The Functioning and Future of the Structure Regime. Abstract 01/02E

Transcription

1 The Functioning and Future of the Structure Regime Abstract 01/02E

2 THE SOCIAL AND ECONOMIC COUNCIL IN THE NETHERLANDS The Social and Economic Council (Sociaal-Economische Raad, SER) advises government and parliament on the outlines of national and international social and economic policy and on matters of important legislation in the social and economic sphere. Employers, employees and independent experts are equally represented in the SER. Their recommendations voice the opinion of organised industry. In addition to its advisory function, the council is responsible for the execution of certain laws. A brochure on tasks, structure and procedures of the SER can be obtained, free of charge, from its Sales Department. Please also visit the SER s home page on the Internet: ( It offers a host of information, such as the composition of the Council and its committees, press releases and the latest news. 2001, Sociaal-Economische Raad All rights reserved. Sections from the SER advisory reports may be used for the purpose of quotation, with due acknowledgement of the source of the publication. Social and Economic Council Bezuidenhoutseweg 60 PO Box LK The Hague The Netherlands Tel: 0031 (0) Fax: 0031 (0) ser.info@gw.ser.nl Internet: Sales Department Telephone: 0031 (0)

3 The Functioning and Future of the Structure Regime Sociaal- Economische Raad 1

4 This is an abstract of the SER-advisory report: Het functioneren en de toekomst van de Structuurregeling 2000, 126 pp., ISBN , orderno. 01/02 ƒ 15,00 / 6,80 Translated by: Baxter Associates/Hilversum Order no. 01/02E ISBN

5 Foreword On 19 January 2001, the Social and Economic Council of the Netherlands (Sociaal-Economische Raad, SER) approved its report entitled The Functioning and Future of the Structure Regime. This booklet (which is also available in Dutch, French and German) provides a summary of the proposals and recommendations contained in that report. The full Dutch-language version of the report is published as SER Publication 01/02 and may also be consulted on the SER s website ( J.M. Prakke Head of Information Department June

6 4

7 Table of contents Foreword Introduction Main conclusion and recommendations Present situation Number of companies involved Scope of the report The SER s proposals and recommendations General considerations Specific proposals Implementation and evaluation Corporate governance International background The Dutch situation The present situation and the SER s proposals: a brief comparison 19 5

8 6

9 1. Introduction The Functioning and Future of the Structure Regime was drawn up by the Social and Economic Council (Sociaal-Economische Raad, SER) in response to requests from the Dutch government and House of Representatives for advice on the functioning and future development of legislation governing the supervision of large companies in the Netherlands. This legislation, known as the structuurregeling or structure regime, was introduced in It requires large companies to appoint a Supervisory Board (Raad van Commissarissen) to oversee the activities of the Board of Management (Raad van Bestuur). In this way, the executive and non-executive (or supervisory) functions are separated and assigned to two distinct bodies. The 1971 legislation also regulates the appointment, dismissal, powers and activities of Supervisory Boards. 1.1 Main conclusion and recommendations The SER s main conclusion in this report is that the General Meeting of Shareholders and the Works Council should play a greater part in appointing and dismissing members of the Supervisory Board. The SER also makes a number of recommendations concerning the following issues: The way in which the Supervisory Board performs its duties and responsibilities; The criteria determining whether application of the structure regime is obligatory or optional; The decision-making procedure relating to voluntary application of the structure regime; and Ways of strengthening the position of shareholders and certificate holders. 1.2 Present situation As noted above, the structure regime requires large companies to appoint a Supervisory Board. In determining the application of the regime, a company s legal status as an NV (public limited company) or BV (private limited company) is irrelevant. Rather, a large company is defined as one that meets the following three criteria: 7

10 1. Having equity capital of at least EUR 13m; 2. Being required by law to have a Works Council (whether at the parent company or a subsidiary); and 3. Employing at least 100 people within the Netherlands (whether at the parent company or a subsidiary). In the rest of this summary, we shall refer to a company that meets these criteria and is therefore obliged by statute to implement the structure regime as a structure regime company. The structure regime applies in full to some companies, but only in part to others: this is referred to below as full and partial application of the structure regime, and, where necessary, the companies themselves as full structure regime companies and partial structure regime companies. Companies that do not meet all three criteria are not required to appoint a Supervisory Board, but may do so on a voluntary basis. If they opt to apply the structure regime voluntarily, they must do so in the manner laid down by statute. The Supervisory Board of a structure regime company has significant legal powers. It can veto major decisions of the Board of Management, and, in the case of a full structure regime company, it can appoint and dismiss Directors and adopt the annual accounts. (In the case of a partial structure regime company, these two powers reside with the General Meeting of Shareholders.) The Supervisory Board of a structure regime company can appoint (i.e., co-opt) its own members: the General Meeting of Shareholders and the Works Council can only put forward candidates or raise serious objection to a proposed appointment. This is in contrast to non-structure regime companies: in such companies, members of the Supervisory Board are appointed by the General Meeting of Shareholders. The structure regime applies not only to large companies (NVs and BVs), but also in limited form to large cooperative associations and mutual insurance associations. However, in its report, the SER considers only the position of companies. The implications of the structure regime for large cooperatives and mutual insurance associations will be examined in a subsequent report. 1.3 Number of companies involved As of 1 January 1999, 393 companies were registered with the Chambers of Commerce in the Netherlands as structure regime companies. Of these, 71 were listed companies and 18 were affiliated to listed companies (as subsidiaries of international companies). An analysis of the articles of association of 184 listed companies showed that 111 of them were companies 8

11 to whom the structure regime applied statutorily, while 30 applied the structure regime on a voluntary basis. 1.4 Scope of the report In its request, the government suggested that the report should concentrate on two topics: The corrective action that can be taken when a Supervisory Board fails to function properly; The criteria for obligatory application of the legislation. However, in its report, the SER has taken a broader view of the functioning and the future of the structure regime, devoting attention additionally to the following issues: The manner in which members of the Supervisory Board are appointed; A partial strengthening of the position of shareholders and certificate holders, and The maintenance of a certain balance in the powers of the General Meeting of Shareholders and the Works Council. 9

12 2. The SER s proposals and recommendations 2.1 General considerations The SER concludes that the structure regime should be retained, but in modified form. The central objective of the structure regime to ensure that both investors and employees are able to exert influence in large companies by participating in determining the composition of the Supervisory Board is felt to be entirely appropriate. The involvement of employees in this matter is a social right that should not be surrendered. The two-tier system provided for by the structure regime, whereby management and supervision are assigned to two separate bodies, is felt to offer the best guarantee that the management of large companies will function well. It should therefore be retained for such companies. It is felt to be essential that the Supervisory Board should continue to exercise supervision in line with the duty imposed on it by law, namely, to act in the best interests of the company and its business. The Supervisory Board has a number of important powers, including the right to veto major decisions of the Board of Management, and, in the case of a full structure regime company, the right to appoint and dismiss Directors. The proposals made in the report do not affect these powers. 2.2 Specific proposals The SER makes specific proposals in the following six areas: 1. The appointment of members of the Supervisory Board and the roles of the General Meeting of Shareholders and the Works Council in this process; 2. Ways of intervening if the General Meeting of Shareholders and/or the Works Council find themselves unable to support the Supervisory Board; 3. The way the Supervisory Board performs its duties and gives account of its performance; 4. The criteria for statutory application of the structure regime and exemptions from it; 5. Voluntary application of the structure regime; 6. Ways in which the position of shareholders and certificate holders can be strengthened. 10

13 The proposals are explained in more detail below The appointment of members of the Supervisory Board and the roles of the General Meeting of Shareholders and the Works Council in this process Background The SER suggests that, in structure regime companies, the General Meeting of Shareholders and the Works Council should be involved in appointing members of the Supervisory Board to a greater degree than at present. It makes several proposals to this effect. These proposals are in line with: the view, endorsed by the SER, that a company is a cooperative association of employees, investors and management; developments on the capital market and developments relating to the position of shareholders in other countries; actual practice in companies where the Works Council is already more extensively involved in appointing members of the Supervisory Board; attempts to achieve greater balance in who determines membership of the Supervisory Board by increasing the influence of the General Meeting of Shareholders and the Works Council. The main thrust of the SER s proposals is the replacement of the present co-option system by a statutory regulation whereby members of the Supervisory Board are appointed by the General Meeting of Shareholders (candidates being nominated by the Supervisory Board), and whereby the Works Council is entitled to make special nominations for up to one-third of the seats on the Supervisory Board. Profile In practice, the Supervisory Board of a structure regime company often draws up a profile detailing the desired composition and size of the Supervisory Board, as well as the desired background and experience possessed by members of the Supervisory Board. The SER recommends that the Supervisory Board, the General Meeting of Shareholders and the Works Council draw up such a profile for the composition of the Supervisory Board jointly, after having heard the views of the Board of Management. The SER does not believe the profile needs to be regulated by law. Proposed procedure The SER proposes that any new statutory regulation for the appointment of the members of the Supervisory Board should include provisions to the following effect: 11

14 The Supervisory Board should have at least three members, the precise number being determined by the General Meeting of Shareholders (unless the company s articles of association stipulate otherwise). The members of the Supervisory Board should be appointed by the General Meeting of Shareholders, nominations being submitted to it by the Supervisory Board. The Supervisory Board s nominations should be accompanied by appropriate explanation and justification. The Supervisory Board s nominees should be deemed to be appointed, unless the General Meeting of Shareholders rejects a nomination by a majority of two-thirds of the votes cast, representing at least one-third of the subscribed capital. In the event of such rejection, the Supervisory Board should submit a new nomination. In the event of a seat on the Supervisory Board becoming vacant, the Supervisory Board should notify the General Meeting of Shareholders, the Works Council and the Board of Management accordingly, giving details of the desired background and experience of candidates, in line with the profile of the Supervisory Board (if any). Within two months of receiving such notification, the General Meeting of Shareholders and the Works Council may then submit the names of one or more candidates to the Supervisory Board who will consider them when deciding on their nomination. The Supervisory Board then submits its nomination to the General Meeting of Shareholders for appointment to the Supervisory Board. It simultaneously notifies the Works Council of this nomination. The present right of the Board of Management to submit candidates for nomination should be withdrawn. The Supervisory Board should give the Works Council an opportunity to make a special nomination (bijzondere voordracht) in respect of one-third of the seats on the Supervisory Board. (If this fraction does not amount to a whole number, it should be rounded down.) Such a nomination is special in that the Supervisory Board must accept it unless it has good reason to reject it, namely on the grounds that the special nominee is likely to be unfit to perform the duties of a member of the Supervisory Board or that the appointment of the special nominee would result in a Supervisory Board whose composition would no longer conform to the desired or required profile. If the Works Council and the Supervisory Board are unable to reach agreement on a special nomination, the Supervisory Board should be able to ask the Enterprise Section of the Amsterdam Court of Appeal to rule whether its objection is justified on the grounds mentioned above. 12

15 The present right of the Works Council and the General Meeting of Shareholders to object to a proposed appointment to the Supervisory Board should be withdrawn. The current criteria for determining the incompatibility of functions should be retained. Accordingly, any employee of the company (or any of its subsidiaries), or any employee of an employee organisation engaged in drawing up the working conditions of the company (or any of its subsidiaries) shall not be eligible for appointment to the Supervisory Board. If they are all in agreement, the Supervisory Board, the General Meeting of Shareholders and the Works Council should be allowed to deviate from the procedure for making appointments to the Supervisory Board proposed by the SER. Such deviations might include different arrangements concerning: a. the right to determine the size of the Supervisory Board; b. the right to submit a nomination to the body entitled to make the appointment; c. the right to appoint or reject a nominee; d. the number of seats on the Supervisory Board for which the Works Council may make special nominations; e. procedural aspects such as the term within which bodies involved in the appointment procedure are required to make their decisions; and f. the term of office of members of the Supervisory Board. This flexibility would allow the Supervisory Board, the General Meeting of Shareholders and the Works Council to choose a system of appointment in line with the specific circumstances of their company Ways of intervening if the General Meeting of Shareholders and/or the Works Council find themselves unable to support the Supervisory Board General Meeting of Shareholders Under the present legislation, both the General Meeting of Shareholders and the Works Council can pass a vote of no confidence in the Supervisory Board, but the Supervisory Board and its members are at liberty to ignore such a vote. Given the Supervisory Board s explicit duty of accountability towards investors, the law should attach specific legal consequences to a vote of no confidence by the General Meeting of Shareholders. The SER therefore proposes the following regulation: 13

16 The General Meeting of Shareholders should be able to dismiss the Supervisory Board by passing a motion passed by a two-thirds majority of the votes cast, representing at least one-third of the subscribed capital. The General Meeting of Shareholders should only be able to exercise this power (a) after the Board of Management has given the Works Council an opportunity to express its opinion on the matter, and (b) after the Supervisory Board and the General Meeting of Shareholders have been notified of this opinion. The Works Council must have sufficient time (at least four weeks) in which to deliberate. A representative of the Works Council should be given an opportunity to explain the Works Council s view in more detail to the General Meeting of Shareholders. The consequence of a motion by the General Meeting of Shareholders that the Supervisory Board should be dismissed, passed as mentioned under the first bulleted point above, should be that the whole Supervisory Board resigns with immediate effect. In such an eventuality, the Board of Management should immediately ask the Enterprise Section of the Amsterdam Court of Appeal to appoint one or more independent persons to perform the supervisory functions temporarily and to arrange for a new Supervisory Board to be appointed (in accordance with the regulations governing such appointments described above) within a period of time to be determined by the Enterprise Section. Works Council Although the Supervisory Board has a certain duty of accountability towards the Works Council as the representative of the employees, this duty of accountability is of a quite different order to that owed by the Board to shareholders. In the light of this difference, the SER does not believe any specific legal provision is required to strengthen the position of the Works Council in a way parallel to that envisaged for the General Meeting of Shareholders. If the Works Council is dissatisfied with the way in which the company is being managed, it already has several legal options open to it: It can ask the Enterprise Section of the Amsterdam Court of Appeal to dismiss one or more members of the Supervisory Board (or indeed the Board as a whole). 14

17 Under the terms of the legislation governing Works Councils, it can enter an appeal with the Enterprise Section of the Amsterdam Court of Appeal against certain proposed decisions by the Board of Management. It may suggest to an employee organisation that the organisation exercise its right of inquiry and ask the Enterprise Section of the Amsterdam Court of Appeal to conduct an inquiry into the company s policy and circumstances, as a result of which the Enterprise Section may take certain provisional measures The way the Supervisory Board performs its duties and gives account of its performance Provision of information The law should indicate clearly what matters the Board of Management is required to report on to the Supervisory Board. The SER proposes that the legislation should specify that the Board of Management should submit a written report to the Supervisory Board at least once a year on the main aspects of the company s strategic policy, the general and financial risks the company is exposed to, and its management and control system. To be able to carry out its supervisory function properly, the Supervisory Board for its part should be able to satisfy any reasonable requests from its members for information, and should therefore be entitled to obtain additional information from the Board of Management. This information should be available to all members of the Supervisory Board. Power to adopt the annual accounts Under the current legislation, the Supervisory Board can adopt the annual accounts, and then submit them to the General Meeting of Shareholders for approval. However, this procedure does not transparently reflect the real lines of accountability and is therefore undesirable. It is the Board of Management s task to draw up the annual accounts, and the Board of Management is responsible for their contents. It is the Supervisory Board s legal duty to supervise the Board of Management; and that duty should therefore include the power to approve (or not) the annual accounts drawn up by the Board of Management. If the Supervisory Board decides to approve the annual accounts, it should sign them and then submit them to the General Meeting of Shareholders for adoption. Under such a procedure, the SER believes the General Meeting of Shareholders should not have the power to amend the annual accounts, but simply to adopt them or not. 15

18 2.2.4 The criteria for statutory application of the structure regime and exemptions from it Criteria With respect to the criteria for statutory application of the structure regime, the SER sees no reason to change the criterion relating to the number of employees employed in the Netherlands (at least 100). Nor does it see any reason to significantly increase the criterion relating to the required level of capital; it suggests raising the level from EUR 13m to EUR 16m. Exemptions The SER suggests creating the following additional exemption from full statutory application of the structure regime. If all shares in a structure regime company are held, directly or indirectly, by a single natural person, or by two or more natural persons who have agreed to collaborate, the company need only apply the partial version of the regime Voluntary application of the structure regime The SER sees no need to limit voluntary application of the structure regime. However, it suggests that some legal provision be made to cover the situation of those companies that were originally obliged by statute to apply the structure regime, but which, as a result of a change in circumstances, are no longer so obliged to apply the regime, either fully or partially. The SER suggests that, in such cases, the Board of Management and the Supervisory Board, should place the question of whether the structure regime should continue to apply to the company on the agenda of the first General Meeting of Shareholders to be held after the changed situation has arisen (at the latest), stating and explaining their position on the issue. The General Meeting of Shareholders will then decide, by a simple majority of the votes cast, whether it wishes to apply the structure regime to the company on a voluntary basis. If the General Meeting of Shareholders decides that it does not want to continue to apply the structure regime, within six months the Board of Management must submit to the General Meeting of Shareholders a motion to amend the articles of association accordingly. After the elapse of six months following the decision to discontinue application, legislation should stipulate that application of the structure regime will cease automatically. 16

19 2.2.6 Ways in which the position of shareholders and certificate holders can be strengthened The SER believes that the position of the shareholders in structure regime companies needs to be strengthened. The stock markets want to see in place a sound system of corporate governance that balances the interests of the shareholders on the one hand and the company s Board of Management and the Supervisory Board on the other. The SER makes the following recommendations (several have already been discussed in detail above). The General Meeting of Shareholders of structure regime companies should have the right (as in non-structure-regime companies) to appoint the members of the Supervisory Board. The General Meeting of Shareholders of structure regime companies should be able to dismiss the entire Supervisory Board. The General Meeting of Shareholders of structure regime companies (whether full or partial) should be able to adopt the annual accounts. The General Meeting of Shareholders of structure regime companies should be able to veto far-reaching decisions by the Board of Management, i.e., those that may effectively change the identity or nature of the company (e.g., by transferring ownership, or initiating or terminating any long-term collaboration with or participation in another company through investment or disinvestment). The SER suggests that far-reaching in this context be defined in terms of percentages of key items in the company s balance sheet (e.g., equity capital, balance sheet total or total capital employed). If shareholders and certificate holders, individually or jointly representing at least one percent of the subscribed capital, ask for an item to be put on the agenda of the General Meeting of Shareholders, the Board of Management and the Supervisory Board should grant this request unless substantial interests of the company militate against doing so. Holders of certificates of shares in structure regime companies whose shares have been certified with the cooperation of the company should be legally entitled to vote at the General Meeting of Shareholders on the following topics: 17

20 a. appointment of members of the Supervisory Board; b. adoption of the annual accounts; c. a motion to dismiss the Supervisory Board; d. discontinuation of voluntary application of the structure regime. Granting certificate holders voting rights on the above-mentioned matters does not affect the voting rights of the certificate administration office in relation to certificates whose holders do not exercise their voting rights. The SER suggests, however, that the above-mentioned voting rights should not apply if a public bid has been made (or announced) for shares in the company, or if a take-over bid that, judged objectively, may be described as hostile is likely to be made. The SER suggests that the government should take up at European Union level the problem of what to do about current restrictions on proxy voting and proxy solicitation in the case of shares or certificates held by investors outside the Netherlands. 2.3 Implementation and evaluation The SER sees the proposals presented in the report as forming a coherent whole and therefore recommends that the government and parliament treat them as such in their deliberation and when implementing them in legislation. The SER suggests that the effects of any revised legislation should be evaluated five years after it has come into force. 18

21 3. Corporate governance In their requests to the SER, both the Dutch government and the House of Representatives asked the SER to set its views on the structure regime in the context of relevant developments in the field of corporate governance as a whole. Corporate governance is normally taken to mean the totality of rules and factors that determine the relationships of power within companies, particularly large companies, both listed and unlisted. 3.1 International background The current debate on corporate governance arose mainly as a result of the internationalisation of business and of the markets of supply and demand that internationally operating companies now have to deal with. A particularly significant factor has been the increasing integration of capital markets. The OECD has published a set of guidelines to assist member countries in benchmarking their own system of corporate governance against certain basic minimum standards. These guidelines, based on the view that companies are job-creating entities that perform an indispensable function in society, give priority to the fundamental rights of the shareholder, including the right to appoint the members of the managing body. 3.2 The Dutch situation The Peters Committee reports In the Netherlands, the debate on corporate governance has been (and continues to be) based on the reports of two committees, the Committee on Corporate Governance and the Corporate Governance Monitoring Committee. They were both chaired by J.F.M. Peters, and are therefore also known informally as Peters Committee I and Peters Committee II. The Committee on Corporate Governance (Peters Committee I) made 40 recommendations as to how listed companies could improve their corporate governance within the framework of current legislation. The Committee focused particularly on the interplay between the Supervisory Board, the Board of Management and shareholders, and the factors that affect the balance of power among them. The Committee did not consider the role of employees in this equation. Government objectives Partly in reaction to the Peters Committee reports, the government has delineated three main objectives in its policy on corporate governance: 19

22 To improve the disciplinary effect of the market on corporate control This relates to the way in which control over companies is gained. Legislative measures relevant here include a Regulation of Public Offerings Bill, the 13th EU Directive on Public Offerings, and a Protective Measures Bill. To increase shareholder participation and provide greater protection for shareholders Highly relevant here are legislative proposals dealing with the following matters: a. the separation of the grant of discharge to the Board of Management and the Supervisory Board from the approval of the annual accounts; b. the right of shareholders to have items put on the agenda of the General Meeting of Shareholders; and c. the purpose and implementation of certification, including limitations on voting rights and proxy voting. To promote the openness and transparency of company data The government has announced that, as far as necessary, it is considering legislation that would regulate: a. the provision of information, based on internationally accepted standards; b. the publication of information about the remuneration and shareholdings of individual directors and members of the Supervisory Board; and c. the reporting of the principal aspects of a company s corporate governance in its annual report. 20

23 4. The present situation and the SER s proposals: a brief comparison Aspects of the legislation Current situation SER proposal Statutory application of structure regime Partial application of structure regime allowed (General Meeting of Shareholders appoints Board of Management and adopts annual accounts) Appointments to Supervisory Board Right to submit candidates for nomination for membership of Supervisory Board; Works Council s If company meets these three criteria: 1. Equity capital > EUR13m 2. Works Council obligatory 3. At least 100 employees in the Netherlands 1. In the case of subsidiaries of an international group of companies the majority of whose total workforce works outside the Netherlands Supervisory Board appoints or reappoints members of Supervisory Board (by co-option) General Meeting of Shareholders, Works Council and Board of Management can all submit candidates for If company meets these three criteria: 1. Equity capital > EUR 16m 2. No change 3. No change 1. No change 2. In the case of structure regime companies whose shares are all owned by a single natural person, or by two natural persons who have agreed to work together General Meeting of Shareholders appoints members of Supervisory Board, nominations being submitted by Supervisory Board; Works Council can submit special nominations for max. 1/3 of the seats on Supervisory Board. General Meeting of Shareholders can reject Supervisory Board nominees by 2/3 majority of votes cast, representing 1/3 of subscribed capital. If in agreement, Supervisory Board, General Meeting of Shareholders and Works Council may decide to follow a different appointment procedure Board of Management loses right to submit candidates for nomination. General 21

24 Aspects of the legislation Current situation SER proposal right to make special nominations Right of General Meeting of Shareholders and Works Council to object to proposed appointment to Supervisory Board Dismissal of individual members of Supervisory Board appointment to all seats on Supervisory Board General Meeting of Shareholders and Works Council can object to a proposed appointment to Supervisory Board solely on grounds mentioned in the law Enterprise Section can dismiss member of Supervisory Board at request of Supervisory Board, General Meeting of Shareholders or Works Council for: Meeting of Shareholders and Works Council keep right to submit candidates for nomination by Supervisory Board. Works Council may also submit special nominations to Supervisory Board for max. 1/3 of seats on Supervisory Board. If accepted, Supervisory Board submits special nominations to General Meeting of Shareholders for appointment. If Supervisory Board rejects special nomination (on grounds of unsuitability of candidate or because Supervisory Board is likely to be improperly constituted), Supervisory Board and Works Council try to reach agreement. If no agreement possible, Supervisory Board asks for judgement from Enterprise Section Dropped Current legislation for dismissal of one, several or all members of Supervisory Board retained 22

25 Aspects of the legislation Current situation SER proposal Dereliction of duty Other serious cause Drastic change of circumstances Dismissal of whole Supervisory Board Duties and powers of General Meeting of Shareholders in structure regime companies No legal regulation (a) In general: As specified by statute (b) In relation to Supervisory Board: Has right to propose or object to candidates for appointment to Supervisory Board. May ask Enterprise Section to dismiss members of Supervisory Board General Meeting of Shareholders may pass a motion to dismiss Supervisory Board (giving reasons) by a 2/3 majority of votes cast, representing 1/3 of subscribed capital. Supervisory Board then resigns with immediate effect. General Meeting of Shareholders must hear views of Works Council before taking this decision. Board of Management then requests Enterprise Section to appoint one or more persons to carry out temporary supervisory function and arrange for new Supervisory Board to be appointed Powers of General Meeting of Shareholders extended to include: Right to appoint members of Supervisory Board, candidates being nominated by Supervisory Board; may reject nominee by 2/3 majority of the votes cast, representing 1/3 of subscribed capital Right to dismiss Supervisory Board by 2/3 majority of the votes cast, representing 1/3 of subscribed capital, 23

26 Aspects of the legislation Current situation SER proposal with immediate legal effect Right to veto legal transactions which may change identity or character of company (e.g., transfer of ownership; entering into long-term collaboration or participation) Right to adopt or reject annual accounts Voting rights for certificate holders at General Meeting of Shareholders on certain topics relating to the structure regime (except in exceptional circumstances) Right for shareholders with 1% of subscribed capital to have items put on agenda of General Meeting of Shareholders Right to decide on continued application of structure regime on voluntary basis if company no longer meets legal criteria for obligatory application 24

27 Translated publications Abstracts of recent opinions in English, French and German 00/12D Auf dem Weg zu einem gesunden Krankenversicherungssystem 2000, 28 pp., ISBN /12F Vers un système sain d assurances maladie 2000, 28 pp., ISBN X 00/09E Long-Range Equal Opportunities Policy Document 2000, 16 pp., ISBN /08E Medium-term social and economic policy, , 33 pp., ISBN /08F Politique économique et sociale de 2000 à , 35 pp., ISBN /PK/F Les retraites complémentaires aux Pays-Bas 2000, 44 pp., ISBN X 00/PK/D Rentenkarte der Niederlande 2000, 44 pp., ISBN /PK/E Pension Survey of the Netherlands 2000, 41 pp., ISBN /02E Social and economic policy co-ordination in the European Union 2000, 17 pp., ISBN /01F Coordination des poliques économique et sociales au sein de l Union européenne 2000, 18 pp., ISBN /01E Social Security in the Netherlands: the need for organisational reform 2000, 30 pp., ISBN /18E Promoting labour participation among older people 1999, 12 pp., ISBN /16E The Enlargement to the East of the European Union 1999, 15 pp., ISBN /12E Market and government 1999, 17 pp., ISBN /04E Higher Education and Research Plan , 20 pp., ISBN /18E European Social Dialogue 1998, 20 pp., ISBN X 98/09E ICT and the consumer 1998, 21 pp., ISBN /08E Socio-economic policy , 27 pp., ISBN /04E Agenda 2000: financing and enlarging the European Union 1998, 18 pp., ISBN /09E Reform of the Common Agricultural Policy 1996, 24 pp., ISBN /09D Reform der Gemeinsamen Agrarpolitik 1996, 25 pp., ISBN /09F Réforme de la politique agricole commune 1996, 25 pp., ISBN X 96/05E Towards an innovative economy 1996, 33 pp., ISBN

28 Published by: Social and Economic Council Bezuidenhoutseweg 60 PO Box LK The Hague The Netherlands ISBN / CIP