General meetings and board meetings during the Corona crisis

On March 23, the Dutch government took additional measures in tackling the corona virus, such in accordance with art. 7 Public Health Act. These measures were further elaborated on March 24 and stipulate, among other things, that all meetings are prohibited until at least 6 April and events with a license and notification obligation, irrespective of the number of participants, are prohibited until June 1, 2020. No later than April 6, the government will announce whether the ban on meetings will be extended. The measures will be enforced by issuing fines of up to EUR 4,000.

The measures may have consequences for already planned or upcoming meetings of corporate bodies of Dutch NV’s and BV’s. More specifically, the measures can be problematic for adopting the annual accounts (general meeting), appointing or dismissing managing and supervisory directors (general meeting) or entering into certain transactions (management). Below we will discuss the options for decision-making by shareholders and board meetings.

I. General Meeting
1. Traditional physical meeting
Since the measures allow for holding meetings that will be necessary to continue the day-to-day business of companies or meetings that are required by law, the general meeting could take place in physical form. This requires however that the meeting will be required in order to continue the day-to-day business of the company, the number of persons participating in the meeting (shareholders, persons entitled to attend the meeting and directors) is less than 100 and that there is a 1.5 meter distance between the participants. In order to limit the number of persons present in the meeting, shareholders could issue a written proxy (with voting instruction).

2. Participation through electronic means
Since 1 January 2007, shareholders can already participate by electronic means in the general meeting, provided that the articles of association allow for this. An example would be participation by means of webcast or video conference.

In order to organize a general meeting in this way, the following conditions must be met:

  • the articles of association must provide for electronic participation;
  • shareholders must be able to be identified via the electronic means of communication;
  • shareholders must be able to take immediate note of the discussions at the meeting; and
  • shareholders must be able to exercise the voting rights.

These conditions also apply to other persons entitled to attend meetings, such as pledgees and depository receipt holders with meeting rights. The basic principle is that the chairman of the meeting and the directors and supervisory directors are physically present at the meeting location.

When identifying electronically, one can think of the situation in which shareholders log in to a closed part of the company’s website using an access code. However, most companies will not have this option. It is conceivable that identification can also take place by showing an ID in front of the camera to the chairman at the start of the meeting.

The conditions for shareholders to take immediate note of the proceedings of the meeting and to exercise their voting rights mean that shareholders must be given the opportunity to monitor and vote from a distance. It is not required that the shareholders can also participate in the deliberation (to speak) at the meeting by electronic means of communication. However, the articles of association may provide otherwise.

If the articles of association do not allow electronic participation, the articles of association will have to be amended. In order to allow a smooth electronic way of meeting, the articles of association should not contain any additional conditions for electronic participation.

Meanwhile, various interest groups have argued for the introduction of an emergency law that makes it possible to organize virtual general meetings. In a virtual meeting, not only meetings and voting take place via the Internet, but it is also possible to communicate online and exchange information between the shareholders. Such an emergency law is especially important for companies with a widespread share ownership, such as listed companies.

3. Decision-making outside a formal meeting
Decision-making by shareholders may also take place in a manner other than at a meeting, provided that all persons entitled to attend the meeting have agreed to this manner of decision-making. The managing and supervisory directors should be given the opportunity to render their advice in advance. In that case, decisions are made outside a formal meeting and the persons entitled to attend the meeting do not have to appear somewhere in person.

II. Meetings of the management board
1. Traditional physical meeting
Board meetings also fall under the scope of the government's measures. In contrast to general meetings, the measures will be less of a problem, since a small number of persons usually attend board meetings. If the meeting will be required in order to continue the day-to-day business of the company and sufficient distance between the participants can be kept, these meetings can take place in physical form.

2. Participation through electronic means
There is a great deal of freedom to elaborate the manner in which a board meeting is held under the articles of association. In practice, a common regulation in the articles is that establishing a simultaneous telephone or video connection with sound will be sufficient to form a board meeting. Such an arrangement ensures that decision-making and deliberation of the board can continue to take place without the persons having to meet in a room. Tax aspects can play a role in this.

3. Decision-making outside a formal meeting
If the articles of association do not provide for the possibility to meet electronically, an alternative is that the relevant resolution is taken outside the meeting. Most articles of association will contain an arrangement for this.

If you have any questions regarding the above, please contact Robrecht Timmermans, Jeslin Brunsting or one of our other corporate law specialists.

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