Dutch Supreme court provides clarity on shareholders' rights to place items on the agenda
The right of shareholders to put items on the agenda of the general meeting pursuant to Section 114a of Book 2 of the Dutch Civil Code, has proved to be an effective means in recent years by which (activist) shareholders have been able to influence the strategy of listed companies. On 20 April last, the Dutch Supreme Court issued an important ruling with regard to the right to place items on the agenda, which shows that shareholders cannot oblige a company to include items which belong to the exclusive competence of the management board on the agenda of the general meeting for a vote.
In a case before the Supreme Court Boskalis, in its capacity as shareholder of Fugro, had asked the management board of Fugro to include an item on the agenda of the General Meeting for a vote. This agenda item included a recommendation to the management board of Fugro to do everything necessary to terminate Fugro's protective structure. This request for inclusion on the agenda was refused by the management board of Fugro, after which Boskalis requested an interim relief judge by way of preliminary relief proceedings to order Fugro to put the item on the agenda for a vote. Both the interim relief judge in preliminary relief proceedings and the appeal court rejected Boskalis' claims. The Supreme Court follows this line and also rejects the appeal in cassation against the judgment of the appeal court. In doing so, the Supreme Court considered the following.
In principle, determining the policy and strategy of a company is a matter for the management board of the company. The general meeting may express its views on this matter by exercising the rights granted to it by law and by the articles of association. The latter means in general that the management board of a company is accountable for its policy to the general meeting, but that, unless otherwise provided by law or the articles of association, it is not obliged to involve the general meeting in its decision-making beforehand with regard to acts for which the management board is competent. Nor is the management board obliged to consult the general meeting in such a case. This division of powers also determines the limits to the right of shareholders to place items on the agenda.
Since determining the policy and strategy of a company is in principle a matter for the management board of the company and the management board is not obliged to consult the general meeting on this matter, shareholders cannot oblige the company to include a subject that is a matter for the management board on the agenda of the general meeting for voting. It is irrelevant that such a vote would have no legal effect and is referred to as an informal vote, a recommendation, a motion or a poll.
European rules do not lead to a different judgement either. It does not appear from the European directive that the intention is to grant shareholders voting rights which they did not have before the directive was introduced.
The Dutch Supreme Court therefore rejects Boskalis' appeal in cassation. With this judgment, the Supreme Court clearly indicated that a shareholder cannot put items on the agenda for a vote, not even in the case of an informal vote, recommendation, motion or poll. At most, the agenda item may be placed on the agenda for discussion.
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