The Development of the Board Observer in Dutch Companies

Abstract

In this article, the author addresses the development of the board observer in Dutch companies. The board observer is a relatively new phenomenon in the Dutch context (unlike Anglo-Saxon jurisdictions). In recent years, an increase has been noted in the Netherlands in the use of board observers. Basically, the board observer is a person who, as an agent and on behalf of an investor (most of the time), attends and observes board meetings and therefore receives a significant amount of information that is useful for the investor to stay up to date about the financial and operational health of the portfolio company. The author describes the motives to make use of an observer, both from the perspective of the investor and the (board of the) company. Also, the position of a board observer within the corporate governance of the company is discussed, as well as issues of confidentiality. Finally, the author addresses different authorities that can be granted to the board observer. For lawyers and other legal practitioners, it might be useful to advocate for detailed, contractual arrangements, since the board observer has no legal basis in Dutch law. Board observer, corporate governance, Johannesburg Stock Exchange, investors, information rights, confidentiality, authorities, contracts, private equity, venture capital, advisory rights