Why a draft bill?

Historically, Dutch law required that Dutch companies and associations hold their general meetings either in person or in a hybrid manner. Holding virtual general meetings, without a physical meeting location, was not possible.

In 2020, in response to the coronavirus pandemic, the Dutch government introduced temporary legislation in the form of the Covid-19 Emergency Act, which allowed Dutch companies and associations to hold their general meetings in a virtual form. The Dutch government recently announced that this temporary basis for virtual general meetings will lapse on 1 February 2023. This means that from that date, Dutch companies and associations can no longer hold virtual general meetings.

The draft bill aims to provide a permanent legal basis for Dutch companies and associations to hold virtual general meetings.

Scope of the draft bill

The draft bill applies to all Dutch companies, so all BVs and all NVs. It also applies to all Dutch associations, including cooperatives, owners associations and mutual insurance associations. The bill also applies to SEs and SCEs with their corporate seat in the Netherlands. In this article we focus on what the draft bill means for BVs and NVs.

Opt-in required

Unlike the temporary Covid-19 Emergency Act, the draft bill does not automatically allow for virtual general meetings and permits this way of holding general meetings only if a company's articles of association provide for the option. As the articles of association of most companies do not yet provide for this option, most companies would first need to amend their articles of association before they can hold virtual general meetings under the draft bill. Unless a company's articles of association provide otherwise, amendment of the articles of association requires a general meeting resolution, adopted by a majority of votes cast without a quorum applying.

The draft bill allows for the articles of association to provide who determines the general meeting format. For example, the articles of association may prescribe that the board decide on the format of each general meeting. Under the draft bill, companies can also include a provision in their articles of association requiring that certain types of resolutions cannot be adopted in a virtual general meeting, but only in an in-person or hybrid general meeting.

Further requirements

The draft bill proposes that virtual general meetings must meet the following requirements:

• The notice of the meeting must set out the procedure for electronic attendance and voting.

• Two-way audio-visual means of communication must be provided allowing shareholders to directly take note of and participate in the meeting.

• Electronic voting must be available during the meeting.

• It must be possible to identify shareholders that participate electronically.

The draft bill proposes that these requirements equally apply to hybrid general meetings, in deviation from the current legal requirements for those meetings. However, as a transitional measure under the bill, companies whose articles of association already allow for hybrid general meetings will be permitted until one year after the bill enters into force, to hold hybrid general meetings in accordance with the law and articles of association as they read before the draft bill's effective date.

Electronic notice of meeting

Under existing legislation, NVs and BVs with listing on a regulated market have to call their general meetings by an electronic notice made publicly available on the company's website.

The draft bill introduces the ability for NVs without such a listing to also call their meetings electronically – they can do so by a publicly available, electronic notice, for example by posting the notice on the NV's website. For BVs without such a listing, it is proposed that notice for a general meeting may be given in an electronic format, for example by sending an email to the address provided by the shareholders. Currently, this form of notice requires individual shareholder consent.

What the proposals mean for your company

With the temporary basis for virtual general meetings under the Covid-19 Emergency Act lapsing on 1 February 2023, companies must expect, at least for some time from that date, not to have the option to hold virtual general meetings. Therefore, for the 2023 AGM season, companies should be aware that they may not be able to hold their general meeting in a virtual format as the new draft bill is not expected to have taken effect by that time.

As the draft bill proposes an opt-in system, where companies can only hold virtual general meetings if their articles of association provide for the option, companies may consider paving the way by already proposing the necessary amendments to their general meeting, for example at the upcoming annual shareholders meeting. This way, once the bill becomes effective, the option to hold virtual general meetings will be immediately available.