Strong science does not organise a company. Once a research project becomes a start-up, decisions about money, people, intellectual property and patient access need a clear home. This is the practical role of life sciences start-up governance.
That sounds obvious. In practice, roles overlap. An academic founder may be an inventor, researcher, shareholder, director and scientific adviser at the same time. A university may be a shareholder, IP licensor, research partner and employer. Investors provide capital, advice and often expect influence. This overlap can lead to informal authority replacing proper decisions.
This insight explains the basic structure of a Dutch private limited company, or BV: who owns, who manages, who supervises and how these roles come together during the year. If you are still deciding whether your research needs a company, read When does your research need a venture?.
Shareholders own the shares, but do not run the company
Shareholders meet in the general meeting, the algemene vergadering. They exercise the voting and economic rights attached to their shares. Their formal powers commonly include appointing and dismissing directors, adopting the annual accounts and deciding on amendments to the articles of association. Share issues and major structural decisions may also require shareholder action, depending on the law, articles and earlier delegations.
Investment documents may give shareholders consent rights over a financing, budget, licence or sale. But influence is not management. A veto over an important decision does not turn a shareholder into a management board member.
This distinction matters for parties involved in multiple ways. For example, a university may have rights under an IP licence that are different from its rights as a shareholder. A publication review clause works through the licence or research agreement. It does not give the university a shareholder vote over the company’s strategy.
The management board runs the company
The management board, the bestuur, determines strategy and manages the company. It is also responsible for representing the company, subject to the representation rules in the articles of association, the statuten.
For a life-sciences venture, management includes more than operational administration. The board decides how the portfolio develops, how scarce cash is allocated, which regulatory route is pursued, how IP is protected and when external partners are needed. It must connect science, clinical development, CMC, regulation, market access and financing.
By law, directors must act in the interests of the company and its affiliated enterprise (see the Dutch Civil Code, Book 2 and Stibbe’s overview of directors’ duties in the Netherlands). An investor-nominated director does not simply represent the investor. An academic-founder director does not simply represent the laboratory. Each director must contribute to the company’s decision, identify conflicts and consider the company’s continuity and relevant stakeholders.
The board also remains responsible when approval is needed elsewhere. If the shareholders must approve the annual budget, management must still prepare a credible budget and decide whether implementing it is responsible.
What changes when there is a supervisory board?
A supervisory board, the raad van commissarissen, supervises and advises management. It does not normally run the company. The articles may require its approval for specified decisions, but management retains responsibility for proposing and implementing strategy.
A good supervisory board adds independent challenge and distance from daily pressures. It can test clinical assumptions, regulatory gaps and whether financing matches the development programme. It can provide expertise and access to relevant networks, and support the management board in key decisions. For more on corporate governance in the Netherlands, see Chambers’ guide.
It can also create problems. An unnecessary supervisory board adds cost and another meeting cycle. A board filled only with shareholder nominees may reproduce shareholder conflicts rather than resolve them. The question is not whether a supervisory board looks professional. It is whether it adds independent judgment and relevant capability.
Using qualified decision-making and share classes
The foundational principle of decision-making is a simple majority, i.e. more than 50%. For shares, representation and benefit are pro rata. However, share structures and decision-making can be tailored to the needs of the company and the shareholders.
It is normal to have qualified decision-making for certain matters, in particular those relating to the long-term development of the company. These decisions can shape how many and/or which shareholders need to approve a decision. They can be shaped through supermajorities, class approvals, investor-majority consent, reserved matters and quorum rules.
Even if used with the right intentions, most of these tools make decision-making more complex and, once created, they are very hard to undo. Use them selectively and find the right balance between interests and effective governance. In the end, decisions will need to be made.
A Dutch BV can create different share classes. Classes may differ in voting, dividend, liquidation, conversion, nomination and approval rights. A BV can also issue non-voting shares, although their holders retain meeting rights. Different shareholder classes can match different risks or interests. An investor may receive priority on proceeds while founders retain meaningful upside.
The drawback is also complexity. A company may appear to be sold for an attractive amount while liquidation preferences of a specific share class leave little for the remaining ordinary shareholders. Anti-dilution rights of certain share classes can make a rescue financing harder. Special approvals can allow a small class to block a transaction needed for survival.
Build an annual governance rhythm
Governance works better when it follows a calendar rather than a crisis. Start with an annual strategy review: which programme comes first, what evidence is needed, what access commitments apply and how much runway the plan requires. Management then turns that strategy into a budget with scenarios and milestones. The supervisory board reviews or approves it where required; shareholders approve it only where the governance documents say they must.
During the year, reporting should cover cash, budget variance, development milestones, negative findings, regulatory and quality issues, IP, licence compliance and capability gaps.
After year-end, management prepares the annual accounts. The supervisory board, if present, reviews and signs them, subject to the applicable rules. The general meeting adopts them. The company should plan these steps with its accountant and advisers around the statutory preparation, adoption and filing deadlines.
The general meeting will also grant discharge, or decharge, to management and supervisory board members. Discharge is not blanket immunity. It generally addresses internal liability for matters apparent from the annual accounts or otherwise disclosed to the meeting. It does not cure hidden information or remove external liability.
The practical lesson is simple: clarify roles before they are tested. Good governance gives a structure to enable science to find capital and, ultimately, patients.
