The large company regime (structuurregime)
If a company meets certain specific criteria regarding its capital and employee count, a special regime applies known as the large company regime (structuurregime). The large company regime aims to make shareholders and employees work together in the top company of a structure. A company can also opt to apply the large company regime voluntarily, provided that the company has established a works council. In this short read, we will briefly point out the main principles of the regime.
A company qualifies as large if its capital (share capital and reserves) amounts to EUR 16 million or more, it established a works council, and it employs at least one hundred people in the Netherlands. Determining whether a company meets the criteria is not easy. For example, the employee criterion is about who is actually working in the company or dependent company, but not about who has concluded an employment agreement therewith.
The large company regime does not apply immediately when the company meets the aforementioned criteria. First, the company must file a statement to that effect with the Dutch trade register and only after registration of such filing for three consecutive years, the large company regime will become applicable. If the company at any time no longer meets the criteria, it can cancel the registration. Upon expiry of the three consecutive years the regime becomes applicable by operation of law and the company should implement the provisions of the large company regime. The company is obliged to amend its articles of association. There are certain exceptions for companies to apply the large company regime, for example dependent companies of a large company.
As a result of the application of the large company regime, the company must establish a supervisory board consisting of at least three supervisory directors. The supervisory board of a large company has certain authorities by law that a supervisory board of a non-large company is not necessarily provided with. The most important authority is the appointment, suspension and dismissal of managing directors. The general meeting of a large company is no longer authorized thereto. In certain cases, a mitigated large company regime applies as a result of which the authority to appoint, suspend and dismiss managing directors remains with the general meeting of shareholders. Furthermore, specific management board resolutions require the approval of the supervisory board.
An important aspect of the large company regime is that the employees will have an indirect say in the composition of the supervisory board. Therefore, the works council may recommend persons to the supervisory board to be nominated as supervisory directors. In addition, the works council has the right to recommend one-third of the supervisory directors. Unless the supervisory board objects to the recommendation, the person(s) recommended by the works council shall be placed on the nomination.
Whether or not the large company regime applies and what consequences this may have can raise challenging questions. We are happy to advise in this regard. Please feel free to reach out to us if you have any further questions regarding this topic