Dutch Supreme Court: no stretching of shareholder’s right to place items on agenda

Some years ago, we discussed the ruling in preliminary relief proceedings between Boskalis and Fugro on this website. The preliminary relief proceedings concerned the question whether Boskalis, the majority shareholder of Fugro N.V., should go to court to enforce the right to place an item on the agenda. Boskalis wanted to put this subject to the vote at the following Annual General Meeting (AGM). The Dutch court in preliminary relief proceedings rejected this action. Now, in 2018, after the Court of Appeal, the Supreme Court has also ruled on this case. Corporate Law Lawyer Marco Guit explains the ruling.

Fugro’s protective structure

What was this case all about? Boskalis had initially requested Fugro to place one of the protective structures on the agenda as an item to be put to the vote. Boskalis was opposed to this protective structure. Fugro refused to include this item on the agenda to be put to the vote. However, it was prepared to place the subject on the agenda for discussion.

Interim relief proceedings and appeal

After failing to obtain preliminary relief , Boskalis’ lawyer appealed. The Court of Appeal considered that on the basis of the statutory right to place items on the agenda (Section 114a of Book 2 of the Dutch Civil Code), a shareholder or depositary receipt holder is entitled to ask the company to place items on the agenda that only require discussion by the general meeting of shareholders and items that also require decision-making by the general meeting.

Agenda items to be put to the vote

In certain circumstances, the board would be obliged to grant these requests. For example, an item that only needs to be discussed by the AGM must be placed on the agenda if the request is substantiated. A request to put an item to the vote is subject to stricter conditions. A requirement for this is that the proposal should concern a subject about which the general meeting itself is competent to decide. And that was the crux of this matter. Boskalis had asked for a proposal for a resolution to be placed on the agenda that was not a matter for the AGM but for the board.

Difference between informal and formal voting?

Boskalis tried to qualify its request in cassation. It would not concern a formal vote, but a survey of the opinions of the shareholders present or represented at the meeting. An “informal vote with the nature of a motion”. According to Boskalis’ lawyer, this would be permissible. The Supreme Court rejected this position.

The board determines company policy and strategy

The Dutch Supreme Court stated first and foremost that determining a company’s policy and strategy is, in principle, a matter for the board of the company. The Supervisory Board supervises this. The AGM may express its opinion on this by exercising its rights granted by law and the articles of association A document, drawn up when a Dutch company or legal person is set up, and which regulates the operations of the company and defines its purpose.
» Meer over articles of association Articles of Association. In general, this means that a company’s board is accountable to the AGM for its policies. However, the board will not be obliged, unless otherwise provided by law or the company’s articles of association, to involve the AGM in its decision-making in advance with regard to acts for which the board is competent. Nor is the board obliged to consult the AGM in such cases.

Corporate Law Lawyer in the Netherlands

The item that Boskalis wished to place on the agenda was a matter for the board. Therefore, the Dutch Supreme Court confirmed the rulings of the court in preliminary relief proceedings and the Dutch Court of Appeal that Boskalis cannot insist that the proposal has to be placed on the agenda by invoking the right to place items on the agenda.