Update on corporate law - Q2 2023

New reporting obligation in The Screening of Investments, Mergers and Acquisitions Act (Wet veiligheidstoets investeringen, fusies en overnames, 'Vifo Act')
The Vifo Act came into effect on 1 June 2023, introducing a notification obligation for so called ‘acquisition activities’ in the interest of national security. Acquisition activities refer to gaining control or (in certain cases) significant influence over specific Dutch companies. Such activities conducted between 8 September 2020, and 1 June 2023, may retrospectively fall under the reporting obligation until 1 February 2024. Although retroactive review will be applied with restraint, it is important to determine whether relevant acquisition activities took place during this period. The notification obligation applies to acquisition activities related to vital infrastructures, companies operating in sensitive technology sectors, and business campus operators. For more information, please refer to our blog.

New procedure for cross-border conversions, mergers, and demergers (EU Mobility Directive)
For private limited companies (BVs) and public limited companies (NVs) wishing to do a cross-border restructuring, the Act implementing Directive (EU) 2019/2121 is relevant. This law introduces new procedural rules for cross-border conversions and demergers and amends the procedural rules for cross-border mergers. The Act will enter into force on 1 September 2023. The same implementation decree also regulates that a provision from the Management and Supervision of Legal Entities Act on the regime of absence and insolvency for supervisory board members of the NV will enter into force on 1 January 2024. For more information, please see our blog.

New reporting obligation in the Foreign Subsidies Regulation (FSR)
Internationally operating companies participating in major tenders or considering significant transactions are required to assess whether any parts of the company have received financial contributions from outside the EU under the Foreign Subsidies Regulation. The regulation introduces an additional reporting and standstill obligation for certain mergers, acquisitions, and public tenders, as well as broad authority for the European Commission to conduct ex officio investigations into transactions that do not meet the thresholds. The reporting obligation applies from 12 October 2023. It is advisable to design and implement control and compliance mechanisms to detect future eligible financial contributions. For more information, please refer to our blog.

New (temporary) requirements on transparency of expedited liquidation
For a period of two years starting on 15 November 2023, Dutch legal entities choosing expedited liquidation (also known as turboliquidation) will be subject to several new requirements. Expedited liquidation refers to the dissolution of a legal entity without assets, on its own initiative. According to the temporary act:

1. The (former) board will be required to disclose certain financial records and notify any creditors in writing
2. The public prosecutor will be able to disqualify (former) directors and include dissolution
3. Creditors will have the right to access the retained records of the dissolved legal entity if the board has failed to meet its accountability obligations

For more information, please see our blog.

Online establishment of BVs will be possible soon
The bill to implement Directive (EU) 2019/1151 enables the online establishment of BVs by allowing the notarial deed of incorporation to be executed electronically and remotely from the notary. After evaluation, it will be considered whether the law will be extended to NVs in the future. The deadline for implementing this directive into Dutch law was initially set for 1 August 2022, but that was not met. The bill passed on 27 June 2023. The planned date of entry into force is expected to be before 1 January 2024. For more information, please see our blog.

Improved access to capital markets through EU Listing Act
Under the Capital Markets Union 2020 Action Plan, a legislative package to improve capital markets was published on 7 December 2022. It consists of three parts, including the 'Listing Act'. The Listing Act aims to ease the administrative burden on companies, especially SMEs, so that they have better access to public funding through listing. The Listing Act has the following objectives, among others:

• Simplifying and reducing the cost of preparing a prospectus
• Providing more clarity on insider trading
• Enhancing the identification of market manipulation by national competent authorities
• Allowing for multiple voting rights shares

The European Council has recently determined its negotiating position on these initiatives, which are compassed in a regulation and two directives. Negotiations on a final version of the texts will begin soon. For more information, please see our blog.

New or stricter whistleblower policy required in the Whistleblower Protection Act
Employers in the Netherlands with at least 50 employees must have an internal reporting procedure for reporting suspected wrongdoing, according to the new Act. This also applies to organisations under the Money Laundering and Terrorist Financing (Prevention) Act (Wwft) as well as specific sectors, regardless of the number of employees. The new law also provides greater protection for whistleblowers. The law came into force on 18 February 2023 for employers with at least 250 employees, organisations under the Wwft, and the relevant sectors, and on 17 December 2023 for employers with 50 to 249 employees. Companies not subject to this law but subject to the Corporate Governance Code must also review their internal reporting procedure. For more information, please see our blog and the key takeaways from our webinar on this topic.

New ESG reporting requirements in the Corporate Sustainability Reporting Directive (CSRD)
The CSRD requires companies to set clear ESG goals and disclose their progress annually. Given the size and level of detail of the reporting standards, all companies within the scope must immediately start preparing by gathering all relevant information. The new requirements will be phased in. The reporting will be based on the European Sustainability Reporting Standards (ESRS), which are currently in draft form and will be finalised in July 2023. The directive will come into effect on 1 January 2024, for the first target group, which includes listed companies, banks, and insurance companies with over 500 employees. Large companies will follow in 2025, listed SMEs in 2026, and certain large non-EU companies in 2028. For more information, please see our CSRD blog and the more detailed ESRS blog.

New disclosure requirements on remuneration in the Pay Transparency Directive
Companies must disclose their average pay levels by gender, as employees have the right to this information under the Pay Transparency directive. In addition, larger companies are required to report annually on the gender pay gap, while smaller organisations must do so every three years. An unjustified pay gap above 5% requires a joint pay review. Employers must inform applicants of the starting salary before the interview and may not ask them about their previous salary. Violations are subject to sanctions, and the burden of proof to demonstrate compliance lies with the employer. The directive covers multiple grounds of discrimination beyond gender, such as ethnic origin and sexual orientation. The directive came into effect on 30 May 2023, and must be implemented into national legislation by 7 June 2026, at the latest. No consultation draft has been submitted to date. For more information, please see our blog.

Draft bill for digital general meetings
In time, fully digital meetings will be possible within general meetings of private-law legal entities, provided that the articles of association are amended accordingly. The consultation (in Dutch) for a draft bill on this matter was published on 7 December 2022. The draft bill stipulates that private-law legal entities, SCEs, and SEs can hold digital general meetings if specified in the articles of association. Further conditions are set for both fully digital and hybrid meetings. The consultation period ran until 6 February 2023. No bill has been submitted yet. We will include new developments in our quarterly updates. For more information, please refer to our blog.