Engaging External Stakeholders in Dutch Corporate Governance
ICCLJ, Volume 13, Issue 2, 2018
21 Pages Posted: 22 Sep 2020
Date Written: September 21, 2020
Dutch corporate law is generally perceived to be based upon the stakeholder value model. According to this model, a company's management board has to consider the interests of the stakeholders affiliated with the company in determining the company's strategy and actions. In this respect, the notion of 'stakeholder' may include a broad range of groups and individuals. Importantly, these groups and individuals do not necessarily form part of the company's formal internal decision-making processes; for example, the stakeholder notion may also cover lenders, suppliers, customers and NGO's.
Although Dutch corporate law thus mandates board members to consider stakeholder interests, it does not prescribe - nor does it include best practices or principles for - formal and proactive stakeholder engagement. It has been argued that organizing an active stakeholder dialogue is the only - or at least most effective - way to assess the impact of a company's activities on external stakeholder groups and thus for a management board to be able to actually consider their interests. This paper aims to stir up the discussion on this topic and to introduce two structures under Dutch corporate law for a company to set up formal stakeholder engagement.
The paper starts by summarizing the theory on the basis of which active stakeholder participation in corporate governance is propagated in extant literature. Subsequently, it provides an outline of the corporate governance structure of companies incorporated under Dutch law, followed by a description of the aforementioned two structures for a company to set up a formal stakeholder engagement under Dutch law: the "stakeholder council" and the "priority foundation". The former is best suited to serve as a discussion platform for the management board, whereas the latter can be equipped with more far-reaching decision-making powers in a company's governance, allowing the company to take the stakeholder dialogue even further.
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