Stakeholder theory in practice: shareholder empowerment

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Stakeholder theory in practice: shareholder empowerment

Dutch businessman and Centric owner Gerard Sanderink must resign immediately as director of his own company. This was decided by the Enterprise Chamber of the Amsterdam Court of Appeal. Centric's management is satisfied claiming  this creates peace and clarity within the company.

According to the court, Sanderink is no longer able to keep private life and his company Centric interests seperated. The judges also doubt whether Sanderink can still make rational decisions in  a company with 2,500 employees and many important customers.

The public prosecutor recently filed a petition before the Enterprise Chamber to suspend Sanderink and appoint an ad hoc director, after the millionaire from Twente decided to take the helm at Centric again. The OM also demanded that Sanderink's shares in Centric be immediately transferred to an administrator appointed by the Enterprise Chamber.

The Enterprise Chamber is now granting the first request, appointing both an executive and a non-executive director. As for the shares, Sanderink will be allowed to keep control of one sole share. The rest will be given in custody to a person yet to be appointed.

For some time now, there has been considerable unrest at Centric, which handles IT projects for the government, among other projects. The unrest arose because Sanderink was frequently in the news in recent years. For instance, he had a quarrel with his former lover Brigitte van Egten, whom he cast aside after entering into a relationship with Rian van Rijbroek, a self-proclaimed cyber expert.

According to Sanderink's lawyer, the media are mainly responsible for the negative image of the Centric boss. Van Rijbroek is also implicated in this. In particular, he pointed to Twente regional newspaper Tubantia and the Financieƫle Dagblad. "Juicy and sensational", the stories would be, "understandable from a commercial point of view", the counsel said. However, Sanderink sees no problem in returning to his company. Because no matter what Van Rijbroek or he do, the reports are still negative, the lawyer said.

Peter Mous, non-executive director at Centric, and a representative of Centric's Works Council (OR), were also present at the trial. According to Mous, Sanderink tried to suspend and dismiss him ahead of the hearing, the former of which succeeded. "Sanderink simply does not tolerate dissent," Mous said. The Enterprise Chamber made short shrift of the suspension, returning Mous to his post with immediate effect.

In a reaction to the Enterprise Chamber's verdict, the company's management team writes that "clarity" has finally emerged now that the judge has removed Sanderink as top executive. The management team also acknowledges that prior to the court case, there was persistent unrest within the company and among customers. Centric's doubting customers are said to include Veldhoven-based chip machine maker ASML, several Dutch municipalities and De Nederlandsche Bank.

What is unusual is that the Dutch court intervenes so fundamentally in a shareholder's right of ownership. However, related legal figures are also known in Belgium. 

The provisional administrator is the most draconian measure and seriously intervenes in the management of the company. The court will weigh up interests, all in the light of the corporate interest and good governance. In this case, the provisional administrator may be instructed to act in place of the blocked or blocking body.

The ad hoc trustee is a legal figure that is assigned well-defined assignments. Its success lies in the fact that the appointment does not have to be published in the Annexes to the Belgian Official Gazette.

The expert custodian is a legal figure created by case law that is usually appointed for the benefit of creditors who already have rights that are in danger of being compromised.

In the same vein, a sequester is sometimes appointed over certain corporate documents.

Incidentally, the most drastic legal intervention the Belgian regulator has borrowed from its Dutch counterpart is the conflict-of-laws rule where, under certain circumstances, shareholders can be obliged to sell their shares or buy them from their fellow shareholders. A form of far-reaching expropriation that again has the stakeholder theory as its basis.

In summary, companies are hotbeds of conflict and the main or sole shareholder does not simply have the right to act on his or her own discretion. This frames the stakeholder theory where the legitimate interest of employees, creditors, government, minority shareholders is given its place.