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Schiphol: all shareholders are equal, but some shareholders are more equal than others…

Schiphol: all shareholders are equal, but some shareholders are more equal than others…

Schiphol’s CEO came to the Dutch Parliament this week to discuss the recent problems at Schiphol Airport. According to Dutch corporate law, he is not obliged to appear and Parliament cannot issue instructions.

Our national airport Schiphol has been in the news in the past few weeks, more than it would care to remember. Passengers had to wait for hours due to a shortage of employees, creating a bottleneck at security checks and the luggage handling. Schiphol’s CEO, Mr Dick Benschop, appeared in Parliament to explain the growing queues and delays for passengers at Schiphol Airport. A quite remarkable situation.

First of all, the Dutch Parliament is not a shareholder or a formal organ of Royal Schiphol Group N.V., nor is it in any way authorised to issue instructions to the Schiphol CEO. So, from a corporate law perspective, the Dutch Parliament is not authorised to give Schiphol instructions. How could this affect the other shareholders, what role does Parliament have in the governance of Dutch owned public-sector companies. Does Schiphol have to comply with any demands from Parliament? From a legal perspective, the answer is a firm ‘no’.

Royal Schiphol Group N.V. (Schiphol) owns and exploits Schiphol Airport – our national airport. Schiphol is structured as a Dutch limited liability company (with subsidiaries). It is not listed, but privately owned, and it has four shareholders: the Netherlands (69.8 %), the city of Amsterdam (20 %), the city of Rotterdam (2,2 %) and Groupe ADP (8 %)[1]. And although the Netherlands is by far the largest shareholder, it is therefore not the only shareholder.

Dutch owned public-sector companies are generally defined as ‘organisations which run an enterprise and have a durable and lasting relationship with government’.[2] For Schiphol, this is definitely the case, and it qualifies as a governmental owned business. In the Netherlands, the Minister for Infrastructure and Water Management (Minister) is responsible for such companies. Hence, the Minister is the primary point of contact for the Netherlands as shareholder. So, if the Netherlands as shareholder would like to obtain additional information, it would be up to the Minister.

By law, shareholders which are in similar circumstances must be treated equally.[3] This is the so-called principle of ‘equality of shareholders’. This principle of equality may only be set aside if there is a fair and objective justification (Supreme Court ruling from 1993). The fact that the majority of shares of Schiphol is owned by the State, is – as such – not a fair and objective justification which might justify a deviation from such principle of equality. Schiphol must therefore make sure it treats all its four shareholders equally.

The governance of Schiphol is structured through a Management Board, including the CEO and CFO, and a Board of Supervisory Directors.[4] In addition, there is a Works’ Council, (internal) committees and a General Meeting of shareholders (GM). The GM consists of these four shareholders, and it can request information from Schiphol. The Board and Board of Supervisory Directors are obliged to provide this information, unless the material interests of the company are a reason not to do so. This might for instance be the case if specific competition-sensitive information is requested. Also, certain major decisions, such as the sale and transfer of the enterprise, are – by law – bound to prior approval of the GM. The Supervisory Board conducts the supervision of the management board and the enterprise of the legal entity. In the case of Schiphol, this task is described as: ‘the Supervisory Board supervises the policies, management and the general affairs of the Group. The Supervisory Board assists the Management Board with advice on general policies related to the Company and its business’.[5] Recently, the Supervisory Board has become rather quiet.

In short: the Management Board of Schiphol must justify its actions to the Supervisory Board. It is the Supervisory Board which must act at this point. The Management Board of Schiphol is not obliged to justify its actions to its shareholders, other than at a GM. Such a GM has not been called for, as far as I am aware. The Management Board is never obliged to provide one single shareholder with an individual justification of its actions.

Nonetheless, the Schiphol CEO defended the actions and policies of Schiphol in and to the Dutch Parliament. And not only that, the Dutch Parliament gave him concrete instructions to inform the Minister weekly of any progress made. Under Dutch corporate law this is not possible, and it would not be an instruction that the CEO, for Schiphol, must comply with.

The Dutch Parliament is not a formal organ of Royal Schiphol Group N.V. It does not represent the shareholders; the Minister represents the Netherlands as a shareholder in this matter. Furthermore, neither the Minister, nor Dutch Parliament, is authorised to instruct the Management Board to provide weekly reports regarding the ‘status’ of the airport in solving its recent problems. Such authority might rest with the GM, however a GM was not held.

To conclude, there was no legal duty for the CEO of Schiphol to appear before the Dutch Parliament. Parliament does not have any say in this. The Minister is responsible for the position of the Netherlands as a shareholder in Schiphol, and in turn the Dutch Parliament can summon the Minister to respond. Not the CEO. Never the CEO.

As for the legal ‘duty’ for Schiphol to send weekly updates of Schiphol’s progress and actions: no such duty exists. And if Schiphol voluntarily chooses to send such weekly updates, it has by law also the obligation to share exactly the same information with all its other three shareholders, based on the principle of equality of shareholders.

[1] https://www.schiphol.nl/nl/schiphol-group/pagina/aandeelhoudersinformatie/;
[2] mr. dr. Jelle Nijland, “De overheidsonderneming. Overheidsinvloed in kapitaalvennootschappen nader beschouwd”, thesis Leiden 2013, Ars Notariatus 154, Kluwer 2013, p. 23;
[3] See: section 2:92 under 2 Dutch Civil Code;
[4] See: https://www.schiphol.nl/en/schiphol-group/page/corporate-governance/;
[5] See: Schedule 4 of the Schiphol Supervisory Board Rules (2019);

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