Netherlands Corporate Alert: Digital general meetings of Dutch companies

Digital general meetings of Dutch companies

The digital general meeting

The Dutch Ministry of Justice and Security submitted a legislative proposal (the Proposal) to enable private legal entities to hold annual- or extraordinary general meetings by digital means.

The Proposal applies to public companies (naamloze vennootschappen), private limited liability companies (besloten vennootschappen), associations (verenigingen), cooperatives(coöperaties) and mutual benefit associations (onderlinge waarborgmaatschappijen). The Proposal will also apply to listed companies, European Public Limited Companies (SE) and European Cooperative Societies (ECS).

General meetings should be held physically. If provided for in the articles of association (the Articles), the participants may also attend general meetings by digital means in the form of a hybrid meeting (meaning attendance in person by at least one participant and additional attendance by digital means). During the COVID-19 pandemic the temporary COVID-19 Justice and Security Act (the Act) made it possible to hold fully digital general meetings (regardless of any basis in a company’s articles). The Act has expired on 1 February 2023 and therefore the possibility to hold fully digital meetings has elapsed. The Proposal introduces a permanent legal basis for general meetings to be held exclusively online. In a fully digital meeting participants may only participate in the deliberations and vote by digital means and will not/no longer be able to attend a physical meeting. A digital meeting must mirror a physical meeting as closely as possible. Any participant must be able to participate digitally – i.e. speak, deliberate and vote using the relevant available electronic means.

The opportunity to exclusively hold a general meeting online should be provided for in the Articles. The Articles may also provide for a more tailored approach, such as the possibility for a designated quorum of shareholders to vote for an otherwise digital meeting to be held in physical form. The Articles may allow several methods of holding a meeting: fully digital, a hybrid meeting and/or entirely physically. Due to the fact that – based on the Proposal – a legal basis to opt for a fully digital general meeting requires the Articles to be amended, we expect that in practice listed companies may find it difficult to implement fully digital general meetings.

The company’s Articles may also contain further regulations with respect to (i) the notice calling the meeting (oproeping), (ii) the means of communication for a digital/hybrid general meeting, (iii) quorum requirement and/or (iv) the manner of voting.

The Proposal requires the notice calling a meeting to include by which means the general meeting will be held: either entirely in person, entirely by electronic means or a hybrid manner. The notice must specify by which means the votes can be cast by the shareholders.

In case of a hybrid method or an fully digital general meeting, the electronic means of communication should allow for a two-way (audio-visual) communication tool through which the participants are:

i. identified
ii. able to cast their vote
iii. able to take knowledge of all subjects on the agenda of the meeting
iv. able to participate in the deliberations on the subjects that will be discussed during the meeting

Conclusion

Please consider the following key aspects:

i. currently Dutch law requires the general meeting to be held physically, unless the Articles provide a basis that allows the general meeting to be held in a hybrid manner
ii. due to the Act expiring, currently no legal basis exists for the general meeting to be held fully digitally until the Proposal will be in effect. For a general meeting to be held by digital means, that general meeting must   be held by way of a hybrid meeting (which must have a basis in the Articles)
iii. when the Proposal will enter into force, the Articles must include a stipulation to allow fully digital general meetings to be held, which may require an amendment to the articles of association

Should you have any questions or in case you require any assistance in this regard, please do feel free to contact us.