Nedlloyd Conflict Exposes Shareholders’ Impotence

The simmering battle at Nedlloyd between Torstein Hagen and management has exposed serious deficiencies in Dutch corporate law. The most contentious issues center on management/shareholder relations. Because of the complex management structure aimed at safeguarding shareholders’ interests, investors are virtually impotent, while management is almost impregnable. Henk Lind, a lawyer with the Vereniging van Effecten-bezitters (VEB), the Union of Dutch shareholders, told Marine Money, “Legislation implemented in the late seventies effectively wiped out most Dutch shareholders’ rights and control over management. Their only sanction against the directors is to reject the annual report, whether they agree with the accuracy of the results or not.” This course of action can backfire, as it means that the directors are prevented from making a dividend.

In the case of Nedlloyd, the question of blocked dividends does not arise, as the company is not planning to make a distribution. But experts believe that the rejection of a report is strictly limited. Professor Van Schelsgaarde, professor of corporate law at Utrecht University, has said that, if Nedlloyd shareholders took this course of action again, they would be abusing their rights.

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