Governance is not the same as decision-making
Decision rights, approval rights and liability after an investment — and why most conflicts do not arise from the deal itself, but from what was never clearly agreed.
At closing, the focus is on the signatures being in place. What is rarely addressed with the same level of precision is that, from the very next morning, the company will be governed according to a different logic than before.
The entrepreneur who spent years as both owner and director is now a minority shareholder and statutory director. Two roles with potentially conflicting interests. The investor wants influence without becoming a director. And a newly appointed supervisory or advisory board is expected to oversee people who are used to making decisions themselves.
For entrepreneurs and investors alike, this is one of the most underestimated risk areas in a transaction. Not the valuation. Not the warranties. But the question of who decides what after closing, within which parameters, and who remains responsible for the whole.
These are different questions. Under Dutch law, the management board is responsible for managing the company (Section 2:239(1) of the Dutch Civil Code): strategy and policy, day-to-day management, risk management, reporting and representation. Decision-making is only one part of that responsibility. A €500,000 approval threshold therefore does not transfer a management responsibility — it allocates one type of decision elsewhere, while overall responsibility remains where it was.
Three documents, three realities
After a transaction, a company is effectively governed by three sets of arrangements that rarely align completely.
The articles of association determine the corporate-law reality. Subject to statutory limitations, the management board is responsible for managing the company. Only if provided for in or pursuant to the articles of association may management board resolutions be subject to approval by another corporate body (Section 2:239(3) of the Dutch Civil Code).
The shareholders’ agreement determines the contractual reality: reserved matters, information rights, nomination rights, leaver and exit provisions. These arrangements bind the parties that entered into them, but do not have corporate-law effect unless they are also incorporated into the articles of association.
The management regulations and authorisation matrix determine the day-to-day reality: who can sign for what, which amounts require approval, and how escalation works. This is an internal allocation of responsibilities. It does not limit the statutory authority of the management board and does not apply towards third parties.
The problem arises when these three realities diverge. An investor may believe it has a veto, while that veto exists only in the shareholders’ agreement. A management team may formally have the authority to make decisions for which, in practice, it does not feel responsible. In reality, parties often discover what they can actually enforce only when something goes wrong.
One point is particularly important: a common assumption is not correct. For a Dutch private limited company (BV), there is no statutory provision that automatically reserves decisions with a major impact to the general meeting of shareholders. Section 2:107a of the Dutch Civil Code, which requires shareholder approval for certain important changes to the identity or character of a company, applies only to public limited companies (NVs). For a BV, this must be explicitly arranged — otherwise, it is not regulated.
A veto right is not a management right
Reserved matters are often designed as if they give an investor control. In reality, they provide something different: the ability to prevent certain decisions. That distinction has consequences.
A veto does not prevent the company from becoming bound. The management board’s authority to represent the company is unlimited and unconditional, unless otherwise provided by law (Section 2:240(3) of the Dutch Civil Code). If a director enters into an agreement despite an applicable approval requirement, the counterparty is generally protected. What remains is an internal breach and potential liability — after the damage may already have occurred.
A purely contractual veto is also weaker than a statutory approval right. In the former case, the decision remains valid and the breach concerns the shareholders’ agreement. Where the approval requirement is incorporated into the articles of association, it affects the validity of the corporate resolution itself, potentially allowing for annulment under Section 2:15 of the Dutch Civil Code.
There is also a practical issue. In buy-and-build strategies, we regularly see lists containing dozens of approval requirements. The result is usually not greater control, but a management team that refers every meaningful step back to the investor.
Precisely the behaviour that can undermine the investment thesis.
How far does an investor’s influence extend?
An investor seeking to provide direction can establish this through corporate-law mechanisms. The articles of association can provide that the management board must follow instructions from another corporate body (Section 2:239(4) of the Dutch Civil Code). For a BV, such instructions may, since the Flex-BV legislation, also be specific; for an NV, they are limited to general lines of policy.
However, there is a clear boundary: the management board must follow such instructions unless doing so would conflict with the interests of the company and its affiliated enterprise. Directors must act in accordance with those corporate interests (Section 2:239(5) of the Dutch Civil Code), which is not necessarily the same as the interests of the majority shareholder.
For investors, there is a second, less visible boundary. In the context of directors’ liability in bankruptcy, anyone who has effectively co-determined the company’s policy as if they were a director may be treated as a director (Section 2:248(7) of the Dutch Civil Code).
The line between active shareholder involvement and de facto management is therefore not a formal one, but a factual one. Especially in periods of stress — when investor involvement naturally increases while documentation and governance discipline may decrease — that line can be crossed without anyone explicitly recognising it.
Two hats, one seat
An entrepreneur who remains both a director and shareholder is structurally exposed to potentially conflicting interests. Consider an earn-out, a subsequent acquisition that dilutes their participation, a refinancing or a transaction with a related party.
The law is clear: a director must not participate in deliberations or decision-making where they have a direct or indirect personal interest that conflicts with the interests of the company (Section 2:239(6) of the Dutch Civil Code).
In practice, this requirement is often overlooked until a conflict arises and the decision-making process is reviewed retrospectively. While internal director liability requires a serious culpability standard (serious blame, Section 2:9 of the Dutch Civil Code), a director’s position depends heavily on whether they can demonstrate that they acted with due care: was the conflict disclosed, did the director recuse themselves, and was the process properly documented?
Structure regulates authority, not ownership mindset
These issues can be addressed: consistency between the articles of association and the shareholders’ agreement, a decision matrix agreed before closing, a clear conflict-of-interest protocol, explicit escalation and deadlock mechanisms, and a deliberate choice between oversight and advice.
What cannot be captured fully in documents is the behaviour surrounding them.
The entrepreneur who no longer formally holds a majority but continues to act as the sole owner. The management team that waits for signals from the investment committee instead of making decisions. The investor who says they want to remain at arm’s length while calling every week.
In almost every post-transaction situation that gets stuck, the legal structure is not the only problem.
The real issue is that structure, leadership and behaviour are not aligned.
HUMA Advisory works with founders, owner-managers, executive teams and investors across growth, transformation and M&A journeys. We combine legal and governance expertise with an understanding of leadership, behaviour and group dynamics. This allows us to look beyond what is written in the articles of association and shareholders’ agreement and understand what is actually happening in the boardroom.
Is your organisation preparing for an investment, acquisition or next phase of growth? Get in touch to explore what is needed to ensure fast, effective and well-governed decision-making after closing.
This article is general in nature and is not intended to constitute legal advice in any specific situation.
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