The legislative proposal amends, inter alia, provisions in Books 2 and 5 of the Dutch Civil Code and applies to public limited companies, private limited companies, associations, homeowners' associations (VvE's), cooperatives and mutual insurance associations. The European Company (SE) and the European Cooperative Society (SCE) also fall within its scope.

The legislative proposal contains three key measures:
  1. Introduction of an optional provision for holding fully digital general meetings, in addition to the existing possibility of physical and hybrid meetings.
  2. Setting further conditions for the use of electronic means of communication in digital and hybrid meetings, aimed at ensuring broad support, full participation and proper information provision.
  3. Modernisation and simplification of the rules for digital notification of general meetings.

Introduction of an optional provision for holding fully digital general meetings.

The legislative proposal provides for the possibility for legal entities with members or shareholders to hold fully digital general meetings; it does not impose an obligation to do so. It is up to the legal entity itself to choose the form of the meeting, whether physical, digital or hybrid. An exception has been made to this rule. For listed companies, the annual meeting must always be held physically or in hybrid form. Extraordinary general meetings of listed companies may be held physically, digitally or in hybrid form.

Further conditions

Consent

The legislative proposal assumes that the majority of members or shareholders must support the holding of fully digital meetings. For this reason, most legal entities require a statutory basis for digital meetings.

For associations and homeowners' associations - due to their different nature - a statutory basis is not required, but support for the association is guaranteed by stipulating that the general meeting may authorise the person convening the meeting to hold the meeting fully or partially digitally. For homeowners' associations, the person convening the meeting will be able to determine whether the meeting takes place digitally, but members representing at least a quarter of the votes may request and oblige the convener to also hold the meeting physically.

Given the previous need for temporary measures due to the coronavirus outbreak, an amendment has been proposed to include in the legislative proposal that, under certain exceptional circumstances, digital meetings are also possible without a statutory basis or authorisation. This amendment has been adopted. Such circumstances include a pandemic, natural disaster, war, terrorism threat or other unexpected emergencies.

Full digital participation

The legislative proposal is based on the principle that a digital meeting should resemble a physical meeting as much as possible and that members and shareholders should be able to participate fully in the meeting as if they were physically present. The legislative proposal regulates this by stipulating that they must be able to follow the meeting directly and must participate in the deliberations via a two-way audiovisual communication means. They must be able to speak and have their questions answered. Under the current rules for hybrid meetings, participation in the deliberations is not mandatory. This legislative proposal aligns the rules for hybrid and fully digital meetings, so that for both hybrid and fully digital meetings, it will be necessary to be able to take note of the proceedings and to participate in the deliberations. The explanatory memorandum to the legislative proposal states that full digital participation also entails that the convener of the meeting has a best efforts obligation to enable members or shareholders with limited digital skills to actually take note of and participate in the meeting (e.g. by providing clear instructions, practical assistance, etc.).  

Identification and exercise of voting rights

In accordance with the current rules for hybrid meetings, the legislative proposal stipulates that members and shareholders must be able to be identified via the electronic means of communication and must exercise their voting rights directly. How this identification and voting will actually take place is left up to the legal entity itself. The legal entity does have a best efforts obligation to provide suitable means. New is that the notice of the meeting must state the procedure for participation and the exercise of voting rights via the electronic means of communication.

Digital notification

Under current law, for all legal entities the notice of a physical or hybrid meeting may be sent digitally, unless the articles of association provide otherwise and on condition that the person being convened has given its consent for this. For unlisted public limited companies, the general rule is that the notice of a meeting takes place by announcement in a nationally distributed newspaper. As digital notification should become the standard, the legislative proposal abolishes the consent requirement and the mandatory notification in a national distributed newspaper.

The legislative proposal is expected to be discussed in the Dutch Senate (Eerste Kamer) early next year. The date of entry into force has not yet been announced.

Contact

If you would like more information and advice on the possibilities for digital and hybrid meetings and amending the articles of association of a legal entity in response to the above news item, please do not hesitate to contact us.