When are companies subject to the large company regime? What powers and responsibilities change? Can companies apply for a full or partial exemption? Every company has its own dynamics – our corporate governance experts will be pleased to help you tailor a customised solution.
When does the large company regime apply and what changes?
Briefly put, Dutch public companies (NVs) and private limited liability companies (BVs) must notify the business register when the following three cumulative criteria are met:
- the sum of the issued capital and the reserves is at least € 16 million;
- the company has, pursuant to a legal obligation, established a works council; and
- the company employs at least 100 employees who work in the Netherlands.
After three consecutive years of registration, the large company regime applies. From then on, a supervisory board is mandatory. The supervisory board is authorised to appoint and dismiss directors, approves certain important management board resolutions and can only be dismissed by the Enterprise Chamber. Additionally, the works council has a right of recommendation for every supervisory board appointment and an enhanced right of recommendation for one third of the supervisory board members.
Exemptions, derogations and practical questions
In international group relationships, the mitigated large company regime can often be applied. In that case, the general meeting will ‘simply’ remain authorised to appoint and dismiss directors. Even a full exemption is possible in specific situations.
For cooperatives, the large company regime differs in several key respects. For example, the works council’s enhanced right of recommendation does not apply.
The large company regime raises important practical questions. What if a statutory obligation applies to set up a works council, but none is established, despite repeated requests from the employer? What are the consequences under corporate law and criminal law of failing to notify the business register while meeting all three criteria of the large company regime? And to what extent may the supervisory board members appointed by the works council allow themselves to be guided by its interests?
Advice and customised solutions
Our corporate governance experts have extensive practical experience with all varieties of the large company regime. We advise on the necessary amendments to the articles of association to establish the large company’s preferred structure and on supervisory board dynamics.
