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: 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 .

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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 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 (" ", 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 ("”, 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, , is located in , 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.