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Stakeholder Board

Statutory Principle 2. A stakeholder board

The bodies of a classic company consist of a general meeting of shareholders, a board of directors and if the organization is large enough, a union that represents the staff. This division creates 'party' thinking with seemingly separate - often financial - interests. This distracts from the reason for existence, the mission of the organization and can create imbalances between stakeholders. Moreover, certain stakeholders, such as customers and society, are not formally involved in the bodies, creating the risk that their interests are forgotten.

To keep a shared mission central, a stakeholder board is therefore established where all stakeholders are equally represented. The board of directors determines which stakeholder categories are defined with minimum representation of financial stakeholders, customers, employees and society provided. If the entrepreneur is still active in the organization, they are included as a separate stakeholder.

Beyond equal representation, our legal model also allows you to install a separate class of shares with specific decision-making rights. This protected shareholder class can be given a decisive say over the most fundamental decisions — changing or locking the mission (a mission lock), selling the company, selling an asset, or modifying the agreements on how the dividend is redistributed. This keeps the mission protected, even when ownership changes hands.

How does a stakeholder board work?

The stakeholder board can be built up by election, drawing lots of candidates or by invitation by the board of directors and meets in principle 2 times per year. A rotation system is introduced to chair the meeting. The main purpose of the meeting is to test the activities and status of the company against value creation.

Specifically, any value violations are brought forward with proposals for solutions and suggestions are made to increase value per stakeholder. This discussion can optionally take place using the Happonomy scorecard, a tool with scoring mechanisms per stakeholder.

A report is submitted to the board of directors and CEO of the organization containing the identified value violations and proposals for value improvement per stakeholder adopted by consensus.

The Board of Directors can be modeled as a stakeholder board, thereby reducing the number of bodies by one. The reason why this is not done by default and a separate body is created is mainly due to the legal liability of its members.

Features of a stakeholder board

Equal representation

All stakeholders get an equal voice in the board, from financial investors to customers, employees and social representatives.

Value creation focus

The board tests all activities against value creation for all stakeholders, not just financial results.

Regular evaluation

The board meets 2 times per year to evaluate progress and formulate improvement proposals.

Protected shareholder class

A separate class of shares can hold special decision-making rights over fundamental choices — mission lock, selling the company or an asset, and changes to dividend redistribution.

Implementation timeline

2 years

Management gets a period of 2 years to fully fill the stakeholder board. This provides sufficient time to find the right representatives and gradually implement the system.

Ready to establish a stakeholder board?

Discover how you can involve all stakeholders in the governance of your organization and thus realize true value creation for everyone.

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