One-Tier Boards in Dutch Venture Capital Backed Companies
As Dutch startups and scaleups grow, governance becomes increasingly important. Venture capital investors often require greater oversight, board involvement and reporting structures as part of a financing round. One governance structure that is becoming more common in Dutch VC-backed companies is the one-tier board.
A one-tier board combines executive and non-executive directors within a single board structure. This differs from the traditional Dutch two-tier model, where the management board and supervisory board are separate corporate bodies.
For earlier articles in this series, see the Insights on Venture Capital Insights: Dutch BV Financing, Investor Rights and Growth Company Governance, such as Investor Veto Rights and Reserved Matters in Dutch VC Deals, and One-tier board or two-tier board: an explanation of both governance models.
For more on Dutch venture capital transactions and governance structures, see also the Venture Capital expertise page.
One-tier versus two-tier boards
Under Dutch corporate law, a BV can choose between a one-tier board and a two-tier board structure.
In a traditional two-tier structure, executive directors manage the company while supervisory directors oversee management from a separate supervisory board. In a one-tier structure, executive and non-executive directors sit together on a single board.
For VC-backed companies, the one-tier structure is often viewed as more international and operationally efficient. It resembles governance models commonly used in the US and UK startup ecosystem and may therefore feel more familiar to foreign investors.
Investor nomination rights
In venture capital transactions, investors frequently negotiate board nomination rights. These rights may allow a lead investor or investor group to nominate a non-executive director to the board after completion of the financing round.
The purpose is usually not day-to-day operational control, but strategic oversight and investor visibility into the company’s development.
The nomination mechanics should be aligned with the shareholders’ agreement and the articles of association. The documentation should also address appointment procedures, replacement rights and the position of investor-appointed directors after future financing rounds or exits.
For related governance rights, see Investor Veto Rights and Reserved Matters in Dutch VC Deals.
Non-executive directors and governance
Non-executive directors in Dutch one-tier boards supervise and advise the executive management team while remaining part of the same board structure.
In VC-backed companies, non-executive directors may help professionalise governance, support strategic decision-making and prepare the company for future growth rounds or an eventual exit.
At the same time, founders should understand that investor-appointed directors may have duties towards the company itself rather than purely towards the appointing investor. Under Dutch law, directors must generally act in the interests of the company and its business as a whole.
Board observers
Some investors prefer board observer rights instead of formal board seats. A board observer may attend meetings and receive board information without formally becoming a director.
This can be attractive where the investor wants visibility and involvement without taking on full director responsibilities or liability exposure.
The shareholders’ agreement should regulate the observer’s access to information, confidentiality obligations and participation rights.
Liability considerations under Dutch law
Dutch law distinguishes between executive and non-executive directors, but both may face director liability exposure in certain circumstances.
For foreign investors, this can be an important consideration when deciding whether to appoint a formal board member or rely on observer rights instead.
The governance structure should therefore be reviewed carefully, especially where the company operates internationally, raises multiple financing rounds or has complex shareholder dynamics.
Why one-tier boards are relevant for VC-backed companies
One-tier boards are increasingly used in Dutch growth companies because they can provide a more integrated governance structure during rapid growth phases.
The structure may facilitate closer interaction between founders, management and investors while remaining familiar to international VC funds. It can also support faster strategic decision-making compared to more traditional supervisory structures.
However, the governance framework should still be tailored to the company’s size, maturity and shareholder structure. There is no single model that works for every startup or scaleup.
Practical takeaway
One-tier boards are becoming more common in Dutch VC-backed companies, particularly where international investors are involved. They offer a governance structure that combines strategic oversight with operational interaction between executive and non-executive directors.
The key issues are investor nomination rights, director roles, observer arrangements, liability considerations and alignment between the shareholders’ agreement and the articles of association.
About Dirk de Waard
Dirk de Waard is a Dutch corporate lawyer focusing on venture capital, M&A and growth company transactions. He advises founders, startups, scaleups, angel investors and venture capital funds on Dutch financing rounds, governance arrangements and shareholder structures.
Questions about one-tier boards, governance structures or venture capital transactions in the Netherlands? Send an email to dirk.dewaard@viottalaw.com.
