COVID-19 also impacts the Dutch corporate law environment. Below is an overview of points to consider with respect to board and shareholder meetings.
Board meetings of Dutch companies
There is no general statutory requirement for the board of a Dutch company to meet at specific intervals. 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 ar-rangements 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).
- 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.
The arrangements described above can also be impacted by provisions in the company's articles of association or the board's internal rules, limiting or setting additional requirements for the application of these arrangements.
Shareholder meetings of Dutch companies
At least one general meeting of shareholders must be held annually. Until 6 April 2020 inclusive, gatherings are in principle not permitted. However, an 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. On 31 March 2020, it will be announced whether these and other measures applicable through 6 April 2020 will be extended. Below are some additional points to consider when organising the AGM. Here are some focal points:
- Virtual AGM: A fully virtual AGM is not permitted under Dutch law.
- Hybrid AGM: A hybrid AGM is possible, under certain conditions. In a hybrid AGM, shareholders can 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. If the AGM has already been called, the possibility to participate in the AGM remotely can still be offered, although in this case shareholders participating via electronic means may not be counted towards the quorum, if any, and may not formally vote (since the possibility of electronic participation in the AGM was not mentioned at the convocation of the AGM as required by law, only afterwards). Failure to follow these rules may result in decisions taken at the AGM being voidable.
- Additional measures 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. The company's articles of association may impose further requirements such as the presence of directors, a quorum or further rules on the chairperson's role. In view of the current exceptional circumstances, we believe that certain rules regarding the physical attendance of directors and officers can be complied with by means of participation by telephone or video conference. It is even 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.). It could be considered 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. The municipality must be the same as that mentioned in the convocation notice.
- 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 NV 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 BV, the AGM must take place within 12 months from the close of its financial year (unless the shareholders take a decision outside a meeting). 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, an NV 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. In light of the uncertainty regarding the duration of the current measures, it is not clear whether postponing or rescheduling the AGM makes sense.
- 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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