On 27 February 2009, a bill was submitted to parliament to amend Book 2 of the Dutch Civil Code giving works councils of public companies (Naamloze Vennootschap, NV) a right to speak on important decisions1. This bill realises one of the tenets of the government’s policy, social cohesion and responds to advice of the Social and Economic Council (Sociaal-Economische Raad, SER) on Corporate Governance of 13 June 2008. The bill would allow works councils to take a position in the general meeting on:

  • important management resolutions which may cause a significant change in the company and which are subject to a right of approval of the general meeting as referred to in section 2:107a of the Dutch Civil Code;
  • resolutions of the general meeting to appoint, suspend or dismiss managing and supervisory directors;
  • proposals to adopt a remuneration policy. Under the proposed bill, the works council is not entitled to adopt a position on the remuneration of individual managing directors.

The main elements of rights of the works council as set out in the proposed bill are as follows:

  • The works council will have the right to put forward its views at such a time that these will be taken into consideration when a final decision is taken. This does not constitute a right to give advice within the meaning of section 25 of the Works Councils Act.
  • The works council may explain its views at the general meeting.
  • The company and the shareholders are not obliged to follow the works council’s views, nor are they required to explain their reasons for rejecting the works council’s views.
  • There will be no sanctions if the works council is not given the opportunity to give its views.

The proposed bill will apply to works councils of public companies irrespective of whether they are listed or not. Dutch employees of an international group company where the majority of its employees work in the Netherlands will have the right to put forward their views with regard to the remuneration policy and the decision-making mentioned above. Special statutory procedures already exist for works councils of public companies that are subject to the two-tier board system (structure regime), but the bill extends this by giving works councils of public companies the right to speak on the appointment of supervisory directors. The works councils right to speak on the appointment of a director in a two-tier company only applies to the mitigated regime.