In the Netherlands, measures due to the COVID-19 impact the decision making within Dutch legal entities in which the law and/or the articles of association require physical meetings to be held. With retroactive effect as from 16 March 2020 the Dutch temporary Act COVID-19 Justice and Security (the ''Act'') has been adopted. The Act may be extended from time to time (currently valid until 1 April 2021). Please find below a summary regarding the legal highlights of the Act.
Board meetings and supervisory board meetings
The articles of association of a legal entity may contain rules regarding the decision-making regarding board meetings and supervisory board meetings. For example, the requirement of holding a physical meeting. In the Act it is regulated that this requirement does not apply, and all management boards and supervisory boards may decide to hold a virtual board meeting. Please note, the members of the management board must agree the way of holding a meeting.
Regarding the general meeting the management board may decide to hold a hybrid meeting or an all-virtual general meeting. Also, all physical access to a general meeting may be denied if the following conditions are met:
- members or shareholders can attend the meeting electronically (audio/ video live stream); and
- members or shareholders had the opportunity to ask questions about the proposed agenda items either in writing or electronically and not later than 72 hours before the meeting.
Furthermore, all other persons that are entitled to attend the meeting must be able to fulfil their advisory role electronically.
Notice of the general meeting
The notice of the hybrid or all-virtual general meeting must state that this will be held hybrid or all-virtual. Furthermore, the notice must include:
- how and when members or shareholders can submit their questions;
- how these questions will be answered; and
- how members or shareholders can attend or participate in the meeting.
In case the notice to hold a physical general meeting was already sent, the management board can still decide to change the physical meeting into a virtual meeting. In such case, the members or shareholders have to be notified at least 48 hours before the meeting.
Questions that were asked by members or shareholders must be answered before or during the meeting. These answers have to made available on the website of the entity or by electronic communication. In this way, the members or shareholders can take the answers into account when casting their vote. In case the board only allows voting prior to the meeting, it is appropriate that the answers to the questions are made available before the voting.
Finally, the management board has to make an effort to enable members of shareholders to ask questions during the meeting. This can be done for example by email or chat. This requirement does not apply if it is unreasonable to demand this under specific circumstances. Also, the chairman may apply further rules in the interest of the order of the meeting.
Validity of resolutions
To avoid legal disputes, the Act states that failure to comply with these requirements concerning questions and answers thereto will not affect the validity of the decision making during the meeting. Connectivity issues of a member or shareholder cannot stand in the way of validly adopted resolutions.
Deadline for preparation of annual accounts
The Act offers the possibility for all management boards to extend the deadline for preparation of the annual accounts due to COVID-19. However, the deadline for publication remains unchanged.
Obligations management board
By way of derogation from Section 2:248 paragraph 2 Dutch Civil Code, a failure to comply with the obligation under Section 2:394 Dutch Civil Code, to publish the annual accounts relating to the most recently closed financial year will not be taken into account if this is due to the consequences of the COVID-19 outbreak.
The Act includes the following new rules for Dutch legal entities:
- management boards and supervisory boards may hold virtual board meetings;
- management boards may also decide to hold a hybrid or all-virtual general meeting;
- virtual meetings are also possible in case the law or the articles of association only allow physical meetings; and
- management boards may decide to extend the deadline for preparation of the annual accounts due to COVID-19, however de deadline for publication remains the same.
In case you have any questions (or need more information) on applying the Act on your management board and and/or general meetings, please contact us: email@example.com.