of such legal person, or;
b. is held, under a mutual agreement to cooperate, by a number of such legal persons or such dependant companies, or;
c. is held, under a mutual agreement to cooperate, by one or more of such legal persons and one or more legal persons to which Article 2:153, paragraph 3, under (a), or Article 2:263, paragraph 3, under (a), applies, or to which Articles 2:63f up to and including 2:63j, or Articles 2:158 up to and including 2:161 and 2:164 or Articles 2:268 up to and including 2:271 and 2:274 apply.
- 2. The exception under the preceding paragraph shall not apply if the majority of the employees of the Corporation, together with those in service of the legal person or legal persons, work outside the Netherlands.
- 3. For the purposes of the present Article employees in service of a legal person shall include the employees in service of group companies.
Article 2:265a Second exception regarding the applicability of the statutory two-tier structure
- 1. In derogation from Article 2:264, Article 2:272 does not apply to a Corporation in which:
a. one natural person has provided or has caused the provision of the entire issued share capital, or in which two or more natural persons, under a mutual agreement to cooperate, have provided or caused the provision of the entire issued share capital;
b. one foundation, one association or one legal person as referred to in Article 2:1 has provided or has caused the provision, for its own account, of the entire issued share capital, or in which two or more of the before mentioned legal persons, under a mutual agreement to cooperate, have provided or caused the provision, for their own account, of the entire issued share capital.
- 2. With a natural person as meant in paragraph 1 is be equated his spouse or registered partner. Equated with such a natural person are also his blood relatives in the direct line, provided that they have entered into a mutual agreement to cooperate with each other within six months after the death of the before meant natural person..
Article 2:266 Dispensation on the statutory two-tier structure
The Minister of Justice may, after having consulted the Social and Economic Council (‘Sociaal-Economische Raad’ or ‘SER’), grant a Closed Corporation ('besloten vennootschap'’), upon its request, relief from one or more of the obligations meant in Articles 2:268 up to and including 2:274. When such a relief is granted, conditions and other obligations may be attached to it. Such a relief may be amended or revoked by the Minister of Justice.
Article 2:267 Voluntary application of the statutory two-tier structure
- 1. A Closed Corporation ('besloten vennootschap') to which Article 2:264 does not apply, may in its articles of incorporation specify that Articles 2:268 up to and including 2:274 shall apply accordingly to the appointment and removal (dismissal) of its Supervisory Directors and to the responsibilities and powers of its Supervisory Board, provided that the Corporation or one or more of its dependant companies have established a Works Council to which the provisions of the Works Council Act apply. It may, in that event, exclude the application of Article 2:272. A provision in the articles of incorporation as meant in the present paragraph loses its validity as soon as the Works Council no longer exists or the Works Council Act no longer applies to that Works Council.
- 2. A Corporation to which Article 2:265 or 2:265a applies, may regulate the appointment and removal (dismissal) of its Directors in accordance with Article 2:272.
Article 2:268 Appointment of Supervisory Directors
- 1. The Corporation must have a Supervisory Board.
- 2. The Supervisory Board consists of at least three members [this must all be natural persons]. Where its number of members is less than three, the Supervisory Board shall, without delay, take measures to complement the number of members.
- 3. The Supervisory Board shall prepare a profile (characterization) of its size and composition, taking into account the nature of the Corporation, its activities and the desired expertise and background of the Supervisory Directors. When this profile is made, and afterwards each time when it is changed, it will be discussed by the Supervisory Board at the General Meeting and with the Works Council.
- 4. Except in a situation as provided for by paragraph 9, the Supervisory Directors will be appointed by the General Meeting upon a nomination of the Supervisory Board, as far as the appointment has not already taken place in the notarial deed of incorporation or before the present Article became applicable to the Corporation. The nomination must be reasoned. Without prejudice to the provisions of Article 2:270, the articles of incorporation may not limit the circle of persons who may be appointed as Supervisory Directors.
- 5. The General Meeting and the Works Council may recommend certain persons to the Supervisory Board to be nominated as Supervisory Director. The Supervisory Board shall inform them in time when, and also for what reason and according to which profile a vacancy in the Supervisory Board has to be filled. Where the right of recommendation, meant in paragraph 6, applies to the to be fulfilled vacancy, the Supervisory Board shall inform the General Meeting and Works Council thereof as well. The Supervisory Board shall inform the General Meeting and the Works Council simultaneously of the nominated candidates. The nomination must be reasoned.
- 6. The Supervisory Board must, with regard to one-third of the number of its members, nominate a person recommended by the Works Council, unless the Supervisory Board objects to the recommendation on the basis of the expectation that the recommended person is unsuitable to perform the duties of a Supervisory Director or that the Supervisory Board will not be properly constituted if an appointment is made in accordance with the recommendation. If the number of members of the Supervisory Board is not divisible by three, then the next lower number that is divisible by three is taken into account in determining the number of members to which this granted right of recommendation applies.
- 7. If the Supervisory Board objects to a recommendation, it shall inform the Works Council thereof, mentioning as well the reasons for its objection. The Supervisory Board shall immediately consult together with the Works Council in order to try to reach an agreement on the nomination. If the Supervisory Board finds that it is not possible to reach an agreement on the matter, a representative designated for this purpose by the Supervisory Board shall request the Enterprise Chamber ('Ondernemingskamer') of the Court of Appeal of Amsterdam to pronounce the objection well founded (valid). Such a request may not be lodged sooner than four weeks after the start of the consultations with the Works Council. When the Enterprise Chamber ('Ondernemingskamer') pronounces that the objection is unfounded (invalid), the Supervisory Board shall place the recommended person on the list of persons nominated as Supervisory Director. When the Enterprise Chamber ('Ondernemingskamer') pronounces that the objection is well founded (valid), then the Works Council may recommend a new person in accordance with paragraph 6.
- 8. The Enterprise Chamber ('Ondernemingskamer') shall ensure that the Works Council is summoned to appear in court. No appeal or other legal remedy (action) is available against the decision of the Enterprise Chamber. The Enterprise Chamber cannot condemn a party to pay the costs of proceedings.
- 9. A nomination of the Supervisory Board may be rejected by the General Meeting by means of a resolution passed with an absolute (normal) majority of the votes cast, which represent at least one-third of the issued share capital. If the shareholders withhold their support to a nominated candidate with an absolute (normal) majority of the votes cast, but this majority does not represent at least one-third of the issued share capital, then a new General Meeting may be convened at which the nomination can be rejected by an absolute (normal) majority of the votes cast. In such event the Supervisory Board must make a new nomination. Paragraphs 5 up to and including 8 shall apply as well. If the General Meeting does not appoint the nominated person and neither decides to reject the nomination, then the Supervisory Board may appoint the nominated person as Supervisory Director.
- 10. The power granted to the General Meeting under paragraph 5, may be delegated (transferred) by the General Meeting, for a duration of each time at the most two consecutive years, to a committee of shareholders of which it selects the members; in that case, the Supervisory Board shall inform this committee of shareholders as prescribed in paragraph 5. The General Meeting may at all times undo this delegation (transfer) of power.
- 11. For the purpose of the present Article, by a Works Council is understood the Works Council of the enterprise of the Corporation or of the enterprise of a dependant company. When there are more Works Councils than one, the power granted under the present Article will be exercised separately; in the event of a nomination as referred to in paragraph 6, the power granted under the present paragraph will be exercised by these Works Councils jointly. Where a Central Works Council has been established for the enterprise or enterprises, the power granted under the present Article to the Works Council shall belong to the Central Works Council.
- 12. The articles of incorporation may derogate from the provisions of paragraph 2, 4 up to and including 7 and 9, except that it is not possible to derogate from the first two sentences of paragraph 9. A resolution to amend the articles of incorporation requires the prior approval of the Supervisory Board and the Works Council.
Article 2:269 Appointment of Supervisory Directors when Supervisory Directors are absent
- 1. When there are no Supervisory Directors at all, for another reason than the one meant in Article 2:271a, the General Meeting will appoint the Supervisory Directors.
- 2. The Works Council may in such event recommend persons to the General Meeting to be appointed as Supervisory Director. The one who convenes the General Meeting, shall notify the Works Council in time that an appointment of Supervisory Directors will be the subject of considerations at the meeting, with mention whether the appointment of a Supervisory Director takes place in accordance with the right of recommendation of the Works Council on the basis of Article 2:268, paragraph 6.
- 3. Paragraph 6, 7, 8, 10 and 11 of the previous Article shall apply accordingly.
Article 2:270 Incompatibility of positions
The position of Supervisory Director cannot be held by:
a. persons employed by the Corporation;
b. persons employed by a dependent company of the Corporation;
c. the Directors of and the persons employed by an employees’ organization (labour union) which is regularly involved at determining the conditions of employment of the persons referred to under (a) and (b).
Article 2:271 Resignation, dismissal and suspension of Supervisory Directors
- 1. A Supervisory Director shall resign at the latest on the day on which he has been a Supervisory Director for four years since his last appointment. This period may be extended in the articles of incorporation up until the day of the first General Meeting after the expiration of the four-years period or up until the day of the first General Meeting after the day on which the present Article became applicable to the Corporation.
- 2. The Enterprise Chamber ('Ondernemingskamer') of the Amsterdam Court of Appeal may, upon request, dismiss a Supervisory Director for neglecting his duties or for other compelling reasons, or because of a severe change of circumstances as a result of which it reasonably cannot be expected of the Corporation to accept that the Supervisory Director keeps his position. The request may be lodged by the Corporation, represented for this purpose by its Supervisory Board, as well as by a representative of the General Meeting or the Works Council, meant in Article 2:268, paragraph 11, who has been designated for this purpose. Article 2:268, paragraph 10 and 11, apply accordingly.
- 3. A Supervisory Director may be suspended by the Supervisory Board. The suspension expires by operation of law if the Corporation has not lodged a request as meant in paragraph 2 with the Enterprise Chamber ('Ondernemingskamer') within one month after the suspension took effect.
Article 2:271a Loss of confidence in the Supervisory Board
- 1. The General Meeting may express that it has lost its confidence in the Supervisory Board by means of a resolution passed with an absolute (normal) majority of the votes cast, which represent at least one-third of the issued share capital. Such a resolution must be reasoned. Such a resolution cannot be passed in respect of Supervisory Directors who have been appointed by the Enterprise Chamber ('Ondernemingskamer') in conformity with paragraph 3.
- 2. A resolution as referred to in paragraph 1 shall not be taken until the Board of Directors has informed the Works Council of the proposal for such resolution and of the reasons for proposing it. The Works Council must have been informed thereof at least 30 days prior to the General Meeting at which the proposal will be discussed. Where the Works Council has set a position statement about the proposal, the Board of Directors will inform the Supervisory Board and the General Meeting thereof. The Works Council may have its position statement explained at the General Meeting.
- 3. A resolution as referred to in paragraph 1, shall immediately result in the removal (dismissal) of all the members of the Supervisory Board. In such event, the Board of Directors shall immediately request the Enterprise Chamber ('Ondernemingskamer') of the Court of Appeal of Amsterdam to appoint temporarily one or more Supervisory Directors. The Enterprise Chamber ('Ondernemingskamer') shall regulate the consequences of such appointment.
- 4. The Supervisory Board shall encourage that a new Supervisory Board will be constituted with due observance of Article 2:268 within a period set for this purpose by the Enterprise Chamber ('Ondernemingskamer').
Article 2:272 Appointment of the members of the Board of Directors
The Supervisory Board appoints the Directors of the Corporation; this power cannot be restricted by any binding nomination of candidates. The Supervisory Board shall inform the General Meeting of an intended appointment of a Director of the Corporation; it shall not remove (dismiss) a Director until the General Meeting has been heard on the intended removal (dismissal). Article 2:268, paragraph 11, shall apply accordingly.
Article 2:274 Resolutions that need the approval of the Supervisory Board
- 1. The approval of the Supervisory Board is required for resolutions of the Board of Directors on:
a. the issuance and acquisition of shares and debentures (debt certificates) by the Corporation and of debentures (debts certificates) issued by of debentures (debt certificates) by a limited partnership ('commanditaire vennootschap') or general partnership ('vennootschap onder firma') of which the legal person is a fully liable partner;
b. the collaboration in the issuance of depository receipts for shares in the Corporation;
c. the application for the admission of debt certificates and depository receipts as meant under (a) and (b) to a regulated market or multilateral trading facility as referred to in Article 1:1 of the Financial Supervision Act or to a system comparable with such regulated markets or multilateral trading facilities in a State that is not a EU Member State, or on the application for a withdrawal of such admission;
d. the start or termination by the Corporation or its dependent company of a long-lasting alliance (collaboration) with another legal person or commercial partnership, or the start or termination by the Corporation or its dependent company as fully liable partner in a limited partnership ('commanditaire vennootschap') or general partnership ('vennootschap onder firma'), always only when such alliance (collaboration) or its termination is of fundamental importance for the Corporation;
e. the acquisition of a participating interest with a value of at least one-quarter of the Corporation’s nominal amount of the issued share capital plus its reserves, to be determined according to the Corporation’s balance sheet with explanatory notes, by the Corporation itself or by a dependant company, in the capital of another Corporation ('vennootschap'), and on any significant increase or decrease of such participating interest;
f. investments which require an amount equal to at least one-fourth of the issued share capital plus reserves of the Corporation, to be determined according to its balance sheet with explanatory notes;
g. a proposal*) to amend the articles of incorporation;
h. a proposal*) to dissolve the Corporation;
i. a declaration of bankruptcy ('faillissement') or an application for an official moratorium on payment ('surséance van betaling') for the Corporation itself;
j. the termination of the employment agreements of a substantial number of employees of the Corporation or a dependent company, to be effectuated either simultaneously or within a short period of time;
k. a significant change in the conditions of employment of a substantial number of employees of the Corporation or a dependent company.
l. a proposal to reduce the issued share capital of the Corporation.
- 2. The absence of the Supervisory Board’s approval on a resolution as referred to in paragraph 1, does not affect the authority of representation of the Board of Directors or the Directors.
*) One has to notice that the Board of Directors itself cannot itself decide to amend the articles of incorporation or to dissolve the Corporation, since this is done by means of a resolution of the General Meeting.
Article 2:274a Application of non-executive and executive Directors*)
- 1. It is allowed to apply Article 2:239a instead of and in derogation from Article 2:268, paragraph 1. What is provided in Article 2:268 paragraph 2 up to and including 12, 2:269, 2:270, 2:271 and 2:271a on the Supervisory Board, respectively, on the Supervisory Directors shall then apply accordingly to the non-executive Directors of the Closed Corporation (‘besloten vennootschap’).
- 2. Where Article 2:239a is applied, the non-executive Directors of the Corporation shall appoint the executive Directors of the Corporation; this power cannot be restricted by a binding recommendation. Article 2:272, second and third sentence, shall apply accordingly.
- 3. Resolutions within the meaning of Article 2:274 of the Board of Directors are excluded from the application of Article 2:239, paragraph 3.
- 4. Where Article 2:239a is applied, resolutions within the meaning of Article 2:274, paragraph 1, shall require the approval of the majority of the non-executive Directors of the Corporation. The absence of such approval does not affect the power of representation of the Board of Directors or Directors.
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