Boards face mounting pressure from regulators, shareholders, employees, and society at large. New ESG reporting rules, stricter data protection laws, shareholder activism, and rapidly evolving technology have turned governance from a compliance checkbox into a strategic challenge. Get it wrong and you risk legal liability, reputational damage, and lost business opportunities.
This article walks you through six corporate governance challenges that boards and executives in the Netherlands must address in 2025. You’ll learn how to build a legally sound governance framework, improve board oversight, balance competing stakeholder interests, manage compliance and legal risk, embed ESG into your operations, and oversee technology and data governance. Each section provides practical steps you can take immediately, along with insights into Dutch and EU legal requirements. Whether you’re strengthening an existing governance structure or building one from scratch, these solutions will help you meet your legal duties while protecting your organization’s future.
1. Build a legally sound governance framework
Your governance framework defines how your organization makes decisions, allocates authority, and holds leadership accountable. Without a solid legal foundation, you expose directors and the company to personal liability, regulatory sanctions, and internal disputes. One of the most pressing corporate governance challenges in 2025 is ensuring your framework complies with evolving Dutch law, EU directives, and sector-specific regulations while remaining practical enough to support your business strategy.
Understand the legal duties of directors and officers
Directors owe fiduciary duties to the company, including duties of care and loyalty under Dutch civil law. You must act in the company’s best interest, not your personal interest or that of a single shareholder. This means making informed decisions, avoiding conflicts of interest, and exercising independent judgment. Officers and executives face similar obligations, and both groups can be held personally liable for breaches that cause damage to the company, creditors, or shareholders. Understanding these duties is the first step to building a framework that protects both the organization and its leadership.
Align with Dutch and EU governance codes
The Dutch Corporate Governance Code applies to listed companies but serves as a best practice benchmark for private companies as well. You should apply its principles on board roles, risk management, audit, and remuneration on a “comply or explain” basis. Beyond national codes, EU directives on shareholder rights, transparency, and sustainability reporting now shape governance requirements across member states. Aligning your framework with both Dutch and EU standards reduces legal risk and signals credibility to investors and partners.
Put core governance documents in place
Your articles of association establish the legal structure of your company and define shareholder rights, voting procedures, and board composition. You also need board regulations that clarify decision-making authority, conflict-of-interest procedures, and reporting lines. Shareholder agreements can supplement articles by addressing pre-emption rights, exit clauses, and dispute resolution. These documents form the legal backbone of your governance framework and must be kept up to date as your company grows or the law changes.
How Law & More strengthens your governance
Law & More helps you draft, review, and update all core governance documents to meet Dutch legal requirements and reflect your company’s specific needs. We advise on directors’ duties, structure board regulations, and ensure your framework aligns with applicable codes and EU law. When disputes arise or regulators ask questions, you have a legally defensible governance structure already in place.
A well-drafted governance framework prevents disputes before they start and protects your directors when challenges arise.
2. Improve board composition and oversight
Your board’s effectiveness depends on having the right people in the right roles with clear accountability mechanisms. Poor board composition leads to groupthink, blind spots in risk oversight, and failure to challenge management when needed. One of the most persistent corporate governance challenges is building a board that balances expertise, independence, and diversity while maintaining continuity through planned succession. You must address this challenge deliberately or accept the consequences when crises expose your board’s weaknesses.
Identify the skills and diversity your board needs
Start with a skills matrix that maps current board competencies against the expertise your company needs to execute its strategy and manage its risks. You should identify gaps in areas like financial oversight, technology, ESG, legal, or international markets. Diversity goes beyond gender and nationality; you need cognitive diversity, varied industry backgrounds, and directors who challenge assumptions rather than reinforce them. Use this assessment to guide your next appointments and ensure your board can oversee an increasingly complex business environment.
Ensure independence and manage conflicts of interest
Independent directors provide the critical distance needed to challenge management and protect shareholder interests. Dutch governance standards recommend that at least half of your supervisory board members qualify as independent, meaning they have no financial or personal ties that could compromise their judgment. You must establish a conflict-of-interest policy that requires directors to disclose potential conflicts immediately and recuse themselves from related decisions. Document these disclosures and abstentions to demonstrate proper governance if disputes arise later.
Strengthen board committees and evaluation
Board committees allow for deeper oversight in specialized areas like audit, remuneration, and nomination. You should define each committee’s mandate, composition, and reporting obligations in written terms of reference. Regular board evaluations help you identify dysfunction early and address performance issues before they escalate. Consider using external facilitators every few years to get candid feedback that internal reviews might miss.
An effective board evaluates itself as rigorously as it evaluates management.
Plan succession for key board and executive roles
Succession planning prevents governance vacancies that leave your company vulnerable during transitions. You need a process that identifies potential successors for board chairs, committee chairs, and executive leadership, along with development plans to prepare them. Emergency succession plans for sudden departures should be documented and reviewed annually. Boards that neglect succession often scramble to fill critical roles under pressure, leading to poor appointments and governance gaps.
3. Balance shareholders and stakeholders
You must navigate competing demands from shareholders who want returns, employees who need fair treatment, customers who expect responsible business practices, and communities affected by your operations. Failing to balance these interests creates legal disputes, reputational crises, and strategic paralysis. Among the most complex corporate governance challenges today is managing shareholder rights while meeting broader stakeholder obligations under Dutch law and emerging EU sustainability standards.
Map your key shareholders and stakeholder groups
Identify all shareholder classes and their specific rights under your articles of association and shareholder agreements. You should document each group’s voting power, dividend preferences, board appointment rights, and veto powers. Beyond shareholders, map stakeholder groups that can materially affect or be affected by your business, including employees, suppliers, creditors, regulators, and local communities. Understanding these relationships helps you anticipate conflicts and design governance processes that address legitimate interests without paralyzing decision making.
Use shareholder agreements to prevent disputes
Shareholder agreements let you address sensitive issues that articles of association cannot cover adequately, such as tag-along and drag-along rights, transfer restrictions, deadlock resolution, and buy-sell provisions. You can establish clear dispute resolution mechanisms through mediation or arbitration clauses that keep conflicts out of court. Law & More drafts these agreements to protect majority and minority shareholders while preserving your ability to make operational decisions efficiently.
Run general meetings and decision making correctly
General meetings require proper notice, quorum, agenda procedures, and voting protocols under Dutch company law. You must document all resolutions, maintain minutes, and ensure decisions exceed required thresholds for ordinary and special matters. Mistakes in meeting procedures can invalidate key decisions and expose directors to liability claims.
Procedural compliance protects substantive decisions from later legal challenge.
Handle shareholder activism and conflicts legally
Shareholder activists may demand board seats, strategy changes, or special investigations. You need clear processes to evaluate their proposals fairly while protecting the company’s long-term interests. When conflicts escalate to disputes over mismanagement or oppression of minority shareholders, having documented governance processes and independent legal advice helps you defend your decisions and resolve conflicts before they reach litigation.
4. Manage compliance and legal risk
Compliance failures and unmanaged legal risks destroy shareholder value, trigger regulatory enforcement, and expose directors to personal liability. You face overlapping obligations from Dutch corporate law, sector regulators, tax authorities, data protection rules, and EU directives that change constantly. One of the most operationally demanding corporate governance challenges is building a system that identifies, assesses, and controls legal and compliance risks across your organization while keeping pace with regulatory change and business growth.
Build an integrated compliance and risk framework
You need a single coherent framework that maps all applicable legal obligations, assesses their impact on your business, and assigns clear ownership for compliance. Your framework should integrate legal risk management with operational, financial, and strategic risk processes rather than treating compliance as a separate checklist. This integrated approach helps you spot connections between risks that siloed departments miss and allocate resources to the areas of highest legal exposure.
Clarify roles for compliance, risk, and internal audit
Ambiguity about who does what creates gaps where risks fall through or duplicated efforts waste resources. You must define the three lines of defense: business units own and manage risks, compliance and risk functions provide oversight and guidance, and internal audit provides independent assurance. Document these roles in writing and ensure each function has the authority, resources, and direct board access it needs to operate effectively.
Address sector specific and cross border regulations
Industry-specific rules in finance, healthcare, energy, transport, or technology impose obligations beyond general corporate law. If you operate across borders, you face multiple regulatory regimes with conflicting requirements. Law & More helps you map sector regulations, identify cross-border compliance obligations, and structure your operations to meet divergent legal standards without unnecessary duplication.
Monitor, document, and report on risk decisions
Your board must receive regular compliance and risk reports that highlight material exposures, control failures, and emerging regulatory developments. You should document key risk decisions, including the rationale for accepting or mitigating specific risks, to demonstrate proper governance if regulators or litigants later question your judgment.
Documentation proves you exercised proper oversight when someone challenges your risk decisions after the fact.
5. Embed ESG and sustainability in governance
Environmental, social, and governance considerations have moved from voluntary reporting to mandatory legal obligations across the EU. You now face binding ESG disclosure requirements under the Corporate Sustainability Reporting Directive (CSRD) and supply chain due diligence duties under emerging regulations. One of the fastest evolving corporate governance challenges is transforming ESG from a communications exercise into a core governance function with board oversight, management accountability, and reliable data systems that withstand regulatory scrutiny and investor demands.
Understand new ESG duties and reporting rules
The CSRD requires detailed sustainability reporting from large companies and listed SMEs starting in 2025, covering environmental impacts, social matters, human rights, and governance factors. You must apply European Sustainability Reporting Standards (ESRS) that mandate disclosure of your sustainability strategy, risks, opportunities, and performance metrics. Dutch companies also face due diligence obligations for supply chain human rights and environmental risks. Understanding which rules apply to your organization and when they take effect is the first step to building compliant ESG governance.
Assign ESG responsibilities at board and management level
Your board must oversee ESG strategy and risk just as it oversees financial performance. You should designate a board committee or individual director with explicit ESG responsibilities and ensure management establishes clear accountability for executing ESG initiatives. Without defined roles, ESG remains an add-on rather than an integrated part of how you run the business.
Integrate ESG into strategy, risk, and remuneration
ESG factors should shape strategic decisions on investments, markets, and operations rather than being reported after the fact. You need to incorporate ESG risks into your enterprise risk management framework and link executive compensation to measurable ESG performance targets. This integration ensures ESG commitments drive actual behavior change throughout your organization.
ESG governance fails when boards treat sustainability as a reporting obligation instead of a strategic driver.
Set up reliable ESG data and assurance processes
You must establish systems that capture ESG data from across your operations and supply chain with the same rigor you apply to financial data. External assurance of your sustainability report will become mandatory, requiring audit trails and internal controls that prove your disclosures are accurate and complete.
6. Oversee technology and data governance
Digital transformation and data-driven decision making create new legal exposures that boards can no longer delegate entirely to IT departments. Cyber breaches expose customer data, trigger regulatory fines, and destroy reputation overnight. AI systems make decisions that affect people’s rights without transparency or human oversight. Among the most urgent corporate governance challenges for 2025 is establishing board-level accountability for technology and data risks that can materially harm your business and expose you to regulatory enforcement across multiple jurisdictions.
Recognize board responsibility for digital and cyber risk
Your board must treat cyber security as an enterprise risk that requires the same oversight as financial or operational risks. You need regular reports on your threat landscape, control effectiveness, and incident response readiness. Directors should understand your most critical digital assets, where they are stored, who can access them, and what happens if systems fail or data is stolen. Boards that dismiss cyber risk as a technical matter learn the hard way when regulators hold them accountable for inadequate oversight.
Meet data protection and privacy obligations
GDPR and Dutch data protection law impose strict obligations on how you collect, process, store, and share personal data. You must document your legal basis for processing, implement technical and organizational security measures, respond to data subject requests within deadlines, and report breaches to authorities within 72 hours. Your board needs assurance that management has mapped all personal data flows and established controls that meet regulatory standards.
Govern the use of AI and automated decision making
AI systems introduce new risks around bias, transparency, accountability, and legal compliance. You must establish governance processes that assess AI use cases before deployment, monitor algorithmic decisions for fairness, and ensure human oversight of high-risk applications. The upcoming EU AI Act will impose specific governance requirements based on risk levels, making board oversight essential.
Technology governance fails when boards treat digital risks as IT problems instead of business risks requiring leadership accountability.
Prepare for incidents and regulatory investigations
You need documented incident response plans that define roles, notification procedures, and communication protocols for data breaches, system failures, or regulatory inquiries. Your board should conduct tabletop exercises to test these plans and identify gaps before real incidents occur.
Key takeaways
Addressing corporate governance challenges requires you to treat governance as a strategic function rather than a compliance burden. Your board must oversee a legally sound framework, maintain the right composition and oversight processes, balance competing stakeholder interests, manage compliance and legal risk systematically, embed ESG into decision making, and take direct responsibility for technology and data governance. Each of these areas demands continuous attention as regulations evolve and your business grows.
Strong governance protects your organization from legal liability, regulatory sanctions, and reputational damage while creating the foundation for sustainable growth. Law & More helps you build and maintain governance structures that meet Dutch and EU legal requirements while supporting your business objectives. Contact our corporate law team to strengthen your governance framework and address specific challenges your board faces today.