Board and shareholders’ meetings in the Netherlands during COVID-19 lockdowns

During the first half of each calendar year, most board and shareholders’ meetings for Dutch companies are being convened for adopting the annual accounts of the previous financial year. Usually, these meetings consist of meetings with most participants being present.

However, due to the globally spread lockdowns and travel restrictions because of COVID-19, physical meetings are currently less of an option.

Here are some alternative solutions for Dutch companies that wish to organise board or shareholders’ meetings:

Shareholders’ meetings

• Organise a shareholders’ meeting from the location designated in the articles of association of the company (eg from the office address), whilst enabling shareholders to join via livestream solutions (eg Skype, FaceTime, video conferencing etc). These electronic means of communication need to enable identification of the participants, and the participants should be enabled to issue their votes. In addition, management (and, if applicable, the supervisory board members) has to be present as well. For instance, management can be physically present at the office with the president of the meeting verifying the attendance of the shareholders dialling in.
• If livestreams are not an option, have the shareholders issue powers of attorney by email to one person or a limited number of persons, which attorney(s)-in-fact can physically join the shareholders’ meeting (naturally taking into account the social distance prescription of 1.5 m).
• Adopt shareholders’ resolutions in writing for urgent issues that cannot be delayed. Note that this is only possible if all shareholders agree to this manner of resolving. For larger or listed companies, this may not be a practical solution.
• Postpone the shareholders’ meeting. Under Dutch law, there is no strict timing prescribed as to when a shareholders’ meeting needs to be held – as long as there is one general meeting per year. This renders time until, theoretically, 31 December 2020.

Board meetings

• Organise a board meeting via livestream solutions. Dutch law contains less mandatory prescriptions on the organisation of board meetings compared to shareholders’ meetings. As long as the board members are enabled to communicate “real time” with each other, in order to secure proper and diligent discussions.

• Adopt board resolutions in writing, provided all board members have agreed thereto.

• Postpone the board meeting. Like with shareholders’ meetings, Dutch law does not impose strict timing requirements as to the intervals board meetings need to be held.

Some caveats

• Before applying any of the above options, verify what is stated in the articles of association of the company at hand, as well as if any internal (board) regulations or shareholders’ agreements touch on the topic of meetings. For instance, not all articles of association enable the option to join shareholders’ meetings via electronic means. In addition, the articles of association may contain prescriptions on, for example, when meetings need to be held, how these should be convened etc. This may limit the options suggested in the above.

• Listed companies are held to convene physical general meetings of shareholders within 6 months from the end of the previous financial year – thus until 30 June 2020. This has caused certain listed companies to call on the Dutch government to adopt specific legislation enabling complete virtual shareholders’ meetings. As a comparison: in Luxembourg, the government has adopted a specific regulation on 20 March 2020 in which electronic or written meetings have been enabled for all companies and disregarding existing legal or statutory constraints.

• From a tax point of view, some companies may need to demonstrate a certain level of substance. This requires having physical meetings in the Netherlands.

• Postponing meetings until lockdowns have been lifted may seem a logical option. However, it should be questioned, on a case by case basis, if a company can diligently proceed without meetings being held and resolutions being passed - especially in times of crisis. Adding to that, there is still large uncertainty as to how long the lockdowns will last. Therefore, it may be preferred to proceed in organising meetings within the available boundaries. As an example, it is strongly questioned if tax authorities would doubt levels of substance during the present lockdowns, as opposed to refraining from properly managing a company during difficult times.

To conclude, Dutch law may offer certain practical solutions for organising meetings which may be even more of importance to face the current extraordinary circumstances. These solutions may not always be optimal, but acting adequately and timely may be of higher importance these days.

Should you wish to learn more on the available options or on how this could be dealt with in specific cases, please reach out to a member of our team.