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Emergency legislation on holding annual general meetings during pandemic

24/04/2020

On 24 April, the law which contains new temporary facilities on holding annual general meetings because of COVID-19 came into force.

Annual general meeting are usually held in Spring, but COVID-19 makes physical meetings undesirable, as a result whereof many legal entities have the desire to hold their general meetings through electronic means only.

In order to avoid uncertainty about the legal validity of resolutions taken at a general meeting not in accordance with the law and the articles of association and to prevent the postponing of general meetings that might result in non-compliance with legal deadlines, the law provides temporary derogations from legal and statutory provisions regarding the holding of physical meetings and related terms and sanctions.

As a result of the law, a management board is able to hold general meetings that can only be followed via livestream (audio or video), even if the articles of association do not provide this possibility. This is subject to the condition that members and shareholders can attend the general meeting electronically and that they are given the opportunity up to 72 hours prior to the meeting to ask questions in writing or electronically about the subjects mentioned in the convening notice. These questions will be answered during the meeting at the latest, and the answers will be posted on the website of the legal entity or made available to members and shareholders through an electronic means of communication.

The management board has a duty to facilitate the possibility of being able to ask questions electronically or by another means during the meeting unless this reasonably cannot be performed at the time.

The management board may also determine that votes cast through electronic means of communication prior to the general meeting are put on par with votes cast during the last meeting.

If a member or shareholder has not been able to participate in an optimal way in a meeting, the resolutions taken are still legally valid.

Where this proposal deviates for members and shareholders, it also includes other persons entitled to attend meetings, such as proxy-holders, usufructuaries and pledgees with meeting rights, managing directors, supervisory directors and the accountant.

The board can also postpone the term for holding a general meeting and the term for drawing up the annual accounts with four months.

As a result of the postponement of a general meeting or due to other causes linked to COVID-19, the deadlines for filing the adopted annual accounts may not be met. This could also apply if – due to the virus – the annual accounts cannot be drawn up or audited by an accountant. In this case, late filing under these circumstances will not count as evidence for director liability in the event of bankruptcy.

The emergency law will expire on 1 September 2020, but this law can be repeatedly extended by two months if necessary.

The intention of the proposal is to give retroactive effect to these provisions up to and including 23 March 2020.

Regardless of the possibilities that this law offers, please note that there are also other options for taking resolutions in the general meeting in a flexible way.

For more information on this proposal and holding annual general meetings in the Netherlands during the crisis, please contact your contact person with CMS expert Gieneke van Nierop, +31 20 3016 455, [email protected].

Authors

Picture of Gieneke Nierop
Gieneke van Nierop
Kandidaat-notaris
Amsterdam