Company law 2020/86

The liberalisation of capital markets has the side effect that other factors of production are proportional
We have lost interest. Thinking in shareholder value has become dominant in practice,
also in the Dutch context. The standard of the company's interest guarantees, as it appears, on a regular basis
social disruptions insufficient that companies are actually responsible
behaving in society. For this reason, 25 professors of company law advocate the introduction
of responsible corporate citizenship in the statutory task of directors and supervisory directors. Drivers
must ensure that the company participates in the social movement as
a company responsible; Commissioners supervise this. They also propose that the
to include a law that allows companies to formulate a statutory basis of existence (purpose of raison d'être).
In doing so, they shall set their ultimate objective and guiding principles on a voluntary basis.
About the responsibility for the impact of the company on human, social and natural capital
may require explicit accounting in the financial statements. In this way, company law can
strengthen the embedding of businesses in society.

Prof. Mr. J.W. Winter, Prof. Mr. J.M. de Jongh, Prof. Mr. J.B.S. Hijink,
Prof. Mr. L. Timmerman, Prof. Mr. G. van Solinge, Prof. M.L. Lennarts, Prof. Mr. J.B. Wezeman,
Prof. Mr. C.D.J. Bulten, Prof. Mr. S.M. Bartman, Prof. Mr. E.C.H.J. Lokin, Prof. Mr. I.S. Wuisman,
Prof. Mr. H.M. Vletter-van Dort, Prof. Mr. C.A. Schwarz, Prof. M.A. Verbrugh, Prof. Mr. J. Rust,
Prof. Mr. G.T.M.J. Raijmakers, Prof. Mr. H. Koster, Prof. Mr. B. Kemp, Prof. Mr. M. Olaerts,
Prof. mr. E.P.M. Joosen, Prof. mr. H.E. Boschma, Prof. mr. A.F. Verdam, Prof. mr. J.N. Schutte-Veenstra,
Prof. mr. J.H.M. Willems & prof. mr. G.J.C. Rensen [1]

1. Introduction
The liberalization of capital markets has had the side effect that other factors of production are proportional.
We have lost interest. The idea of shareholder value has become dominant, even in the
Dutch context. Even though the standard of the company interest suggests a broader balancing of interests,
In practice, it appears very possible to steer in particular or exclusively towards financial objectives
for the benefit of shareholders. Compensation systems with substantial variable remuneration for drivers
make this a reality for many stock exchange companies. Moral responsibility in the sense of
Feeling responsible for the effects of behaviour on others is more and more common in this context
Only if the outside world forces this, with regulation or public indignation. [2] Uprooting enterprises
led to social discontent before the corona crisis.
With the corona crisis, the social embedding of companies is once again in the spotlight. For
where undertakings do not receive State aid directly, many are indirectly supported by public money,
For example, in the form of the NOW[3]. Part of the entrepreneurial risk is publicly borne in times of crisis.

The discussion about the role of companies in society is not only in the Netherlands. Other countries are:
already one step further by making provision in their company law for responsibility
to strengthen businesses in society. One example is the French Loi PACTE responsible for
(b) to provide for the possibility of including companies in society;
the statutes of a land of existence, a purpose or raison d hindered.[4] It may well be that the standard of company law
the importance so far has prevented us from taking responsibility for companies in society
to make explicit. However, this standard does not provide sufficient guarantees of periodic social eruptions.
that companies actually behave responsibly in society.
The question of whether companies should have a broader legal responsibility in society than
the responsibility for their own financial success for shareholders is a political question
which government and parliament must decide on. We advocate this movement and indicate in this proposal how
the company law may be amended to give that responsibility a hand and a foot.

2. Responsible corporate citizenship

If the legislator wants to promote the social orientation of directors and Commissioners, he can inspire
draw on the South African King IV Code. [5] This provides that . .
is and is seen to be a responsible corporate citizen. It is important to ensure that the
organization is a responsible corporate citizen and is seen as such, is placed at the governing body. In
The Netherlands is concerned with the board and the supervisory board. It is a responsibility of
people who run and direct the organization to ensure that the company in a responsible way in society
is operating. To make this notion of responsibility for responsible corporate citizenship also in the
It is obvious to introduce Dutch law to the general administrative commission of
Article 4 2:129/2:239 (5) WW and the terms of reference of the Supervisory Board in Article 2:140/2:250 (2) WW. The
are the directors and directors of the company who determine in the first place how the company
behaviour in society. Drivers have within the company that the company
is linked the authority as an employer to instruct employees accordingly and Commissioners
have the task of ensuring that. Article 2:129/2:239 (5) BW would then formulate the administrative mandate as follows:

"In the performance of their duties, directors shall
the interests of the company and the
its related undertaking. They shall ensure that the
company participates in social movement
as a company responsible."

Article 2:140 (2):250 (2) BW would
Commissioners should read as follows:

"The supervisory board's role is to
The Commission's proposal is based on the following principles:
business in the company and with the company
related company. He stands the board with
Council aside. In carrying out their duties, the
Commissioners are interested in the company's interests
and the related undertaking. In doing so,
ensure that the company participates in
social movement as a responsible person
company."

Under current law, the responsibility of the board of directors and the supervisory board shall in any event be assumed.
the obligation to exercise due care with regard to the interests of all persons employed by the company;
and its company are involved.[6] Responsible corporate citizenship, being a responsible company
company in society as we advocate in the like of King IV, includes more. We think
First of all, the company's responsibility for a healthy environment and climate.[7]
Social responsibility can also cover other issues. Think for example
to tax morality, remuneration relationships within the enterprise, diversity, spatial viability or
public aid applications in relation to shareholder benefits. Our proposal seeks to clarify
that the responsibility of management and supervisory board is not limited to providing financial
success of the company for the benefit of its shareholders. A responsible company
is responsible for the consequences of its actions in
the communities in which it operates and the impact of its actions on the environment and climate. The aim
for profitable long-term continuity must be embedded in this broad responsibility.

The content of the supervisory board's duty of care for responsible participation
the company's social movement must be based on the requirements of reasonableness and
fairness in the specific circumstances of the case. A mass dismissal of workers is in
good times may not be allowed, but may be required if the company is in decline. Determining
what may reasonably be expected of a company in the circumstances of the case. At completion
This duty of care should leave directors and Commissioners discretion. The judge
review it with due restraint, as with the standard of the company interest.

The management's duty of care to the company as a responsible company
The Committee of the Regions believes that the Committee of the Regions should be involved in this process and that the supervisory board's role in monitoring this should be strengthened in practice.
Development. That requires debate, both in society and within companies. In our view
This can improve the quality of decision-making and contribute to social embedding
of enterprises. At the same time, there is a duty of care for responsible participation in society.
traffic more than non-binding debate. A broadening of the task colors the different
open standards in company law. The aforementioned discretion for directors and supervisory directors
and restraint by the courts are essential. The extension of the task
impact on the position of shareholders. They may have extended tasks for directors and Commissioners.
Don't ignore it. This also reflects the obligation of institutional investors and asset managers
In order to formulate a policy of involvement in which they describe how they monitor the companies in which
they invest in areas such as social and environmental impacts.[8] Also with institutional investors
is a growing awareness that their long-term interests are served by a sustainable and balanced
profits.[9]

3. Existence

In recent years, there has been a great deal of talk of the desirability of companies having a basis of existence (purpose of
raison d In it, the company defines its ultimate objective, which is to
of society. Well formulated basic principles can be helpful in
defining the strategy aimed at that ultimate goal in society and can contribute to the intrinsic
motivation of the persons concerned within the company. [11] Realizing that everyone in the company works
a common cause relevant to society can provide an important basis for mutual understanding between the
to promote confidence and thus the success of the company.

The current company law does not create obstacles to a livelihood within or outside the statutes.
formulation. In France, this was not different until recently. However, the French legislature recently decided to
of the wording of a statutory raison d'être laid down in the law. [12] With that, he sent the signal.
consider it important that companies reflect on their position in society. Following on from the
French law may be added to Article 2:66/2:177 BW as follows:

"The company may lay down in its statutes the ultimate objective of:
it pursues the values and principles of society
formulate which are leading."

We are not proposing a mandatory legal provision, but an invitation to companies. It is up to companies
even to accept that invitation or not. The formulation of such a final objective in the
However, statutes are not without obligation. It gives direction to the decision-making and orientation of the company and gives guidance to
the implementation of open standards which the judge assesses in liability procedures and the right of inquiry. She
indicate the substance of the reasonableness and fairness of the persons concerned in the company's relations
desire (Article 2:8 BW).[13]

4. Accountability

An extension of the tasks of the Board and the Supervisory Board and a legal basis for a
basis of existence as proposed questions for accountability by the Board and the Supervisory Board on
the manner in which they have implemented this. Article 2:391 (1) WW, relevant in practice for approximately
the largest 5% of enterprises can be changed along the following lines:[14]

"The management report shall give a true and fair view of the situation at the balance sheet date, the trend during the financial year and the results of the legal person and of the group companies whose financial data are included in its annual accounts. The management report shall contain, in accordance with the size and complexity of the legal person and group companies, a balanced and complete analysis of the situation at the balance sheet date, trends during the financial year and results. The management report shall describe the manner in which the management has ensured the company's responsible participation in social affairs. If the company
Article 66 (4) or 177 (4) provides a basis for existence, the management report shall give a description of the way in which the company has carried out its business. Where necessary for a good understanding of the development, results, way of implementing the livelihood or position of the legal person and group companies, the analysis shall include both financial and non-financial performance indicators, including environmental and personnel issues indicators that provide insight into the impact on the environment and climate, personnel issues and the communities within which the legal person operates. The management report shall also describe the main risk derivatives and uncertainties facing the legal person. The administrative report shall be drawn up in the Dutch language, unless the general meeting has decided to use another language."

In the management report and the annual accounts, the board is accountable in a general sense. The annual accounts
brings in particular the financial position and performance of the company and its related company
for the financial year ended. Increasing attention has emerged in recent years
For the purposes of accounting for "..." .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The above
Proposal supports this development. These changes aim to ensure that accountability is also targeted
on the impact of the company on human capital (staff), social capital (community)
in which the company operates) and natural capital (environment and climate). This is more important than the
kwantificeren en monetariseren van de prestaties van de vennootschap.[15] Verantwoording afleggen over de wijze
waarop het bestuur in het afgelopen jaar invulling heeft gegeven aan zijn zorgplicht, en de raad van commissarissen
daarop heeft toegezien, bestaat ook en vooral uit het inzichtelijk maken en beschrijven van de afwegingen en
keuzes die daarbij zijn gemaakt. Een verantwoordingsplicht over de wijze van uitvoering van de bestaansgrond
beoogt ‘purpose washing’ te voorkomen. De uitbreiding van de taakopdracht van de raad van commissarissen
vraagt om een overeenkomstige uitbreiding van verslaggeving door de raad over de wijze waarop hij
uitvoering heeft gegeven aan deze opdracht. Zolang het opnemen van een verslag van de raad van commissarissen
nog geen wettelijke verplichting is,[16] kan deze uitbreiding plaats vinden in de Nederlandse Corporate Governance
Code. De Code zal ook overigens moeten worden aangepast naar aanleiding van een wettelijke basis voor een bestaansgrond
en de verbreding van de taakopdracht van bestuurders en commissarissen. Te denken valt aan de bepalingen
omtrent de samenstelling en het functioneren van de raad van commissarissen en de bepalingen over de
beloning van bestuurders. Bij een brede taakopdracht van bestuurders past niet dat omvangrijke variabele beloning
uitsluitend afhankelijk is van het behalen van financiële doelstellingen waarbij aandeelhouders belang hebben.

5. Ten slotte

We hoeven ons niet neer te leggen bij de werkelijkheid dat ondernemingen door een overmatige oriëntatie op eigen
financieel succes en daarmee gepaard gaande waardecreatie voor aandeelhouders onthecht zijn geraakt van
de samenleving. Het kan anders maar dat gaat niet vanzelf. Een nieuw sociaal contract tussen onderneming en
samenleving is wenselijk. Internationaal worden op het gebied van duurzaam investeren en beleggen stappen gezet,
ook door institutionele beleggers. Wij denken dat het vennootschapsrecht met onze voorstellen aan een nieuw
sociaal contract kan bijdragen. De wettelijke taak van bestuurders en commissarissen kan worden verbreed met
de plicht ervoor te zorgen dat de vennootschap aan het maatschappelijk verkeer deelneemt als een verantwoordelijke
vennootschap. De wet kan de uitdrukkelijke mogelijkheid bieden een statutaire bestaansgrond te formuleren
die het uiteindelijke doel van de vennootschap in de samenleving leidend maakt voor haar handelen. Over de
verantwoordelijkheid voor de impact van de vennootschap op menselijk, sociaal en natuurlijk kapitaal kan expliciete
verantwoording in de jaarstukken worden voorgeschreven. Zo kan het vennootschapsrecht de inbedding
van ondernemingen in de samenleving versterken.

[1] De auteurs zijn hoogleraar ondernemingsrecht: Jaap Winter (VU & UvA Amsterdam), Matthijs de Jongh (Rotterdam), Steven Hijink (Nijmegen), Vino Timmerman (Rotterdam), Gerard van Solinge (Nijmegen), Loes Lennarts (Groningen), Jan Berend Wezeman (Groningen), Claartje Bulten (Nijmegen), Steef Bartman (Maastricht), Manuel Lokin (Utrecht), Iris Wuisman (Leiden), Hélène Vletter-van Dort (Rotterdam), Kid Schwarz (Rotterdam), Maarten Verbrugh (Rotterdam), Joti Roest (UvA Amsterdam), Geert Raaijmakers (VU Amsterdam), Harold Koster (Leiden), Bastiaan Kemp (Maastricht), Mieke Olaerts (Maastricht), Bart Joosen (VU Amsterdam), Hylda Boschma (Groningen), Albert Verdam (VU Amsterdam), Hanny Schutte-Veenstra (Groningen), Huub Willems (Groningen) en Günther Rensen (Utrecht).

[16] De wet verplicht niet tot een afzonderlijk verslag van de raad van commissarissen. De Nederlandse Corporate Governance Code gaat er wel van uit dat bij beursvennootschappen de raad van commissarissen jaarlijks in een eigen verslag verantwoording aflegt over het door hem uitgeoefende toezicht. De Raad voor de Jaarverslaggeving heeft nadere guidance gepubliceerd over het verslag van de raad van commissarissen (https://www.rjnet.nl/uitingen/2018/2018-8).