COVID-19 also impacts the Dutch corporate law environment. For instance, the Temporary COVID-19 legislation (Tijdelijke wet COVID-19 J&V) contains provisions to facilitate virtual board and shareholder meetings. This new legislation is temporary and is set to expire on 1 September 2020. It should be noted, however, that the expiry date is subject to extension by royal decree, each time by up to two months. The temporary rules have, in part, retroactive effect as from 16 March 2020.
Below is an overview of points to consider with respect to board and shareholder meetings, including the provisions of the Temporary COVID-19 legislation.
Board meetings of Dutch companies
There is no general statutory requirement for the board of a Dutch company to meet at a specific interval. As such, board meetings can be postponed or cancelled in view of the COVID-19 related travel restrictions.
In certain cases, however, board decisions cannot be postponed. There are a number of arrangements the board can make to mitigate the effects of travel restrictions and other safety measures related to COVID-19:
Board meetings can generally be held using electronic means of communication, provided all participating board members can communicate with each other in real time (i.e. Skype or a conference call).
- Board meetings can generally be held using electronic means of communication, provided all participating board members can communicate with each other in real time (i.e. Skype or a conference call).
- It is possible for a board member to grant a proxy to another board member to represent him or her at a meeting, thereby limiting the number of participants.
- Board resolutions can be adopted in writing provided all board members are familiar with the resolutions to be passed and there are no objections to this means of decision-making.
Please note that under certain circumstances the tax residency of a company may impair the flexibility the board would otherwise have to take one or more of the above measures.
Under the Temporary COVID-19 legislation, provisions in the company's articles of association relating to physical board meetings are deemed inapplicable.
Shareholder meetings of Dutch companies
At least one general meeting of shareholders (AGM) must be held annually. Below are some focal points to consider when organising the AGM:
Fully Virtual AGM: A fully virtual AGM is not permitted under regular Dutch law. However, under the Temporary COVID-19 legislation the board may determine that shareholders may only access the AGM via electronic means (a fullvirtual AGM) even if the company's articles of association do not provide for this possibility. In this case, the following requirements must be met (both for BVs and NVs):
- shareholders must be able to watch the AGM through an electronic means of communication (e.g., a video or audio live stream);
- shareholders must be able to ask questions about the agenda items in writing or by electronic means (such as email) up to 72 hours (or 36 hours in some cases) before the AGM;
- all questions asked by shareholders timely before the AGM must be answered ultimately during the AGM and these answers must be posted on the company’s website or made available to shareholders by other electronic means; and
- the board must ensure that follow-up questions can be asked (e.g., through an online chat function), unless this requirement would be unreasonable under the then prevailing circumstances;
If the AGM has already been called, the board may, under the Temporary COVID-19 legislation, change the meeting to a fully virtual AGM as described above (and for the N.V. the location of the AGM can also be changed) up to 48 hours in advance. Furthermore, the board may stipulate that voting rights can only be exercised via electronic means of communication. The board may also decide that (i) votes cast electronically (or in writing in case of an N.V.) before the AGM shall be treated as votes cast during the course of the meeting and/or (ii) each shareholder is authorised to participate in, address and vote at the AGM by electronic means of communication, even if the company's articles of association do not provide for this possibility.
Hybrid AGM: Under regular law, a combination of a physical and virtual AGM (hybrid AGM) is possible, albeit under certain conditions. In a hybrid AGM, shareholders can also participate in, address and vote at the AGM by electronic means of communication. The applicable procedures and conditions must be announced when the AGM is convened, and the company's articles of association must expressly permit this possibility. Under the Temporary COVID-19 legislation, the latter is not required. If the AGM has already been called, the board may, under the Temporary COVID-19 legislation, change the meeting to a fully virtual AGM as described above (and for the N.V. the location of the AGM can also be changed) up to 48 hours in advance. Furthermore, the board may stipulate that voting rights can only be exercised via electronic means of communication. The board may also decide that votes cast electronically (or in writing in case of an N.V.) before the AGM shall be treated as votes cast during the course of the meeting, even if the company's articles of association do not provide for this possibility.
Additional measures for a physical AGM:
Until 1 September 2020, gatherings are in principle not permitted. However, a physical AGM may nonetheless be held if there are no more than 100 people in attendance and a distance of at least 1.5 meters between attendees is maintained. The following additional measures could be considered for a physical AGM:
- The physical attendance of directors and officers of the company can be kept to a minimum: a chairperson and a secretary. In this respect, the chairperson of the meeting need not be the chairperson of the supervisory board and either of them can act as proxy holder for shareholders voting by proxy. Rules regarding the physical attendance of directors and officers can be complied with by means of participation by telephone or video conference. It is also conceivable for the chairperson to preside over the AGM via electronic means of communication.
- Shareholders may be discouraged from physically attending the AGM, including by indicating that there will be no opportunity for social interaction (no lunch, drinks, etc.) and expressly indicating that the company strives to minimise physical attendance, in order to protect the health of all concerned.
- Shareholders may be offered the opportunity to follow the meeting via a live webcast, possibly with a chat function so that they can ask questions and make comments.
- Shareholders may be expressly requested to grant a proxy with voting instructions to an officer of the company or an independent third party (in writing or electronically through e-voting). Extending the time period within which proxies can be granted could be useful, provided sufficient time is left before the meeting to check and register the proxies.
- Shareholders may be given the opportunity to ask questions in advance via email.
- It could be announced that the company intends to organise an additional shareholder event later in the year.
- Attendees may be spread over several rooms in the event of (too) high attendance.
- Check whether all measures are possible at the usual meeting venue and, when changing venues, take into account the requirement that the physical meeting must be held at the place indicated in the articles of association or otherwise in the municipality where the company is domiciled.
- Prepare a back-up plan for emergencies should, for example, the rented premises unexpectedly close their doors or if the governments imposes a ban on gatherings.
- Take additional security measures such as temperature checks and the refusal of admission of persons who display COVID-19 symptoms. Draw up and make available in a timely manner procedural rules for such safety measures. All such measures concern the orderly functioning of the AGM and thus fall within the ambit of the chairperson of the AGM.
Postponement (if the convocation notice has not been sent) or rescheduling (if the notice has already been sent) of the meeting: The AGM of an N.V. must be held within six months from the close of its financial year (or earlier if so provided in its articles of association). For a B.V., the AGM must take place within 12 months from the close of its financial year (unless the shareholders take a decision outside a meeting). Under the Temporary COVID-19 legislation, the board of an N.V. may decide to extend the statutory period of six months for holding the AGM by four months (i.e. until 30 October 2020 at the latest). While postponing or rescheduling the AGM is therefore possible, doing so will have consequences for the time at which the annual accounts are adopted and any dividend can be paid. In addition, due to an omission in the Temporary COVID-19 legislation, an N.V. may not buy back its own shares after expiry of a six-month period from the close of its financial year if the annual accounts for that financial year have not yet been adopted. Under the Temporary COVID-19 legislation, the board of an N.V. or B.V. may decide to extend the statutory period of five months for preparation of the financial statements by five months. Dutch listed companies with a listing on Euronext Amsterdam or another regulated market within the EU / EEA will remain subject to the requirement to make an annual report available within four months and a semi-annual report within three months.
Preparing a Q&A for upcoming AGMs is advisable so that adequate responses can be given to questions by shareholders and analysts about the situation.
In accordance with the legal principles of reasonableness and fairness, the company may, in exceptional circumstances, derogate from rules and procedures provided for by law or in its articles of association.
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