The government in the Netherlands has published a draft bill to modernise the public limited liability company (NV) regime and to remove administrative burdens. We outline the key changes here. The draft bill also aims to improve gender diversity at the board and senior management level at large NVs and BVs. We have reported separately on this here.

Key changes

The purpose of the draft bill is to simplify the NV regime and to provide more flexibility to NVs. The key changes are:

• The articles of association of NVs will no longer have to state the authorised share capital. The authorised share capital limits both the minimum and maximum number of shares that can be outstanding. Without an authorised share capital, increasing or decreasing the issued share capital will be simpler.

• The draft bill introduces the possibility of holding general meetings abroad, if the foreign location is specified in the articles. A shareholders resolution to amend the articles of association so that they provide for general meetings abroad, can only be taken unanimously. For NVs that are already listed, this requirement will effectively be impossible to meet.

• Under current legislation, shareholders can only grant voting rights to a pledgee or usufructuary of shares at the time when the right of pledge or usufruct is created. In practice, it is often the parties' intention to stipulate that voting rights only accrue to the pledgee if a default event has occurred. The draft bill allows shareholders to grant voting rights to a pledgee when the right of pledge is created but subject to a condition precedent such as an event of default. Shareholders will also be able to grant voting rights to a pledgee by entering into a written agreement at any point in time after the creation of the right of pledge.

• NVs will be able to grant holders of shares with a specific reference (for example, a letter or number) with specific rights such as to approve certain management board resolutions. Due to this change, the articles will no longer have to provide for separate classes of shares in order to grant rights to holders of certain shares.

We have submitted consultation feedback on this draft bill and will keep you updated on further developments.