NETHERLANDS Law and Practice Contributed by: Manon Cremers, Heleen Kersten, Frédérique van der Wegen and Sandra Rietveld, Stibbe
Potential Conflicts of Interest A managing director or supervisory director may not participate in deliberations and decision- making if they have a direct or indirect personal interest that conflicts with the interests of the company. If a managing director or supervi - sory director nevertheless participates in the deliberations or decision-making, the manage - ment board or the supervisory board resolution becomes voidable. Any conflict of interest has an impact on internal decision-making only. This means that directors with a conflict of interest remain authorised to represent the company. There is, however, a liability risk. Consequences of a conflict of interest of management or supervisory directors If no management board resolution can be adopted as a result of a conflict of interest, the resolution may be adopted by the supervisory board. If there is no supervisory board, the reso - lution may be adopted by the general meeting, unless the articles of association provide other - wise. If all the supervisory directors have a con - flict of interest, the resolution is adopted by the general meeting, unless the company’s articles of association provide otherwise. Based on case law, a supervisory director has a duty to provide full transparency about pos - sible conflicts of interest, while keeping conflict - ing interests separate from the interests of the company. A similar provision applies in the event of a conflict of interest of one or more supervi - sory directors. Stricter conflict of interest rules apply to Dutch companies within scope of the CG Code The CG Code stipulates that any form of conflict of interest between the company and the man - aging directors or supervisory directors must be
prevented, and that adequate measures should be taken to avoid conflicts of interest. Therefore, high standards of transparency and accountabil - ity are expected from Dutch listed companies. 4.6 Legal Duties of Directors/Officers The entire management board of the company is collectively responsible (see 4.2 Roles of Board Members ) for the policy, strategy and day-to-day management of the company, which includes: • the management of the company (subject to any limitations in the company’s articles of association); • keeping proper company books and records; • preparing financial reports and publishing annual accounts in time; • exercising management control (managing the company and its business, determining its general policy and co-ordinating its organisa - tion, including that of the group); • exercising financial control (managing the company’s assets, controlling the flow of funds, administering the company’s financial condition); and • exercising control of the company’s legal acts (to ensure regulatory compliance and compli - ance with the company’s articles of associa - tion, and to fulfil the duty of care towards third parties, by ensuring that the company observes the legal relationships entered into with the third parties). In the performance of their duties, directors of all boards must be guided by the best interests of the company and the business affiliated with it. This is generally determined primarily by pro - moting the continued success of this business ( bestendig succes van de onderneming ). The Dutch Supreme Court added that, in discharging their duties, directors should also – partly based on the principle of reasonableness and fairness
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