A Dutch court rejected investors’ request to investigate Philips management over the sleep-apnea device recall. The judges found insufficient grounds to doubt the parent company’s governance or disclosures. The case followed the worldwide recall that began in 2021. Its outcome concerns the requested corporate inquiry, leaving other product-related and compensation questions outside that decision.
The Enterprise Chamber, the corporate-disputes division of the Amsterdam Court of Appeal, rejected a request to investigate Philips management over its sleep-apnea device recall. Investor association VEB and a group of shareholders had sought the inquiry. The judges found insufficient grounds to doubt the proper conduct of the parent company’s management or its disclosures to investors. The court published its explanation on 10 October.[1], [2]
Philips began the worldwide recall in 2021 over health risks linked to foam in devices made by Respironics, its US subsidiary. Philips stock lost value after the recall. Applicants alleged that the parent company’s board had received risk information too late and had not adequately supervised Respironics. They also challenged the supervisory board’s conduct and public communications. The court said internal systems followed international standards, underwent regular auditing and had been strengthened over time.[1]
The judges concluded that reliable research results about health risks became available in the first months of 2021. They found insufficient evidence that the management board should have been informed or intervened earlier. The determination addresses the grounds for this corporate-governance inquiry. It leaves the wider question of mistakes by Respironics and investors’ compensation rights outside the decision; other proceedings connected to the recall can continue.[1]
