VOC Organization

Directors and Shareholders

F.S. Gaastra

fter the founding of the VOC in 1602, the seventy-six directors who had headed the voorcompagnieën were placed in control of the new company. The charter which established the monopoly and the duration of the business, albeit provisionally limited to twenty-one years, altered the position of the directors. They now formed a real board, a managerial group, with its own aims, which were distinct from those of the shareholders. Of course they were themselves important investors and, as such, their position and interests did not differ from those of the other shareholders. But as managers they strove to increase the turnover, and for continuity and consolidation, rather than for any short-term profit which would give the investors a quick return on their investment(6). In this the directors enjoyed the protection of the charter. Only after ten years, thus after the expiry of the first decennial capital account, were they required to open the books and to account to the shareholders.

The incomes of the directors were fixed at a certain percentage of the turnover: at one per cent of the expenditure on the outfitting or equipages and at one per cent of the profits from the sale of the retourgoederen (return wares). Directorship was for life. Shareholders had no influence at all on the appointment of new directors. Directors were supposed to have shares in the VOC set at a fixed minimum amount: fl. 6,000 (in the chambers of Hoorn and Enkhuizen fl. 3,000). This sum was regarded as a surety; the directors were held responsible for instances of mismanagement or fraud though it was set down in the charter that directors were not personally liable for debts incurred by the Company. As has already been said, the stipulations in the charter which favoured the shareholders - the rapid distribution of dividends from the profits made on the imports and the liquidation of the capital after ten years - were not observed by the directors. In short, in return for the right that the charter gave the directors to manage the VOC, there were few obligations, and even these were not strictly observed.

The charter fixed the number of directors at sixty: twenty in the Amsterdam Chamber, twelve in that of Zeeland and seven in each of the smaller chambers. In view of the fact that at the time that the VOC was founded there were more directors in all the chambers except that of Hoorn, for the time being there were to be no new appointments when a vacancy occurred. The appointments procedure, which was prescribed in 1602, gave the States of Holland, and for the Zeeland Chamber the States of Zeeland, the right to choose a candidate from a nomination list of three persons, which had been compiled by the directors still in office in the Chamber concerned. Upon the insistence of the Zeelanders this stipulation was included in the charter. However, in Holland it was never applied. A few days before the charter was issued, the States of Holland, at the suggestion of the city of Amsterdam, passed a resolution in which the choice from the list of three nominees was made the responsibility of the burgomasters of the city in question. For indeed, the burgomasters had, so ran the argument of the Amsterdammers, vaste kennisse (reliable knowledge) of the capacities of the candidates.

The Zeeland determination to leave the choice of the candidates to the States was probably prompted in order to prevent problems within their own circles. The situation there was more complicated than it was in Holland. Citizens of Veere and Vlissingen had had interests in the voorcompagnieën in Zeeland, and these two cities did not want to relinquish their share in the trade with Asia in 1602. Finally, after a lot of rows, both the cities succeeded in each obtaining two directors' seats in the Zeeland Chamber. Veere lost its seat as early as 1603, because the director from Veere, Balthasar de Moucheron, resigned his place. As there were thirteen directors still in office, one more than prescribed by the charter, there was no question of filling this vacancy. In later years Veere never succeeded in winning back this second seat, despite a stubborn battle which recurred every time there was a new appointment. Middelburg kept a firm hold on the nine places that it had in its grasp, and the States of Zeeland took its side. The States of Zeeland held onto their right of nomination until 1646; after this the cities themselves assumed this right, and each city could fill its own places.

The outcome of this was that an intimate relationship developed between the regents of the cities and the directors. Party factions, political antitheses and cabals could very easily infiltrate the boards of directors. However, from the close ties between the city regents and the VOC directors one cannot draw the conclusion that merchants gradually had to make way for administrators; certainly in Amsterdam good care was taken to see that business expertise was maintained on the board. One of the consequences of the system of appointments employed is that in municipal archives there is a great deal of information to be found about the appointment of directors.

Besides the sixty directors mentioned in the charter of1602, in the course of time directors from outside the Chamber cities took their places on the boards of directors. This so called extraordinair or buitengewoon (extraordinary) directorship grew up as the result of the demands made by various provinces after the States General had granted the VOC some not insubstantial subsidies in 1606. Because they demanded to be able to supervise how this money was spent in 1613 and 1614 Gelderland, Utrecht, Friesland and the city of Dordrecht (als eerste en voorsittende stad, as premier and presidential city in Holland) were each granted the right to appoint one director. Dordrecht had already attempted to obtain influence in the VOC in 1602 by organizing a capital investment by a great many of its citizens. The city was thus able to achieve this aim in 1614. In 1642, at the time of the second renewal of the charter, a similar post was also granted to Overijssel and Stad en Lande.

The vicissitudes which preceded the second renewal of the charter (in 1642) also offered various cities in the provinces of Holland a fine opportunity to get their hands on a director's place. There had already been a quarrel between Dordrecht, Amsterdam and Haarlem in 1636. The extraordinary directorship of the first mentioned city had more or less been informally transformed into an ordinary one, because the representative from Dordrecht, Elias Trip, had moved to Amsterdam during his term of office and thereafter was counted as an ordinary Amsterdam director. After Trip's death, Dordrecht wished this situation to continue, but, on the basis of the order of precedence among the cities of the States of Holland, Haarlem thought that its turn had come and therefore claimed the directorship that had previously been held by Dordrecht. During the discussion about the continuation of the charter which erupted shortly afterwards, it was made clear to the Company that they had to offer the cities something in return for support for the renewal. Haarlem and Leiden came off best; these cities secured an ordinary directorship in the Chamber of Amsterdam, but they could only take their seats in 1648. Besides its extraordinary directorship in the Amsterdam Chamber, Dordrecht obtained a similar place in one of the chambers in the Zuiderkwartier (Southern District, Delft and Rotterdam), later only in Rotterdam. Alkmaar was allowed a director who occupied a place in Hoorn and Enkhuizen in rotation. Gouda lagged behind a little, but later, in 1665, succeeded in securing a place in the Amsterdam Chamber. Much later, in 1696, the Ridderschap van Holland secured two ordinary directors' seats in the smaller Holland chambers. These seats were counted over and above the fixed number of sixty.

Thus, in the time-honoured custom of the Dutch Republic the administrative structure had become extremely complicated. Moreover, the smaller chambers did not observe the formal rules. In the chambers of the Noorderkwartier (Northern District, Hoorn and Enkhuizen), the director from Alkmaar was regarded as an ordinaris. This director continued to take his seat in whichever Chamber a place had fallen vacant, which meant that the Hoorn Chamber, or as the case may be that of Enkhuizen, sometimes only contained six directors from its own city. After 1669 this same happened with the director from the Ridderschap in the chambers of the Zuiderkwartier(7). (See the webpage with a survey of the composition of the boards of directors.)

During the seventeenth century various modifications were made, not only in the number of directors, but also in their emoluments and election, and in the role of the shareholders. There was a great deal of discontent among the shareholders about the failure to honour the obligations laid down in the charter of 1602 with respect to the distribution of dividends and the establishment of the capital, as well as about the less than open attitude of the directors towards financial matters. Furthermore, suspicions that the directors were lining their own pockets at the Company's expense were rife among the shareholders. During the lifetime of the first charter this led to blazing rows. When the charter came up for renewal the States General made some small concessions to these complaints. First of all, changes were made in the way in which the directors were reimbursed. In future the one per cent commission would be calculated from the expenditure for the outfitting and from the net, instead of the gross, profits from the sales. This meant a drop in remuneration. In 1647 the whole regulation was abrogated and replaced by a fixed salary of fl. 3,100 per annum for the directors of the Amsterdam Chamber, fl. 2,600 for those in Zeeland, and fl. 1,200 for the directors of the smaller chambers. Moreover, in 1623 the directorship was fixed at a three-year term, but this ruling was soon disregarded: later on it seems that in most instances directors occupied their seats until their deaths.

Furthermore, in 1623, via a very complicated procedure, some control and say was granted to the shareholders by the establishing of three commissions of hoofdparticipanten (principal shareholders) - that is to say those from whom it was demanded, as it was of the directors, that they had at least fl. 6,000 invested in the chambers of either Amsterdam or Zeeland and fl. 3,000 in the smaller chambers(8).

One of these boards, that of the rekeningopnemers (inspectors of accounts), would inspect the generale rekeninge (general accounts) which had to be presented for the first time after the expiry of the first charter in 1622. After 1647 this financial accountability took place every four years, not just in the presence of the inspectors of accounts, but also in that of a committee from the States General.

The second board of principal shareholders functioned by chamber and was assembled when a directorship fell vacant. By means of affixie van biljetten (posting of bills) the same number of principal shareholders as there were directors still sitting was summoned; thus the directors and the principal shareholders formed an electoral college which was empowered to draw up a nomination list of three persons. In practice once again the chambers followed their own rules. In Zeeland, for instance, twice as many principal shareholders as directors assembled. In Amsterdam, by contrast, the main shareholders showed little enthusiasm for such meetings; usually only a few deigned to put in an appearance.

Finally nine principal shareholders were delegated by the chambers to attend the meetings of the Heren XVII and participate on their various committees, in which they were entitled to make recommendations. Four of them came from Amsterdam, two from Zeeland and three from the remaining smaller chambers, which meant that in turn each of these smaller chambers had to do without such a principal shareholder as a delegate. Their election took place in much the same way as that of the directors: shareholders compiled a list of nominations consisting of three persons, from which the local burgomasters made their choice. As these shareholders were obliged to swear an oath in the presence of the burgomaster (as did the directors), they were known as beëdigde hoofdparticipanten (sworn principal shareholders).

Yet another modification was made to these electoral regulations in 1749. Then, following a proposal from principal main shareholders of the VOC, the stadhouder, William IV, was appointed opperbewindhebber (director-general). It was now the prerogative of the stadhouder to make a choice of new directors and new certified shareholders from the short-list of three names. However, neither William IV nor his successor, William V, took any direct interest in the administration; they were represented in the boards of directors of the chambers and in the meetings of the Heren XVII by a representant(9).

Finally, in 1786, when the Company was forced to turn to the government for support, at the suggestion of the States of Holland the board of directors of the Amsterdam Chamber was increased by six people. A political battle had preceded this move. The original idea of the States of Holland had been that several more directors should also be nominated in Zeeland. Those directors who had espoused the cause of reform and who had been appointed by the Patriot-influenced administration would mainly concern themselves with the Asian side of the enterprise. But Zeeland opposed this and, as a result, the extension of the boards of directors was confined to Amsterdam. In this Chamber the newly appointed directors formed the Departement tot de Indische Zaken (Department for Asian Affairs), which was also known as the Vijfde Departement (Fifth Department). In view of the fact that the anti-Orange Patriots had the upper hand in Holland, initially this appointment was not made by the stadhouder, but by the States General on the recommendation of the States of Holland. When the political situation altered in 1788 and the stadhouder regained his former power, his rights were also restituted in this respect. In 1790 the Zeeland Chamber finally gave its approval to the introduction of this administrative body, which from that time on was known as the Preparatoir Besogne (Preparatory Committee)(10).

The invasion of the French and the establishment of the Batavian Republic brought the regime of the old management to an end. By decree of the States General dated 24th December 1795, the directors were relieved of their office per 1st March 1796. The management of the Company was entrusted to the Comité tot de Zaken van de Oost-Indische Handel en Bezittingen, which consisted of twenty-one members.

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