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Under the Dutch Civil Code (DCC), there are many requirements on how to convene certain general meetings of business enterprises. The one that causes the biggest obstacle is the fact that the DCC requires in some instances that such general meetings require the physical presence of the parties concerned. And this may not be possible or practicable during the period of the “intelligent” lock-down imposed by the Dutch Government.
The Government has come to the rescue again and has just drafted a new draft Emergency Act enabling business enterprises to conduct formal meetings on-line during the Corona crisis. This draft Emergency Act was submitted by the House of Commons on the 8th of April 2020, and considering the urgency of the matter, this draft Emergency Act will be implemented sooner than later. Once it has been implemented it will have retro-active effect to 23rd March 2020 to a certain date and will lapse on 1 September 2020. Thereafter the normal provisions in the DCC will apply again.
Please rest assured that this draft Emergency Act covers all sorts of business enterprises ranging from publicly quoted companies to owner associations that are required to hold a general meetings.
The draft Emergency Act does set out some conditions that need to be met for the above-mentioned business enterprises to make use of the rights set out therein to conduct general meetings that require physical presence. These are:
- The members of the general meetings must be able to follow the general meeting by way of a livestream, this can be by video or by audio.
- The members of the general meeting must be able to submit questions to be addressed during the meeting no later than 72 hours before the general meeting takes place. Furthermore, these questions will need to be shared with all the members and specifically dealt with during the meeting itself. This right must be communicated expressly to the members in the invitation to attend the general meeting.
- The resolutions adopted during these general meetings are valid in the event that the above requirements are met and remain valid even in the situation where one or more of the members have not be able to adequately follow the general meeting.
As there are very specific time-limits in the Dutch Civil Code for conducting general meetings for the preparation of the annual accounts, the Dutch Government has facilitated business enterprises by enabling that these general meetings can be conducted within a window of 10 months in total from the date of the end of the financial year. This means that an additional extension of 4 months is available on top of the normal 6 months period. Furthermore, the Dutch Government has extended the period within which the management board needs to hold an annual meeting.
Furthermore, the Dutch Civil Code sets out that the management can, under certain circumstances, be held personally liable in the event that the strict procedures for conducting these general meetings are not met. Given the fact that the Corona Crisis has turned the world upside down, the Dutch Government included a provision in this draft Emergency Act that non-compliance of the publication requirement does, under certain circumstances, not result in a formal breach if such non-compliance is due to the Corona Crisis.Such circumstance is in the event that a company is declared insolvent and where its management has not complied with the publication requirements in relation to the most recent annual accounts. In the event that such failure to meet this requirement is due to the Corona crisis, the management will not be deemed to be personally liable.
Specific rights for Associations
The draft Emergency Act has made it possible for Associations to hold an annual meeting by video or by audio. Furthermore, the draft Emergency Act enables the Association to apply for an extension of time of an additional 4 months to approve the Annual Accounts period after the end of the relevant book year.
In relation to inviting members to an annual meeting through electronic means, there are a number of formalities that need to be complied with. These formalities must be complied with and in the event that certain specific formalities are not complied with, this could under certain circumstances render the resolution null and void.
- The management board of the Assocation can call for an annual meeting to be conducted on-line provided the general meeting can be attended by its members through electronic means.
- The members also need to be given, 72 hours prior to the annual meeting, the right to ask questions regarding the agenda items, which questions can be communicated either in writing or by electronic means.
- These questions and answers are to be made available to all members during the annual meeting by electronic means.
- During the annual meeting all questions raised by the members should be reasonably dealt with.
In the event that the annual meeting cannot be attended by all members because of the connection or for a technical reason, then validity of the resolutions will not be affected. Furthermore, the votes of the members can be conducted by electronic means through this draft Emergency Act.
All in all, this is good news for all business enterprises and must be relief for many of them that the Dutch Government is proving to be so flexible and practicable. Please contact Madelon van Breemen for further information or advice.