1

Mandate of the Special Representative of the

Secretary-General (SRSG) on the Issue of Human

Rights and Transnational Corporations and other

Business Enterprises

CORPORATE LAW PROJECT JURISDICTION: Netherlands

FIRM: NautaDutilh

DATE: November 2010

This survey is an independent submission to the SRSG’s

Corporate Law Project. It is the sole work of NautaDutilh and

the SRSG takes no position on any views expressed or implied

in this report.

More information about the Corporate Law Project is available

at: http://www.business-

humanrights.org/SpecialRepPortal/Home/CorporateLawTools.

A NOTE FROM THE UN SPECIAL REPRESENTATIVE ON BUSINESS AND HUMAN

RIGHTS

September 2010

This survey is an independent submission to a project on corporate law and

human rights under my mandate as Special Representative of the UN Secretary-

General on Business and Human Rights: the “Corporate Law Project”. I am

delighted that nineteen leading corporate law firms from around the world have

agreed to make submissions to this project, and thank them for their

engagement. The willingness of so many firms to provide their services pro bono

in order to expand the common knowledge base indicates that corporate law

firms worldwide appreciate that human rights are relevant to their clients’

needs.

It is important at the outset to understand how this project fits into my wider

work. I was appointed in 2005 by then UN Secretary-General Kofi Annan with a

broad mandate to identify and clarify standards of corporate responsibility and

accountability regarding human rights, including the role of states. In June 2008,

after extensive global consultation with business, governments and civil society,

I proposed a policy framework for managing business and human rights

challenges to the United Nations Human Rights Council (Council). The

Framework of “Protect, Respect and Remedy” rests on three differentiated yet

complementary pillars: the state duty to protect against human rights abuses by

third parties, including business, through appropriate policies, regulation, and

adjudication; the corporate responsibility to respect human rights, which in

essence means to act with due diligence to avoid infringing on the rights of

others; and greater access for victims to effective remedy, judicial and non-

judicial. You can read more about the Framework in my 2008, 2009 and 2010

reports to the Council, available at my website: http://www.business-

humanrights.org/SpecialRepPortal/Home.

The Council unanimously welcomed what is now commonly referred to as the

U.N. Framework and extended my mandate by another three years, tasking me

with “operationalizing” the Framework—that is, to provide “practical

recommendations” and “concrete guidance” to states, businesses and others on

the Framework’s implementation. There has already been considerable uptake

of the U.N. Framework by all relevant stakeholders. It has also enjoyed

unanimous backing in the Council; strong endorsements by international

business associations and individual companies; and positive statements from

civil society.

A key aspect of the first pillar, the state duty to protect, is that states should

foster corporate cultures respectful of rights both at home and abroad, through

all appropriate avenues. In particular, I have been exploring the opportunities

and challenges that corporate and securities law can provide in this regard.

Corporate law directly shapes what companies do and how they do it. Yet its

implications for human rights remain poorly understood. The two have often

been viewed as distinct legal and policy spheres, populated by different

communities of practice.

The Corporate Law Project will allow me to explore this area further by gaining

knowledge from over 40 jurisdictions as to how national laws and policies

dealing with incorporation and listing; directors’ duties; reporting; stakeholder

engagement; and corporate governance more generally currently require,

facilitate or discourage companies from respecting human rights. I am interested

not only in what laws currently exist, but also how corporate regulators and

courts apply the law to require or facilitate consideration by companies of their

human rights impacts and preventative or remedial action where appropriate.

The project thus formally comprises part of my work on the state duty to

protect. It will assist me to understand whether and how national corporate law

principles and practices currently encourage companies to foster corporate

cultures respectful of human rights. I will in turn consider what, if any, policy

recommendations to make to states in this area, following consultation with all

relevant stakeholders. However it is just one element of my work on the state

duty to protect, which also looks at other areas of the law and national policies

which might help states to encourage companies to respect human rights.

The project will also support my work on the corporate responsibility to respect

and access to effective remedy. In relation to the responsibility to respect, I have

explained that in addition to compliance with national laws, the baseline

responsibility of companies is to respect human rights. To discharge the

responsibility, I have recommended that companies conduct ongoing human

rights due diligence whereby they become aware of, prevent, and mitigate

adverse human rights impacts. The responsibility exists even where national

laws are absent or not enforced because respecting rights is the very foundation

of a company’s social license to operate. It is recognized as such by virtually

every voluntary business initiative, including the UN Global Compact, and soft

law instruments such as the International Labour Organization Tripartite

Declaration and the OECD Guidelines on Multinational Enterprises.

Nevertheless, an understanding of national laws, including corporate law,

remains vital to ensure companies understand and comply with their national

legal obligations. Moreover, as my 2010 report to the Council highlights,

companies may face non-compliance with corporate and securities laws where

they fail to adequately assess and aggregate stakeholder-related risks, including

human rights risks, and may thus be less likely to effectively disclose and

mitigate them, as may be required.

The Corporate Law Project’s website is http://www.business-

humanrights.org/SpecialRepPortal/Home/CorporateLawTools. There you will

find the original press release for this project; the research template the firms

have agreed to follow; summary reports from two consultations held to date on

the project; an over-arching trends paper bringing together the main themes

from the firms’ surveys; and all completed firm surveys.

My thanks again to all stakeholders who have contributed to this project.

John G. Ruggie

Special Representative of the UN Secretary-General on Business and Human

Rights

EXECUTIVE SUMMARY:

Setting the legal landscape

The national laws of the Netherlands embed various elements of international

law, including international human rights law. The state of the Netherlands is a

signatory to most international human rights-related instruments. National legal

rules regarding human rights are mostly state-oriented (e.g. rules that require the

government to refrain from certain actions or conversely to undertake certain

actions).

Regulatory framework

The Netherlands is a civil law jurisdiction. Even though the state has a

decentralised structure through provinces and municipalities, most statutory rules,

including corporate law and securities law, are promulgated at the state level.

These law are also partially monitored and enforced on the centralised level

through various public enforcement agencies, for example the Dutch Financial

Markets Authority ("AFM").

Incorporation and listing

As for Dutch corporate law and Dutch securities law, there is no direct link

between the statutory provisions governing Dutch listed corporations on the one

hand and human rights obligations on the other. Still, corporations as legal

persons are bound by the law, meaning that they may be criminally or

administratively prosecuted in case of violations of for instance environmental- or

employment laws. Even though there are no "hard" legal requirements to that

effect, Dutch listed companies are still encouraged pursuant to a "best practice" of

the Dutch Corporate Governance Code to develop and implement a Corporate

Social Responsibility policy. Additional guidelines such as the UN Global

Compact and the OECD Guidelines for Multinational Enterprises may provide

additional guidance in this respect for Dutch multinationals, even though these

instruments are not binding in nature.

Director's duties

In taking business decisions, directors of Dutch listed corporations are allowed

(and to some extent required) to take the interests of non-shareholders such as the

company's employees, its creditors and society at large into account. The facts

and circumstances of the case dictate which interest should be paramount. It

could well be argued that directors as a consequence are required to take human

rights-related issues into account, even if these issues are in fact located abroad.

However, this does not automatically mean that this requirement could

successfully be enforced by private parties.

Reporting

Even though there are few explicit obligations to report on corporate social

responsibility issues, there is a growing tendency in accepted best practices

(including best practices to that extent in the Dutch Corporate Governance Code)

on listed companies to report on CSR matters in their annual report. Strictly

speaking, this reporting is limited to operations in the company's own

jurisdiction, but one could reasonably argue that as a matter of sound business

practice a company may wish or may even be obliged to report on CSR issues

relating to foreign subsidiaries as well.

Stakeholder engagement

Shareholders under Dutch law have several means at their disposal to bring issues

relating to human rights to the attention of the company's directors, for instance

by tabling a shareholders' resolution or by asking questions during a general

meeting of shareholders. On top of this, institutional investors are expected to

take an active role in this respect - at least when it comes to their own investment

decisions - on the basis of their adherence to ESG guidelines. Outside

constituencies such as human rights interest groups do not have such means on

the basis of Dutch corporate- or securities law, but they might nonetheless

attempt to exert influence through the media and through public debate.

Other issues of corporate governance

There is a growing awareness among institutional investors that CSR is an

important item on the agenda of Dutch listed corporations. A large part of the

Dutch institutional investors has developed "ESG” (Economic, Social and

Governance) guidelines. In addition, stakeholders (in their capacity of

shareholder) have a number of means at their disposal to address human rights

issues, for instance by requesting a human rights-related item to be added to the

agenda for a general meeting of shareholder or by directly addressing the other

shareholders during a meeting. Even though this does not happen frequently at

present, this could well occur more frequently in the future.

ANSWERS TO THE QUESTIONNAIRE

Setting the legal landscape

1. Briefly explain the broader legal landscape regarding business and human

rights.

The Netherlands has ratified the following human rights treaties:

• the European Convention for the Protection of Human Rights and

Fundamental Freedoms ('ECHR');

• the International Covenant on Civil and Political Rights ('ICCPR');

• the International Covenant on Economic, Social and Cultural Rights

('ICESCR');

• the International Convention on the Elimination of All Forms of Racial

Discrimination;

• the International Convention on the Elimination of All Forms of

Discrimination Against Women;

• the Convention against Torture and Other Cruel, Inhuman or Degrading

Treatment or Punishment;

• the Convention on the Rights of the Child; and

• the Convention on the rights of persons with disabilities.

The above treaties are only binding to the member states, and some provide an

ability for individuals to complain about breaches by states parties. For example,

the ICCPR provides individuals a means to bring a matter involving an alleged

violation of the ICCPR before the Human Rights Committee, provided that the

state in question has ratified the Optional Protocol to the ICCPR. It is also worth

noting that the ECHR contains self-executing provisions on which any person

(private persons and legal persons) can rely on in a court of law.

The place of the Netherland’s international obligations is laid down in articles 93

and 94 of the Constitution of the Netherlands (Grondwet). Article 93 of the

Constitution provides that any provision of a treaty that contains a universally

binding rule has binding force in the Kingdom of the Netherlands after the

publication of the provision. Article 94 of the Constitution adds that statutory

provisions (including those in the Constitution itself) that are contrary to

universally binding provisions in a treaty or according to international law shall

not be applicable. The consequence of these two provisions is that the human

rights provisions in the international agreements that the Netherlands have

ratified do not have to be incorporated in domestic law.

The Constitution also contains a series of human rights provisions, of which the

most relevant to this template are:

• the right of equal treatment and anti-discrimination (art. 1);

• freedom of religion or philosophical beliefs (art. 6);

• freedom of speech and press (excluding advertising) (art. 7);

• right of privacy (art. 10);

• right of physical integrity (art. 11);

• privacy of correspondence (art. 13).

Not all of the above provisions can be mutually invoked by or against (legal)

persons, however the court can take the relevant provisions into consideration

when deciding on legal concepts such as tort or the reasonableness and fairness of

a particular decision under other areas of law (redelijkheid en billijkheid).

Specific laws and regulations have been adopted in an effort to further secure the

above civil rights. Reference is made to the Equal Treatment for Men and

Women Act (Wet gelijke behandeling mannen en vrouwen) and the General

Equal Treatment Act (Algemene wet gelijke behandeling). Employment law also

has specific protective provisions, for instance the ban on termination of the

employment contract if the employee is pregnant or because of membership of a

trade union (art. 7:670 sub 2 and 5 DCC). For employment law purposes, the law

also provides for equal treatment of men and women (art. 7:646 DCC) and

extensive regulations on workplace safety and employee wellbeing are in place

pursuant to the Working Conditions Act (Arbeidsomstandighedenwet). Privacy

and personal data are protected by the Personal Data Protection Act (Wet

bescherming persoonsgegevens). Violations of environmental laws can be

enforced through private law (i.e. damages), administrative law (e.g.

administrative coercion or incremental penalties) or criminal law.

The Dutch Penal Code ('DPC') provides for complicated rules on the criminal

liability for international crimes. The main rule is based on territory: the Dutch

Penal Code is applicable to anyone that commits a crime in the Netherlands (art.

2 DPC). Additionally, the Dutch Penal Code also applies to anyone outside of the

Netherlands that commit certain crimes that infringe on the interest of the State

(art. 4 DPC). Crimes that infringe on the interest of citizens of the State can lead

to the prosecution of individuals outside the Netherlands. Examples of such

crimes are: crimes against Dutch ships or aircraft, terrorist attacks or the

financing of terrorist organisations (art. 4 sub 7, 13 and 14 DPC). Furthermore,

any Dutch citizen (including a Dutch legal person and a Dutch citizen abroad who

is the de facto director of a foreign legal person that commits a crime regardless

of the criminal liability applicable in that country) that inter alia commits any of

the following crimes can be held criminally liable in the Netherlands (art. 5

DPC):

• human trafficking;

• (foreign) employment of illegal aliens in the Netherlands;

• a series of crimes against the administration of justice of the International

Criminal Court;

• sex tourism;

• female circumcision; and

• certain computer and digital crimes.

The International Crimes Act ('ICA', Wet internationale misdrijven), which

implements the Rome Statute, assumes criminal jurisdiction over anyone present

in the Netherlands - including companies as legal persons - that has committed a

crime outside of the Netherlands that is listed in the ICA; anyone that has

committed a listed crime outside of the Netherlands against a Dutch citizen and

any Dutch citizen that commits a listed crime outside of the Netherlands (art. 2

sub 1 ICA). The crimes listed in the ICA are:

• genocide (art.3);

• widespread or systematic attack on the civil population in the form of

extermination, (sexual) slavery, deportation, imprisonment, torture, rape and

other forms of sexual violence, collective persecution, disappearance,

apartheid and other comparable inhumane acts (art. 4);

• serious breach of the Geneva Conventions (art. 5); and

• war crimes (art. 5 sub, art. 6 and 7).

In the past year, the issue of potential liability of Dutch companies for damages

for possible human rights related abuses committed by foreign subsidiaries

abroad has been brought into focus as a result of court proceedings brought by

foreign plaintiffs against Dutch parent companies regarding their acts and

omissions vis-a-vis the conduct of their subsidiaries abroad. There has also been

a criminal prosecution relating to a Dutch company’s behavior in the

Netherlands, allegedly acting as a catalyst for human rights-related harm abroad.

Dutch courts have had to make decisions about whether they have the

jurisdicational basis to hear these cases and the grounds for imposing parent

company liability. In at least two cases they have taken jurisdiction – in the

criminal cases mentioned above, which is now on appeal after a finding against

the company, and in a civil case, which is now being litigated on its merits.

Finally, the issue on how to assess cases of possible legal liability of Dutch parent

companies for their subsidiaries’ involvement in possible violations of human

rights abroad also attracted attention from policymakers as well as from the

academic field. A Leiden University Study by professor Geert Castermans,

commissioned by the Dutch Minister of Foreign Trade and released just prior to a

December 2009 ruling by the The Hague District Court in the civil case

mentioned above, attempted to formulate a framework for Dutch courts to assess

these liability issues.

Regulatory Framework

2. To what legal tradition does the jurisdiction belong, i.e. civil/common law,

mixed?

The Dutch legal system principally belongs to the civil law tradition. The main

source of law in the Netherlands is legislation. This legislation, however, is

further refined and interpreted by the Dutch courts. The case-law generated by the

courts, especially that of the Dutch Supreme Court (“Hoge Raad”) is of particular

relevance in understanding the scope and meaning of the statutory provisions.

Furthermore, the Netherlands is a member-state of the European Union, meaning

that it is also subject to regulation at a European level. Finally, the Netherlands is

a signatory to a number of international treaties.

3. Are corporate/securities laws regulated federally, provincially or both?

The Netherlands is not a federal state, but a unitary state. Even though a system

of decentralized government is in place – governmental organisations are

established at state level as well as at the provincial- and municipal level - these

local authorities have limited executive powers. This also holds true with regard

to corporate law and securities regulation. Both of these sets of rules have been

set at the central (i.e. state of the Netherlands) level. It should be noted, however,

that as a member of the EU, the Netherlands is also subject to the rules regarding

corporate- and securities law that have been laid down in various EU / EEC

directives and regulations. These rules are “federal” in the sense that they trump

conflicting regulation at the national level. Corporate- and securities law at the

EU level is mostly regulated through directives, i.e. general rules which member-

states have to implement into their own national legislation (as opposed to EU

regulations, which have direct effect without requiring separate implementation).

Dutch law provides for a number of enterprise- and business forms through which

persons can engage in business, ranging from the basic form of sole

proprietorship to the listed Dutch corporation. Part of these business forms are

partnership-structured, whereas other business forms are corporate entities. The

answers to this questionnaire will focus primarily on the latter category, more

specifically on the form of the Dutch corporation ("Naamloze Vennootschap", or

"N.V."). Dutch law also recognizes a separate form for closely-held corporations

("Besloten Vennootschap met beperkte aansprakelijkheid", or "B.V."), but the

rules governing Dutch B.V.'s in most instances strongly resemble those of the

N.V.. Dutch listed companies are typically incorporated as N.V.s. This

questionnaire will therefore take the open corporation (i.e. N.V.) as a starting

point.

The statutory rules governing the Dutch corporation are laid down in Book 2 of

the Dutch Civil Code ("Burgerlijk Wetboek", hereafter: "DCC"). These rules are

mandatory and may only be deviated from (for instance through a provision in the

company's articles of association) if this is provided for in the statutory rules

themselves. The Book 2 DCC provisions basically provide the ground rules for

Dutch corporations. In addition to Book 2 DCC, other statutes such as for

instance the Dutch Works Councils Act ("Wet op de Ondernemingsraden") also

contain relevant rules for Dutch corporations.

As for securities law, the main source for statutory rules in this regard is the

Dutch Financial Supervision Act ("Wet financieel toezicht", hereafter: "DFSA")

and various governmental decrees in which a number of statutory provisions of

the DFSA are expounded in further detail. In this context, it should be noted that

the field of securities law in EU member-states has increasingly been harmonised

through various EU-directives over the course of the past years. Thus, most of the

provisions of the DFSA in fact constitute the implementation of these EU-

directives into Dutch law.

Finally, a number of important rules regarding the internal system of checks &

balances within Dutch listed corporations are contained in the Dutch Corporate

Governance Code. The rules contained in the Code are in principle non-binding

by nature, but all Dutch listed corporations have to provide a statement as to

whether or not they comply with each provision of the Code and, in case of non-

compliance, the corporation has to state the reasons for doing so ("comply-or-

explain-mechanism). The Code was drawn up by an independent advisory

committee and subsequently declared applicable to Dutch listed corporations

through a governmental decree requiring these companies to include the comply-

or-explain statement described above in their annual reports.

4. Who are the government corporate/securities regulators and what are their

respective powers?

Under Dutch law, no separate regulatory authority with regard to corporate law

has been established. Since the main source of corporate law is statutory law,

most rules regarding corporate law are enacted through legislation. Thus,

corporate law is primarily made by the Dutch parliament, with the aid of the

Council of State (“Raad van State”) and non-official advisory bodies such as the

Corporate Law Commission (“Commissie Vennootschapsrecht”). In addition to

statutory corporate law, however, the Dutch Corporate Governance Code (see

under 22) is of particular relevance in this context. The Monitoring Committee is

the responsible organisation for updating the Code and monitoring the

compliance with the Code by Dutch listed companies. Even though it is not a

regulatory authority, its reports and recommendation have a considerable impact.

Finally, it should be noted that the Dutch judiciary has provided for a specialized

business court, the Enterprise Chamber, which is the exclusive judicial venue for

the interpretation of large parts of Dutch corporate law (not including matters

such as director liability, which are considered by the ordinary courts). Thus, the

case-law of the Enterprise Chamber can also have a regulating effect with regard

to the way in which the statutory corporate law provisions are to be applied.

As to regulatory authorities in the field of securities regulation, the Netherlands

Authority for the Financial Markets ("Autoriteit Financiële Markten", or "AFM")

is responsible for the conduct-of-business supervision which focuses on ensuring

orderly and transparent financial market processes, proper relationships between

market participants and the exercise of due care by financial undertakings in

dealing with clients. The AFM is an autonomous administrative authority. The

Ministry of Finance has delegated powers to the AFM to regulate behaviour on

the financial markets. As an autonomous administrative authority the AFM is

independently responsible for the performance of its role as regulator. The

Supervisory Board supervises the way in which the Executive Board performs its

tasks.

The Minister of Finance has the power to appoint the Chairman and members of

the Executive Board and the Supervisory Board of the AFM, to approve

amendments to the Articles and to approve the annual budget. In addition, the

Dutch Central Bank ("De Nederlandsche Bank”, or “DNB”) is responsible for the

prudential supervision of financial institutions. This supervision focuses on

ensuring the financial soundness of these institutions and the overall stability of

the financial sector.

5. Does the jurisdiction have a stock exchange(s)?

Yes. The main Dutch stock exchange, Euronext, is located in Amsterdam, the

Netherlands. This stock exchange consists of three separate indexes for large-,

midsized- and small listed companies respectively. Small and midsized

companies seeking simplified access to a stock market can list their shares in

Amsterdam, the Netherlands on NYSE Alternext. This is an exchange-regulated

market with a lighter regulatory regime (inter alia special listing procedures, a

market model designed to enhance trading and listing sponsors that assist

companies throughout their life on the exchange). The Euronext stock exchange

in Amsterdam is part of the NYSE Euronext group which operates in six

countries.

Incorporation and listing

6. Do the concepts of “limited liability” and “separate legal personality” exist?

Both the concepts of limited liability and separate legal personality exists under

Dutch law, with the notable exception that these do not apply to Dutch

partnerships. Currently, however, a bill is pending in the Dutch parliament which

would enable partnerships to choose whether or not they wish to qualify as a

separate legal personality.

The concept of "piercing the corporate veil" has been recognised in Dutch case-

law, albeit in a limited number of instances. Reported cases on the subject mostly

involve situations in which a director was held liable for a wrongful act vis-à-vis

the company's creditors or situations in which creditors of a subsidiary company

successfully held the parent company - which exercised control over the

subsidiary's actions - liable for wrongful acts. In all these cases, the creditors

suffered some kind of monetary harm as a result of the actions by either the

director or the parent company.

7. Did incorporation or listing historically, or does it today, require any

recognition of a duty to society, including respect for human rights?

Neither incorporation nor listings require any formal and specific recognitions of

a duty to society or with respect to human rights. However, founders of Dutch

corporations are subject to an examination of their history (i.e. records of criminal

offences) prior to incorporation. This examination is conducted by the Dutch

Justice Department. If there are reasonable grounds to suspect that the founders

wish to use the company for unlawful purposes, the Justice Department will issue

a formal objection to incorporation. The Justice Department uses a quite narrow

definition of "unlawful purposes", in the sense that only outright criminal

activities or activities to defraud creditors constitute such purposes.

8. Do any stock exchanges have a responsible investment index, and is

participation voluntary? (See e.g. the Johannesburg Stock Exchange’s Socially

Responsible Investment Index.)

Neither Euronext Amsterdam nor NYSE-Euronext appear to have something akin

to a responsible investment index. There are, however, a number of companies

incorporated in the Netherlands which also have a listing on either the

FTSE4Good and/or the DJ Sustainability Index. Examples include the industrial

conglomerate Unilever as well as the chemical production companies DSM and

Akzo-Nobel.

Directors’ Duties

9. To whom are directors’ duties generally owed (i.e. to the company, non-

shareholders etc)?

As a preliminary remark, it is important to note that Dutch corporations typically

have a two-tier board structure. The management board is responsible for the day-

to-day business and affairs of the company, whereas the supervisory board

provides for oversight of the management board’s activities. Depending on size

and the number of employees, some listed companies are required by law to have

a supervisory board (the so-called “structuurvennootschappen”), other listed

companies have voluntarily installed a supervisory board for practical

considerations. At the moment, a legislative proposal is pending which if enacted

would allow for Dutch companies to choose between adopting a one-tier board

(i.e. a single board with both executive- as well as non-executive board members)

or maintaining their present two-tier board structure. This questionnaire,

however, will take the current two-tier board system as a starting point.

Management board members' duties are generally owed to the company. Article

2:9 DCC provides that a management board member is bound vis-à-vis the legal

entity (i.e. the company) to discharge of his duties in a prudent and orderly

manner. The notion of directors' duties has been further refined in Dutch legal

scholarship through the notion of the “corporate interest” (“vennootschappelijk

belang”). It is generally held that a director - including both members of the

management board as well as members of the supervisory board - is to act in the

interest of the company in the broadest sense, i.e. the combined interests of its

shareholders, its employees, its creditors and even society at large. The preamble

of the Dutch Corporate Governance Code provides a similar statement, even

though this statement only refers to the company's "stakeholders" in general.

Articles 2:140 DCC and 2:250 DCC provide that supervisory directors of

respectively private - and public limited liability companies must supervise the

policy of the management and the general course of affairs of the company and

the enterprise connected therewith. They shall assist the management with advice

and in the performance of their duties the members of the supervisory board shall

be guided by the interest of the company and the enterprise connected therewith.

Even though there is no explicit codification of the corporate interest with regard

to the management board's duties, it is generally held that this notion applies to

the management board as well (see above).

Finally, a legislative proposal concerning the 'one-tier board' (giving Dutch

companies the possibility to choose between a separate supervisory board or a

board on which both executive and non-executive directors sit) provides a similar

provision for both executive and non-executive directors. As to directors' duties

this proposal contains a new provision (article 2:129 subd 5 DCC), which

explicitly states that a director in fulfilling his tasks is to serve the interests of

"the company and the company's enterprise." Thus, the notion of "corporate

interest" is to be explicitly codified in Dutch corporate law. The bill is currently

pending before parliament and is expected to be signed into law sometime in

2010.

The interests of non-shareholders (i.e. employees, creditors, society at large)

under Dutch law are all part of the encompassing corporate interest which is to be

served by a company's directors. There is no agreement within Dutch legal

academia as to the relationship between these various interests. Conceptually, all

of these interests are on equal footing, meaning that each interest under

circumstances can be paramount depending on the circumstances. Thus, the

weight that is to be attached to the various interests would be determined by the

facts and circumstances of the matter at hand.

In recent years, it has also been argued that the interests of shareholders should be

paramount, and even - under influence of the primarily U.S.-originated "law and

economics" legal thought - that directors should solely serve the shareholders'

interest. Serving non-shareholder interests, it was held, was inefficient and a mere

disguise to allow for unlimited board discretion to pursue their own pet projects.

This view, however, again is subject to discussion at the moment, perhaps due to

the effects of the credit-crunch on companies which were typically led in a

shareholder-oriented way, but which have arguably contributed to instability for

other constituencies and the overall economy as well.

Recently, professor Vino Timmerman, a prominent Dutch legal scholar and

advisor to the Dutch Supreme Court, argued in favor of adopting the U.K.

approach of the "enlightened shareholder value model". In this concept, the

interests of shareholders are paramount in principle, but the facts and

circumstances may require that other interests (such as the interests of employees

in the context of a large-scale reorganization or the interests of creditors in the

wake of a possible bankruptcy) can be prevailing in dictating the outcome of

specific business decisions. However, recent publications, including explanatory

notes to bills for new legislation, include specific references to the traditional

stakeholder model, meaning that shareholders' interests are conceptually on equal

footing with other stakeholders' interests.

In sum, Dutch corporate law has a stakeholder-oriented approach to directors’

duties. This stakeholder approach has drawn criticism by some Dutch legal

academics and in practice in recent years, but with a legislative proposal currently

pending before Dutch parliament which would codify the unwritten principle of

corporate interest, the stakeholder-oriented approach appears to be reinforced.

10. Are there duties to avoid legal risk and damage to the company’s reputation?

If so, are they duties in their own right or are they incorporated into other duties?

There are no specific directors' duties to avoid legal risk and damage to the

company’s reputation under Dutch law. However there is a general duty to

properly manage the company (article 2:9 DCC). Under Dutch law, a director has

considerable discretion performing this task but he may nonetheless be held liable

for damages in case of serious instances (“ernstig verwijt”) of improper fulfilment

of his tasks. Even though this is a fairly high threshold (which has been further

developed and refined in Dutch case-law), cases are conceivable (but have not yet

been reported) in which a director through a disregard of legal risks and damage

to the company’s reputation would cause the company to suffer significant harm,

for which he could subsequently be held personally liable by the company.

11. More generally, are directors required or permitted to consider the

company’s impacts on non-shareholders, including human rights impacts on the

individuals and communities affected by the company’s operations? Is the answer

the same where the impacts occur outside the jurisdiction? Can or must directors

consider such impacts by subsidiaries, suppliers and other business partners,

whether occurring inside or outside the jurisdiction? (See e.g. s. 172 UK

Companies Act 2006)

There is no specific legal rule which would explicitly require directors of Dutch

companies to actively consider the impact of the company’s business on the

human rights of individuals and communities. However, as explained above, one

aspect of the corporate interest which directors have to consider in fulfilling their

tasks is the interest of society at large. It could well be argued that the interest of

society at large would dictate directors to consider the human rights impact of the

company's operations, but it should at the same time be stressed that there is no

agreement as to the exact scope of the term society at large. Still, the 2008

Burgmans report (see below under 22) contains clear indications that the term

stakeholders should be viewed broadly in the sense that it also covers persons

who are affected by the company. Thus, in taking business decisions, directors

could and probably should take human rights issues into account to the extent that

these are relevant for the company. In any case, a regard for the corporate interest

should lead directors to refrain from taking decisions which would be adverse to

the human rights issues involved since this would not be in the best interests of

the company and its stakeholders. It is doubtful, however, whether this standard

would be sufficient to serve as a basis for actively encouraging directors to take

business decisions with the sole aim of improving human rights aspects, but it

does serve a function in deterring and/or addressing corporate activities that are

adverse to human rights.

For listed Dutch companies, the revised 2008 Corporate Governance Code

provides that the management board has to draw up a policy regarding the

relevant aspects of corporate social responsibility, which also has to be submitted

to the supervisory board for approval. (Best practice II.2(d) of the Code). The

main themes of this policy have to be published in the company’s annual report.

Furthermore, both the management board as well as the supervisory board under

the Code have the explicit task of actively taking into account in their decision-

making the CSR aspects identified in their policy (Principles II.1 and III.1 of the

Code). This amounts to a sufficient basis to consider human rights aspects in

corporate decision-making.

In case human rights of individuals and/or communities abroad are involved, the

analysis may be somewhat different. The general concept of corporate interest

does not in so many words cover these particular human rights issues, since the

reach of Dutch law rules (and more importantly the enforcability thereof)

typically does not extend beyond the boundaries of the Dutch jurisdiction. This

means that even the interest of 'society at large' in all likelihood is to be

interpreted so as to mean the interest of Dutch society only. Nevertheless, if there

was a risk to the company relating to human rights impacts overseas, one would

expect that the directors should oversee an appropriate response by the company.

The Burgmans Report mentioned under question 22 does contain a number of

references to international initiatives such as the UN Global Compact and the

OECD Guidelines on Multinational Enterprises, but does not offer any additional

guidance as to the scope of national corporate law regulation with regard to

foreign human rights issues. The Code does not contain an explicit reference to

CSR issues abroad, but given the fact that the Code applies to all Dutch listed

companies – of which a considerable part is actively involved in businesses

outside the Netherlands – one could argue that these foreign human rights issues

are implicitly covered. In the absence of a similar statement in Dutch statutory

law, however, this reasoning would not apply to non-listed companies.

Finally, it should be noted that Dutch companies doing business abroad should

take note of certain international initiatives, such as the OECD Guidelines on

Multinational Enterprises. As head of a group of companies, the board of the

parent company is responsible for the overall group strategy, which arguably

includes setting corporate governance standards and guidelines for conduct at the

group's subsidiary level. Even though the OECD guidelines are by nature non-

binding, they may be relevant in terms of imposing corporate governance

standards upon foreign subsidiaries.

12. If directors are required or permitted to consider impacts on non-

shareholders to what extent do they have discretion in determining how to do so?

As explained above under 9, the interests of non-shareholders are conceptually on

equal footing with the interests of a company's shareholders. In practice,

however, the interests of shareholders appear to be paramount in a number of

corporate business decisions. Still, the company's directors have a wide range of

discretion in taking business decisions and also have the power to determine the

company's overall strategy. This means that directors in principle may adopt

decisions which cater to the interests of non-shareholders. In the past years, such

decisions have been challenged by shareholders on the grounds that the directors

failed to maximise shareholder value, but the Dutch courts have refused to uphold

such challenges. Therefore, the interests of shareholders are not by definition

paramount in relation to the interests of non-shareholders.

13. What are the legal consequences for failing to fulfil any duties described

above; and who may take action to initiate them? What defenses are available?

A breach of a director's duties does not automatically lead to the director's

liability. Under Dutch law, the possibilities for holding a director liable for

damages are somewhat limited. The concept of a derivative shareholder suit does

not exist under Dutch law, as a result of which shareholders are precluded from

claiming damages suffered by the corporation from directors. It is possible for

shareholders to sue directors under the general cause of action of wrongful act

(article 6:162 DCC), but in that case the shareholder will have to prove that the

director violated a norm of care vis-à-vis the shareholder personally instead of

just a norm of care to the company as a whole. The same holds true for other

stakeholders or third parties; they will also have to allege and prove that the

director through his conduct violated a specific norm of care towards them. In

practice, this will be very difficult to establish, as a result of which only a small

fraction of such lawsuits is successfull.

Directors may be held liable for breach of their duties by the company itself. In

this scenario, the board would have to decide to bring a claim on behalf of the

company against the director. Shareholders formally do not have any influence in

this decision on whether or not to sue; they cannot instruct the company to bring

the suit, even though a shareholder or a group of shareholders may attempt to

exert some influence informally. If such a suit is brought, the company would

have to demonstrate that the director did not properly fulfil his duties, which

caused harm to the company. Under limited circumstances, for instance if the

director violated a provision in the company's Articles of Association, the burden

of proof shifts to the director, meaning that the director will have to show that he

carried out his tasks and responsibilities correctly.

In addition, breaches of directors' duties could be challenged in the context of

Inquiry Proceedings against the company before the Enterprise Chamber. Certain

parties, i.e. groups of shareholders collectively representing 10% of the

company's capital or who alternatively hold at least EUR 225.000 in share value,

labour unions, the attorney general of the Amsterdam Court of Appeals in case of

public interest and any party to whom the right to bring inquiry proceedings has

been awarded through contract or by the company's Articles. The inquiry

proceedings are typically aimed at establishing mismanagement of the company

and are also a forum for obtaining redressive measures for the mismanagement,

or preliminary measures pending the proceedings. The company itself is the

defendant in this action.

The focus lies on the general policy of the company and the questions whether or

not this policy is proper. It is important to note that director liability can not be

established in these proceedings and that thus claimants cannot obtain monetary

relief from the directors. If they wish to sue for damages, they would have to

bring suit against the director in an ordinary civil court.

14. Are there any other directors’ duties which might encourage a corporate

culture respectful of human rights?

As a general remark, a corporation - as a legal person - is to obey all applicable

laws and regulations. Since directors are the governing body of such corporation

and represent the company externally, they are responsible for compliance with

all applicable rules. These rules include provisions of employment law,

environmental law and other areas of law which are closely related to human

rights standards. Therefore, in a sense directors would be required to obey at least

the minimum standards as required under applicable laws.

Even though we are not aware of any norms which would specifically encourage

a corporate culture respectful of human rights, there are a number of general

norms and standards of conduct which provide some guidance in this respect.

First, the Enterprise Chamber and the Dutch Supreme Court in their case-law

within the scope of the above mentioned inquiry proceedings have developed

certain standards of proper management. These standards are primarily aimed at

the company's directors. Failing to adhere to these standards could lead to a

finding of mismanagement in inquiry proceedings.

More importantly, however, these standards also have a precautionary effect in

the sense that they can be applied as "rules of thumb" for good governance in

practice. Adherence to the applicable human rights standards undoubtedly falls

within the scope of these standards of proper management, even though there are

no reported court cases to date in which this has been expressly stipulated. Thus,

directors would be well-advised to take the relevant human rights aspects in

account in their decision-making process.

15. For all of the above, does the law provide guidance about the role of

supervisory boards in cases of two tier board structures, as well as that of senior

management?

The general Dutch statutory corporate law does not provide for additional rules

regarding oversight of the supervisory board for human rights issues. The general

standard, however, that the supervisory board is to monitor the management

board's activities and that it is to help frame the overall policy of the company

(article 2:146 DCC) of course also applies in this context. As to Dutch listed

companies, the supervisory board under the rules of the Corporate Governance

Code has to assume an active role vis-à-vis the management board, providing a

counterweight to the management board's powers. Specifically, the Code

prescribes that both the management board as well as the supervisory board of

Dutch listed companies have to take into account the relevant aspects of CSR in

their decision-making. Also, the management board has to submit the CSR policy

to the supervisory board for approval. These rules award considerable weight to

the role of the supervisory board with regard to framing the company's CSR

policy and ensuring compliance therewith.

Reporting

16. Are companies required or permitted to disclose the impacts of their

operations (including human rights impacts) on non-shareholders, as well as any

action taken or intended to address those impacts, whether as part of financial

reporting obligations or a separate reporting regime?

As a preliminary remark, it should be noted that under Dutch law, companies are

subject to different sets of reporting rules, generally depending on their respective

size and their business form (i.e. legal entity). Small companies are typically

exempt from the majority of financial reporting rules, whereas mid-sized

companies usually have to adhere to a limited set of reporting rules. Large

companies, both listed- as well as not listed companies, are subject to full-fledged

reporting rules and standards. With respect to disclosure of impacts of a

company's operations to non-shareholders, two specific rules are of particular

relevance. Both of these rules, however, only apply to large Dutch companies.

First, article 2:391 subd 1 DCC requires a company - both listed as well as non-

listed - to include an analysis of both financial- as well as non-financial

performance indicators in its description of the overall state of the company and

its business in the annual report, insofar as this is necessary for a better

understanding of the company's performance, the development in its results,

and/or the overall position of the company and its related entities. These non-

financial indicators include environmental affairs as well as human resources

issues. Notwithstanding this requirement, companies are of course free to address

any additional human rights related aspects in their annual report as they see fit.

In 2001, a bill was proposed in parliament which would require companies with

businesses abroad to report on their policy with regard to economical-, social-,

and environmental issues with regard to their international activities (article 2:391

subd 3 (new) DCC). Even though the text of the bill does not refer to specific

human rights instruments, it is clear that it is influenced by the general notion of

corporate social responsibility. Interestingly, the language of the bill would not

require companies to report on the impact of its operations on human rights, but

instead would merely require a statement of policy. However, as of now, this bill

has yet to be signed into law, and given the fact that it has been on the shelf for

about 8 years already, it is doubtful whether this will happen in the future.

Second, the Dutch Reporting Council ("Raad voor de Jaarverslaggeving") in

2003 issued a revised set of reporting guidelines ("Richtlijn 400 Jaarverslag"), in

which companies - again both listed as well as non-listed - are encouraged to

report in their annual report or in a separate report on issues of economic-, social-

, and environmental nature - without referring to a specific human rights

instrument - which are involved in the company’s operations (including

operations abroad if these accounts are consolidated in the group accounts).

These guidelines are issued as best practices for accountants, and enjoy a high

status within the profession. Even though these guidelines are non-binding, they

nonetheless have a considerable impact on the accountants' auditing and therefore

on the companies' financial reporting. As to listed companies, the Corporate

Governance Code additionally requires that at least the main themes of the

company's CSR policy be included in the annual report.

Finally, it could be argued that possible human rights violations - both in the

Netherlands as well as abroad - pose an operational risk for the company, in the

sense that possible human rights violations could impair the company's total

value, could pose a risk for disruptions (strikes etc.) especially with regard to

foreign subsidiaries and could impact the company's risk assessment and risk

forecasts in its reporting. In that case, the company should include these issues in

its statement in the annual report regarding the company's risk profile (article

2:391 subd. 1 DCC). Measures which are in place or which have been undertaken

to address these risks regarding human rights standards should also be generally

described in the annual report.

17. Do reporting obligations extend to such impacts or actions outside the

jurisdiction; to the impacts or actions of subsidiaries, suppliers and other

business partners, whether occurring inside or outside the jurisdiction?

As described above under 16, Dutch listed companies have to include general

language regarding their CSR policy in their annual reports under the Corporate

Governance Code, and in addition, depending on the specifics of the company,

may also be obliged to consider and report certain CSR and/or human rights

issues as part of their risk-management reporting. As to businesses and

enterprises which are wholly or partially owned by the Dutch state, the Dutch

Ministery of Finance has recommended that these companies report under the

Global Reporting Initiative ('GRI'), which would require these companies to

report on certain issues relating to CSR.

Even though this has not been established by the Monitoring Committee itself or

by a Dutch court, it could well be argued that these reporting obligations would

also have to extend to possible human rights issues of foreign subsidiaries. Since

developments outside the Netherlands can be of relevance to shareholders and to

the public at large (i.e. human rights violations abroad could have an adverse

effect on the value of the company) it would only make sense to interpret the

reporting obligations in such a way as to also extend to foreign activities. Since

the parent company's management board is responsible for the group's overall

strategy and policy as well as for the group's reporting, one could very well argue

that the board should also take the CSR issues relating to foreign subsidiaries into

account in the group's reporting.

The general reporting mentioned above would in principle only extend to the

company's own operations, not to those of suppliers and other business partners.

Still, a general description of the environment in which the company is

performing its operations could be included, more specifically in the context of

the risk section of the reporting. Again, however, suppliers and other business

partners would principally fall outside of the scope of these obligations, and the

reporting would most likely be limited to general language describing the

environment and the risks associated therewith.

18. Who must verify these reports; who can access reports; and what are the

legal consequences of failing to report or misrepresentation?

Compliance with reporting obligations is primarily a responsibility of the

management board. The reporting regarding CSR and/or human rights is to be

included in the annual report (as opposed to the annual accounts, which contains

specific information regarding the company’s financials), which is drawn up by

the management board. The supervisory board, at least for listed companies, has a

general obligation pursuant to the Code to exercise oversight on the financial

reporting process.

As to access to the annual accounts, this largely depends on the size and the

business form of the company. Small companies are not required by law to

publish detailed annual accounts, nor do they have to file an annual report. Large

companies have to deposit both the annual report as well as the annual account

with the Dutch Chamber of Commerce ("Kamer van Koophandel") on a yearly

basis. Any individual can then request a copy thereof. In addition, listed Dutch

companies are required under the Code to publish the annual accounts and the

annual report on their website, so that they can be easily accessed by everyone.

Failure to comply with reporting obligations can be sanctioned in a number of

ways, even though it must be mentioned that not all of them are effective in

practice. First, the AFM (the Dutch regulatory authority for securities regulation

described above) may undertake public enforcement action, although no cases

have been reported yet in which the AFM initiated enforcement actions regarding

the reporting of social or environmental issues. In doing so, it may recommend or

at a later stage may force the company to amend its annual accounts and/or

annual report, possibly in combination with imposing a monetary fine on the

company. Each interested party (including shareholders, but also groups of

employees and the AFM itself) can also undertake private action to enforce the

reporting obligations through bringing Annual Accounts Correction proceedings

("jaarrekeningprocedure") before the Enterprise Chamber. Through these

proceedings, parties may request the court to order the company to amend its

annual accounts or its annual report. To date, no such proceedings appear to have

been brought with regard to CSR issues.

Stakeholder engagement

19. Are there any restrictions on circulating shareholder proposals which deal

with impacts on non-shareholders, including human rights impacts?

As an initial matter, it should be noted that the Dutch corporate law legislation

only provides for the possibility to submit shareholder proposals for items to be

discussed during a company’s general meeting of shareholders for large

corporations (N.V.'s). Closely held corporations (B.V.'s) are not required by law

to allow for shareholder proposals. Still, companies can also adopt a voluntary

regime with regard to shareholder proposals in their Articles of Association. The

following analysis, however, is based on the framework for listed Dutch

corporations.

Under article 2:114a DCC a shareholder or a group of shareholders holding at

least 1% of the outstanding shares or the equivalent of EUR 50 million in share

value may submit a request to the company's board to add items to the agenda of

an upcoming general meeting of shareholders. This request has to be filed at least

60 days prior to the actual meeting. Under the current statutory provision, the

management board has some, albeit a small, amount of discretion to refuse such

requests: they may do so if in their opinion a prevailing interest of the company

would overrule the interest of the shareholders to add the item to the agenda,

which refusal may subsequently be challenged before the Enterprise Chamber

and/or an ordinary civil court. However, a bill is currently pending before

parliament pursuant to which the management board would no longer have this

discretion, meaning that an item that is properly submitted to the board is to be

put in the agenda. Also, it is contemplated to delete the alternative EUR 50

million share value threshold, which would make it significantly more difficult

for shareholders of listed companies to acquire standing to table agenda items.

The bill is currently pending before Dutch parliament and expected to become

law sometime in 2010.

In the specific case of shareholders' resolutions dealing with impacts of the

company's operations on non-shareholders, there would probably not be any

substantive restrictions. The discretion that the management board of the

company has to turn down a request for including a shareholder proposal is very

limited and the management board would not likely be able to justify such a

refusal on the grounds that discussing such a proposal would be contrary to the

company's prevailing interest. Nonetheless, the shareholders would still need to

satisfy the high standing requirements to be able to submit their request.

Especially for large listed companies, this will be quite difficult. To date and to

our knowledge, no instances of agenda proposal relating to human rights have

been reported, meaning that there are no precedents in how such agenda

proposals are treated by a company's directors.

Alternatively, every shareholder is entitled to speak during the general meeting of

shareholders and to address the other shareholders during the meeting.

Companies usually include a "any other business" item on their agenda, which

could be a suitable forum for shareholders to address human rights issues. The

shareholders could also ask questions to the board about the subject. This has

happened several times, e.g. in the AGM of Royal Dutch Shell, when it was still a

Dutch N.V., where shareholders would bring up human rights related issues

during the "any other business" agenda item.

20. Are institutional investors, including pension funds, required or permitted to

consider such impacts in their investment decisions?

Pursuant to article 4:50 DFSA, institutional investors are required to file a

description of their investment policy with the AFM. In addition, institutional

investors are required under the Code to formulate their voting policy with regard

to the shares held by them in listed Dutch companies and to publish this policy on

their website. The voting policy ordinarily indicates the weight attached by the

institutional investor to the various corporate governance issues as well as voting

preferences with respect to a number of topics. This voting policy could take

impacts on non-shareholders, including human rights impacts, into account, but

this is not specifically required by law. Still, the institutional investors themselves

can adopt such policies in their own charters (i.e. the document governing their

internal organisation and outlining the goals it wishes to achieve for its

beneficiaries).

In fact, a lot of institutional investors include so called "ESG" issues (Economic,

Social, and Governance issues) in their policies. For instance, the largest Dutch

pension fund ABP has a very elaborate and detailed ESG policy, which includes,

among other things, a policy aimed at promoting the use of environmental- and

social factors in investment decisions, the exclusion of certain prohibited

investments such as landmine producers and a broad accountability and

transparency policy towards investors and the public at large. In this context, the

2006 UN Principles for Responsible Investments (UNPRI) provide additional

guidance. Still, there is a tension in this regard with the institutional investor's

general obligation to maximise returns for its beneficiaries on the one hand, and

the fund's position in society on the other pursuant to which it is to take factors

like human rights into account.

Moreover, there is considerable public scrutiny of the institutional investors'

investment decisions, especially when it concerns quasi-public institutional

investors such as state pension funds. For example, the largest Dutch institutional

investor ABP - which has an ESG policy in place - was forced in 2007 to

withdraw from investments in the international arms' business after it was

revealed that it had invested in foreign arms manufacturing companies.

21. Can non-shareholders address companies’ annual general meetings?

In principle, only shareholders or holders of depository receipts of shares (when

applicable) may attend a company's general meeting of shareholders. Non-

shareholders, however, can be given a proxy by shareholders to attend the

meeting on their behalf and also to vote on their behalf. In that case, the non-

shareholders are also entitled to address the meeting, albeit that they would not do

so in their own name. Typically, special interest groups, for instance groups

involved in sustainable business, will own a small number of shares just to be

entitled to attend the meetings. In addition, a bill is currently pending before

parliament - expected to be signed into law sometime in 2010 - which would give

the company's Works Council ("Ondernemingsraad") the power to attend the

meeting and to issue a separate statement on behalf of the Works Council with

regard to a number of specific decisions, such as for instance the appointment of

new directors and the company's overall remuneration policy.

Other issues of corporate governance

22. Are there any other laws, policies, codes or guidelines related to corporate

governance that might encourage companies to develop a corporate culture

respectful of human rights, including through a human rights due diligence

process?

The Dutch Corporate Governance Code (hereafter: “the Code”) is an important

source of Dutch corporate law. The Code is basically a "soft law" instrument,

containing additional rules in the field of corporate governance for Dutch listed

companies. The first Code was established in 2003 by a working committee

consisting of representatives from Dutch listed companies, their shareholders,

institutional investors and academics, and addressed a broad range of corporate

governance issues, such as executive remuneration, investor relations, the

functioning of the supervisory board and transparency. The provisions of the

Code, divided into general principles and more specific best practices, are non-

binding in nature, but Dutch listed companies are nonetheless obliged to pay

special heed to them. Since 2004, all Dutch listed companies are required by law

(Article 2:391 subd. 5 DCC) to include a statement in their annual report in which

they describe for each provision of the Code individually whether they apply the

provision or whether they deviate from it. In case of a deviation, the company

must offer a substantive explanation for doing so.

The Monitoring Committee Corporate Governance, which was established after

the publication of the Code (hereafter: "the Monitoring Committee"), monitors

trends in the application of the Code and issues yearly reports thereof. Also,

application of the Code is closely monitored by private parties, for instance

shareholder rights advocacy groups. In December 2008, following an extensive

market consultation project, the Monitoring Committee published an updated

version of the Code (also dubbed “Code Frijns”, referencing the committee’s

chairman). The Code, as well as the Monitoring Committee’s reports, can be

accessed through http://www.corpgov.nl. The new Code will most likely be

applicable as of the book year 2009, meaning that Dutch listed companies will

have to report on their compliance therewith in early 2010. Since the provisions

of the new Code have been substantially modified vis-à-vis the 2003 Code, it

remains to be seen how the 2008 Code will work out in practice.

The revised 2008 Code also marks the first instance in which the issue of

Corporate Social Responsibility was first formally acknowledged in Dutch

corporate law. The 2008 Code requires management of Dutch listed companies

(both the management board as well as the supervisory board) to draw up a policy

identifying the relevant CSR aspects and to take these relevant aspects into

account in the company's strategy. These 2008 amendments were the direct result

of a broader public debate as to businesses and CSR in the Netherlands. In May

2008, the Ministry of Economic Affairs had commissioned a committee chaired

by Anthony Burgmans, the former CEO of Unilever, to draw up a set of

recommendations as to how a better CSR awareness could be fostered among

Dutch listed companies. The Burgmans Committee published its final report on

November 6, 2008, and its recommendation to formalise CSR obligations through

the Code were adapted immediately after in the 2008 revised Code. Even though

the Corporate Governance Code itself does not contain a detailed definition of

these CSR obligations (the language refers to 'aspects of CSR which are relevant

to the company'), it nonetheless puts CSR firmly on the map.

The Burgmans report itself in turn contains a number of references to

international initiatives such as the OECD Guidelines on Multinational

Enterprises, but does not offer any additional guidance as to the scope of national

corporate law regulation with regard to foreign human rights issues. The

Corporate Governance Code does not contain explicit references to these

particular instruments, but it seems reasonable to argue that these instruments

provide guidance for dealing with CSR obligations on the basis of the Corporate

Governance Code as well.

The Netherlands has established a National Contact Point as required under the

OECD Guidelines on Multinational Enterprises. This contact point is

administered by the Ministry of Economic Affairs and is charged with both

educating Dutch multinational enterprises on the OECD Guidelines as well as

handling questions and allegations from organisations and private citizens

regarding violations of the guidelines by enterprises. In addition, the contact point

is responsible for exchanging information with other national contact points and

for filing an annual report on its work to the OECD (see

http://www.oecdguidelines.nl/ncp).

Finally, the formation of the UN Global Compact in 2000 from the very

beginning attracted a lot of attention from Dutch companies, eventually leading to

the formation of the Global Compact Network Netherlands (GCNL). The

adaptation of the Ruggie framework at the UN-level moved ten of the larger

Dutch multinational companies within the GCNL to bundle their efforts by

setting up the ‘Business and Human Rights Initiative’. The Initiative’s report,

‘How to do Business with Respect for Human Rights’, was published in June

2010. This report aims to provide guidance to companies on how to incorporate

the fundamentals of the Ruggie framework into their policies and operations.

23. Are there any laws requiring representation of particular constituencies (i.e.

employees, representatives of affected communities) on company boards?

There is no specific requirement in Dutch corporate law as to mandatory

representation of certain constituencies on the companies' boards. Prior to 2004,

the supervisory boards of large Dutch corporations which were subject to the so-

called "structure regime" ("Structuurregeling") - typically companies of a certain

size with a substantial number of employees working in the Netherlands - were

appointed by cooptation (e.g. self-selection) with an advice and objection right of

the shareholders meeting and the works council. Since 2004, in companies

subject to the structure regime the shareholders meeting appoints the supervisory

directors upon non-binding nominations of the supervisory board and the Works

Council may issue a non-binding recommendation for one-third of the

Supervisory board members, which the supervisory board must take into account

- on a non-binding basis - in drawing up its recommendations to be submitted to

the shareholders. In practice, however, a large number of Dutch listed companies

are exempt from the structure regime, so that the Works Council does not have

the right of recommendation in this respect.

24. Are there any laws requiring gender, racial/ethnic representation; or

nondiscrimination generally, on company boards?

There are no statutory rules in Dutch corporate law which mandate gender - and

racial-/ethnic representation on company's boards. Of course the company has to

adhere to the general non-discrimination provision provided by the Dutch

constitution as well as by the European Human Rights Convention, but there is no

positive requirement in that respect. The Code, however, does contain a provision

pursuant to which supervisory boards of listed Dutch companies are obliged to

aim for a diverse composition (no fixed statutory target), amongst other things in

terms of gender and age. In doing so, the supervisory board has to set a fixed

diversity target for itself, which is to be included in a profile outline of

supervisory board members, which in turn has to be published on the company's

website.