Inquiry proceedings and group leadership by a top holding company
Following the recall of sleep apnoea devices and ventilators, three petitions sought an investigation into the policy of Koninklijke Philips, and on 10 October 2026 the Enterprise Chamber refused them. It set out what may be expected of a top holding company, but the investors did not specify where Philips fell short. Below: the case, the standard, the assessment and what it means.
Investors seek an inquiry into Philips after the Respironics recall
The refused petitions came from the Dutch Investors' Association (Vereniging van Effectenbezitters, VEB) with seven co-petitioners, from ten Vanguard entities and from 35 institutional investors led by AP Pension. They were ordered, jointly and severally, to pay the costs of the proceedings incurred by Philips, assessed at €4,721. Their petitions were filed between 31 December 2025 and 14 January 2026 and sought an investigation covering the period from 2008 or from 2015. They also sought immediate measures, such as an additional supervisory board member or an independent director with a casting vote on the handling of the disputes (Enterprise Chamber 10 October 2026, paras 2.1-2.3 and 5.91).
Philips acquired the American company Respironics, a maker of sleep apnoea devices and ventilators, in 2008 for approximately €3.6 billion. Since 2008 those devices had contained polyester-based polyurethane foam to reduce noise. At the end of 2014 the Japanese subsidiary received three complaints about foam particles in ventilators, with no harm to health, and on 14 June 2021 Respironics recalled almost all the devices it had sold worldwide since 2008: 16.1 million units. The recall cost more than €1 billion, Philips paid more than €1.5 billion in settlements, and the share price fell from €53.45 in April 2021 to €25.29 in January 2026 (Enterprise Chamber 10 October 2026, paras 3.6-3.12 and 3.78-3.106).
The petitioners relied on five grounds: that the board of management lacked sound internal systems, that it failed to intervene at Respironics in time, that the supervisory board neglected its supervision, that Philips gave a misleading picture in its public statements, and that it disclosed price-sensitive information too late. The Enterprise Chamber made clear at the outset that only the policy of Philips as top holding company was under review. Respironics is an American company, to which Dutch inquiry law does not apply (Enterprise Chamber 10 October 2026, paras 4.1 and 5.1).
What the Enterprise Chamber expects of a group parent
In inquiry proceedings an investigation is ordered only where there appear to be well-founded reasons to doubt the soundness of the policy or the proper conduct of affairs (Section 2:350(1) DCC). For a group, the Enterprise Chamber assessed Philips against a duty of group leadership (concernleidingsplicht). The starting point is Ogem, a holding company that did not intervene when a second-tier subsidiary's management kept it insufficiently informed. The Supreme Court accepted that the holding board's duties also extended to the businesses in the group (Supreme Court 10 January 1990, paras 9.1-9.2). From the Corporate Governance Code and case law, the Enterprise Chamber concluded that group management needs an organisation suited to the group's nature and risks. That includes governance, management and meeting structures, information systems, internal audit and risk and quality management. These must enable it to supervise subsidiaries, identify risks to the continuity of the whole group, meet disclosure obligations and intervene in time where necessary (Enterprise Chamber 10 October 2026, para. 5.2).
For medical devices, the Enterprise Chamber set the bar high. That high standard of care applies in the first place to the producing subsidiary, which is normally the primary addressee of the regulations, and the Enterprise Chamber did not consider it wrong that primary responsibility lay there (Enterprise Chamber 10 October 2026, para. 5.36). But health risks can affect the whole group, financially, legally and in its reputation, all the more so where the parent is listed. The internal systems must therefore ensure that group management learns "in good time and in full" of possible health risks of a subsidiary's product, so that it can intervene. It spelled out when information must be escalated: for possible health risks, at least to cluster management and, given sufficiently clear indications, to the board of management. That information must be sufficiently concrete and reliable; verification by another expert may be appropriate, certainty about the risk is not required (Enterprise Chamber 10 October 2026, paras 5.3 and 5.59).
Against those high standards, the Enterprise Chamber required specific allegations. It assessed the policy on the basis of the situation before the recall and warned against hindsight bias: anyone who knows the outcome overestimates how foreseeable it was. The petitioners therefore had to specify where the internal systems fell short, what information Philips should have had and when, and where it failed to intervene. The Enterprise Chamber called "plainly insufficient" the petitioners' reasoning that, if the systems worked, senior management must have known everything and therefore intervened too late (Enterprise Chamber 10 October 2026, para. 5.6). Judging by what was known at the time is not new: the Supreme Court did the same in Fortis, with the caveat that more foresight may be expected of those who bear a heavier responsibility (Supreme Court 6 December 2013, para. 4.2.3).
Why the petitions failed for lack of specific allegations
Philips described in detail how its systems worked: a division in which management, supporting quality functions and internal audit each form their own layer of control, a group-wide risk management system, a quality committee of the supervisory board, and fixed triggers for reporting upwards, such as a health hazard evaluation or a warning letter from the American regulator, the FDA. None of the petitioners challenged that description on the substance. They pointed to what had gone wrong: FDA findings at American subsidiaries from 2011, the number of recalls and the improvements after 2021, such as some 1,000 additional quality staff. None of the three sufficed. The FDA findings concerned the subsidiaries, not the group's systems. A recall may just as well point to quality management that works. And a company that improves its systems after a crisis does not thereby prove that they fell short before (Enterprise Chamber 10 October 2026, paras 5.11 and 5.36-5.43).
On intervention, the chronology was decisive. The Enterprise Chamber had the complete meeting papers of Respironics' quality meetings and of the supervisory board's quality committee, from 2015 to the second quarter of 2021. It proceeded on the basis that the board of management had known of the possible health risks since early March 2021. Individual members heard of a possible health risk earlier: the chief legal officer on 8 February 2021, the chief financial officer shortly afterwards. That the board knew significantly earlier and concealed it was "simply not established" (Enterprise Chamber 10 October 2026, paras 5.56-5.57). According to the Enterprise Chamber, the board was not informed later than it should have been (Enterprise Chamber 10 October 2026, paras 5.60 and 5.62).
A Respironics researcher saw a toxicological risk in December 2019, but in August 2020 an external expert rated the likelihood of health effects from inhalation as low, with a caveat, and a third found both reports full of uncertainties. Only in December 2020 did somewhat concrete indications of a significant risk emerge. In February 2021 a panel of five external physicians still agreed unanimously that the benefit of continued therapy outweighed the risk, and only on 22 April 2021 did it become clear that the foam could pose a serious health risk. The Enterprise Chamber held that it was justified for the information to be escalated only after it had been confirmed by other research. How uncertain such an assessment is became clear later: extensive research that Philips commissioned after the recall reached a different conclusion from the one assumed at the time, namely that the health effects of the foam are negligible (Enterprise Chamber 10 October 2026, paras 3.39-3.40 and 5.59-5.61).
The Enterprise Chamber did see open questions: why information on the foam project within the cluster was not more specific, and why the medical panel did not consider the provisional data on emissions of volatile compounds. It left them aside, as the answer was not material to whether deficient escalation meant that Philips was informed too late (Enterprise Chamber 10 October 2026, para. 5.62). Investigative journalism by ProPublica, NRC and the Pittsburgh Post-Gazette did not help either: the sources could not be checked and the case file provided "no basis whatsoever" for the accusations. A whistleblower's complaint before an American court did not distinguish Respironics from the top holding company and was partly refuted by the documents. The Enterprise Chamber found its tenor about events at Respironics worrying, but the complaint was not specific or verifiable enough (Enterprise Chamber 10 October 2026, paras 5.55 and 5.65). The petitioners did not elaborate on their allegations against the supervisory board (Enterprise Chamber 10 October 2026, para. 5.69).
In Ahold and SNS Reaal, where the Enterprise Chamber did order an investigation into a group parent, group management knew of a concrete problem and it did not emerge what it had done about it. Ahold knew before acquiring U.S. Foodservice that the latter had no proper system for tracking supplier rebates, with a risk of fraud. As parent company it could properly be expected to see to a swift remedy. The Enterprise Chamber doubted whether it had done so, and whether it was entitled meanwhile to rely on the auditor's checks: rebates of €103 million, €215 million and €269 million for 2000 to 2002 later had to be corrected. Its description of its supervisory systems also said little about what the operating companies reported upwards (Enterprise Chamber 6 January 2005, paras 3.19-3.22 and 3.40).
After the fraud, Ahold introduced a manual tracking system and did not explain why that had not happened earlier (Enterprise Chamber 6 January 2005, para. 3.23). A company that already knew of a risk and does not explain why the improvement came only after the damage was done can therefore give reason for doubt. In the Philips case, by contrast, the Enterprise Chamber accepted such an explanation: the central quality system announced in 2015 proved a complex and lengthy project (Enterprise Chamber 10 October 2026, para. 5.43).
At SNS Reaal, internal audit reports from July 2007 onwards pointed to loans by the property finance subsidiary that had been granted outside its own standards. According to a risk memo, that applied to 58% of new loans from November 2007 to March 2008. SNS Reaal gave no account of the decisions that followed, and the Enterprise Chamber ordered an investigation (Enterprise Chamber 26 July 2018, paras 3.38-3.40). After the investigation, however, the Enterprise Chamber held that the policy of senior management towards that subsidiary did not amount to mismanagement. The management and supervisory boards knew of the shortcomings, and the board of management responded with closer supervision, changes of course and improvement programmes (Enterprise Chamber 30 November 2022, para. 8.45). The same idea recurs in the Philips decision: shortcomings at a subsidiary say little in themselves about group management that knows of them and acts (Enterprise Chamber 10 October 2026, para. 5.38).
Optimistic statements gave no reason for doubt
Whether Philips communicated misleadingly in breach of the law is, according to the Enterprise Chamber, not for it to decide. There may, however, be reason for doubt if it is established that misleading or incorrect, overly rosy statements were made on the company's behalf, or if that possibility must seriously be reckoned with (Enterprise Chamber 10 October 2026, para. 5.73).
That line was crossed in earlier cases where what the company knew internally contradicted its public statements. In a prospectus of September 2007, Fortis described the expected impact of the subprime crisis on its full-year results as "non-material", while its Executive Committee knew of a possible loss of €350 to €400 million on an exposure of approximately €8.7 billion. That was deliberately selective information and supported the finding of mismanagement (Supreme Court 6 December 2013, paras 4.4.2-4.4.3). At KPNQwest it remained unexplained why management learned late that revenue from the sale of network capacity had dried up, and why the public was informed only weeks later. The doubt concerned both the information given to the public and the internal reporting systems, and the Enterprise Chamber ordered an investigation (Enterprise Chamber 28 December 2006, paras 3.30 and 3.32).
The then chief executive of Philips had "sometimes sought out the optimistic end of the spectrum" in analyst calls, but there was insufficient basis for seriously reckoning with the possibility that his statements were misleading or incorrect and overly rosy. In the light of what was then known, saying on 26 April 2021 that the matter was at a "very early stage" was not incorrect or misleading. His reference to ozone cleaning as a possible cause was based on a laboratory report from January 2021. And the allegation that he played the matter down could not be reconciled with the shipping halt and the €250 million provision announced on the same call (Enterprise Chamber 10 October 2026, paras 5.74-5.75). The Enterprise Chamber had drawn the same line before: at SNS Reaal, overly rosy words at a general meeting, partly a matter of opinion, did not in themselves amount to a misleading statement (Enterprise Chamber 30 November 2022, para. 14.32).
Nor did the fact that Philips increased the provision four times, to €970 million, point to investors being misled. A provision is an estimate, and Philips sufficiently explained that before 26 April 2021 the matter did not meet the requirements of the accounting standard IAS 37. On Thursday 22 April the board heard that the health hazard evaluations would point to a possibly serious health risk. On Friday 23 April the FDA and the audit and quality committees of the supervisory board were informed, and on Monday 26 April Philips announced it before the market opened. The Dutch Authority for the Financial Markets (AFM) found no breach of the obligation to publish price-sensitive information as soon as possible, only a minor one concerning the time at which the press release of 14 June 2021 was filed with it. Even if that obligation had been breached in some respect, the Enterprise Chamber saw no well-founded reason for doubt in it (Enterprise Chamber 10 October 2026, paras 3.63-3.64 and 5.78-5.86).
No lower threshold for petitioners at an information disadvantage
The petitioners asked for a lower threshold because Philips had allegedly withheld information. The Enterprise Chamber rejected this: the standard does not depend on what the company provides to shareholders. Outside the general meeting, shareholders in a listed company have no right to information they request individually, as the Supreme Court held in ASMI (Supreme Court 9 July 2010, para. 4.6). Within the limits of the duty to treat shareholders equally (Section 2:92(2) DCC), the board is, according to the Enterprise Chamber, "entirely free" to grant such requests or not. It had already refused, during the proceedings, a request to order Philips to produce further information. Philips also pointed out that the VEB accepted the offer by Philips to answer questions only on 11 December 2025, with 200 questions and a twelve-day deadline. The petition followed on 31 December (Enterprise Chamber 10 October 2026, paras 2.14 and 5.89-5.90).
The decisions analysed contain no formally lower threshold, but a company that does not make full disclosure does run a risk. At SNS Reaal, the Enterprise Chamber doubted whether the company had recognised that redeeming participation certificates could create an overly rosy picture, partly because it produced no minutes or other internal documents showing what considerations it had weighed (Enterprise Chamber 26 July 2018, para. 3.84). Ahold produced minutes of its management board, supervisory board and audit committee with everything but a single passage redacted, which gave a picture that was "(far) from sufficient" (Enterprise Chamber 6 January 2005, para. 3.21). In ASMI the Supreme Court rejected the complaint against the finding that insufficient openness had been shown towards outside shareholders, although it set the decision aside on other grounds (Supreme Court 9 July 2010, paras 4.6 and 4.8.1). Philips did explain itself, with meeting papers and accounting memos from the time (Enterprise Chamber 10 October 2026, paras 5.57 and 5.79).
What does this mean for investors and group directors?
An inquiry is meant to bring the facts to light, but whoever asks for one must already know where to look. An investor who takes a group parent to task over deficient systems must challenge the description of those systems on the substance: which reporting line failed, which signal got stuck at which level, and when it should have reached the top. A timeline of what went wrong at a subsidiary, a series of recalls, improvements after the event and journalistic reconstructions do not fill that gap. The material must be in hand before the petition is filed: from questions at the general meeting, from public documents of regulators and from any offer of information by the company, if there is one and it is taken up in time. And whatever the company produces in the proceedings must be read with exactly those questions in mind.
For directors, the same reasoning works the other way round. Philips was able to describe its systems in detail, and the case file contained the complete meeting papers of more than six years of quality meetings. The Enterprise Chamber found nothing in the documents produced to suggest that the board had been informed earlier than Philips stated. To be able to do the same, a group parent records which signals are always escalated, who was informed and when, and why information was passed on only after verification. The composition of the management and supervisory boards also matters: the knowledge needed to run and oversee a medical device business is expected to be present at that level, although it need not necessarily be medical knowledge (Enterprise Chamber 10 October 2026, paras 5.48 and 5.57).
The decision sets the bar high for group management and higher still for the petitioner. The heavier the demands on the internal systems, the more it pays to record that they have been met, and the better a group does so, the more specific an investor must be to get past it.
Frequently asked questions
Can the investors appeal to the Supreme Court?
Yes. A party that appeared in the proceedings can bring an appeal in cassation within three months of the decision (Section 426(1) DCCP). The Supreme Court does not review the establishment and assessment of the facts unless they are incomprehensible or inadequately reasoned, and it takes into account that the examination at this first stage is summary (Supreme Court 9 July 2010, para. 4.1.2).
Does the refusal mean that Philips is not liable to investors?
No. Inquiry proceedings decide only whether there is reason for an investigation, not whether damages are owed. A securities class action against Philips and (former) directors is pending in the United States. The order prohibiting disclosure of part of the Philips documents expressly allowed them to be used in liability proceedings against Philips, its directors, supervisory board members and auditors (Enterprise Chamber 10 October 2026, paras 2.14 and 3.84).
Which shareholders can petition for an inquiry into a listed company?
Shareholders or holders of depositary receipts who together hold at least 1% of the issued capital, or shares worth at least €20 million at the closing price on the last trading day before filing, unless the articles of association require less (Section 2:346(1)(d) DCC). They must first set out their objections in writing to the management board and the supervisory board, allowing time to investigate them and take measures; otherwise the petition is inadmissible (Section 2:349(1) DCC).
Cited case law
Supreme Court: ECLI:NL:HR:2013:1586 (Fortis, 6 December 2013, paras 4.2.3 and 4.4.3; conduct is judged by the standards and knowledge of the time, more foresight may be expected of those who bear a heavier responsibility; deliberately selective information in a prospectus amounted to mismanagement at a systemic bank); ECLI:NL:HR:2010:BM0976 (ASMI, 9 July 2010, paras 4.1.2 and 4.6; outside the general meeting, shareholders have no right to information they request individually, the finding of insufficient openness towards outside shareholders was adequately reasoned; the Supreme Court does not review the assessment of the facts at the summary first stage); ECLI:NL:HR:1990:AC1234 (Ogem, 10 January 1990, para. 9.2; the duties of the board of a group holding company also extend to the businesses within the group).
Amsterdam Court of Appeal, Enterprise Chamber: ECLI:NL:GHAMS:2026:2900 (Philips, 10 October 2026, paras 5.2-5.6 and 5.59; inquiry petitions refused, duty of group leadership and escalation of health risks, the petitioner must specify where the internal systems fell short); ECLI:NL:GHAMS:2022:3392 (SNS Reaal, 30 November 2022, paras 8.45 and 14.32; no mismanagement where senior management knew of the subsidiary's shortcomings and responded, overly rosy oral statements not necessarily misleading); ECLI:NL:GHAMS:2018:2651 (SNS Reaal, 26 July 2018, paras 3.40 and 3.84; investigation ordered after audit warnings on lending, no internal documents on the considerations behind an overly rosy picture); ECLI:NL:GHAMS:2006:AZ5413 (KPNQwest, 28 December 2006, paras 3.6 and 3.32; where the possibility that the investing public was misled must seriously be reckoned with, an investigation is warranted); ECLI:NL:GHAMS:2005:AR8831 (Ahold, 6 January 2005, paras 3.20 and 3.40; a parent that knew of fraud-prone internal controls at a subsidiary had to see to a swift remedy).