Temporary measures due to the COVID-19 pandemic impact corporate compliance policy of Dutch companies

The COVID-19 pandemic has urged Dutch Parliament to adopt the Temporary Act regarding COVID-19 Justice and Security (Temporary Act) on 24 April 2020. The Temporary Act provides certain urgent temporary measures for Dutch legal entities which all expire as per 1 September 2020. However, also after that date, certain temporary measures will continue to be relevant when assessing validity of adopted resolutions and potential director's liability for mismanagement.

For management boards of Dutch companies the Temporary Act provides several important changes, which are explained below.

1. Electronic shareholders meetings The management board can now establish that shareholders cannot attend general meetings in person, as long as shareholders can follow the general meeting electronically and have had the opportunity to ask questions regarding subjects placed on the agenda until 72 hours before the date of the general meeting. The convening notice will need to mention that the general meeting is held electronically. If the conditions for holding electronic shareholders meetings are not met, resolutions adopted will remain subject to nullification.
   
   In addition, the management board must ensure that the questions received are answered during the general meeting and that such answers are placed on the company's website or are made accessible for all shareholders in any alternative way; non-compliance would, however, have no effect on the validity of the resolutions adopted during the meeting.

2. Electronic voting by shareholders Even in the event the company's articles of association would not provide it, until 1 September 2020, the management board can decide that each shareholder shall be able to attend, speak and exercise his voting right at the meeting electronically, in person or via a proxyholder. The management board may also adopt an e-voting system by which shareholders are allowed to validly cast their votes up to 30 days prior to the meeting, if that is addressed in the covening notice. The e-voting system applied must comply with mandatory provisions; if such conditions are not met, resolutions might be nullified.

3. Extension of the period for adoption of annual accounts by five months Whereas Dutch law allows the general meeting to resolve to accomplish such extension in the event of special circumstances, Dutch law now enables the management board to enforce such extension. If the management board would resolve to effect such extension, the minutes or written resolution must describe the relevant special circumstances in detail.

4. No deemed mismanagement in event of late publication of most recent annual accounts Directors must deposit the annual accounts of the company over a financial year within twelve months following the expiry of that financial year, whether or not the general meeting has timely adopted such annual accounts. Non-compliance is considered improper performance in the event of a bankruptcy, which is deemed to have been an important cause for bankruptcy. Each director would then be held jointly and severally liable for the company's deficit by law, unless he would exculpate himself by proving that this manifestly improper management was not an important cause of the bankruptcy. Now, with respect to the date of publication of annual accounts over the most recently expired financial year, the Temporary Act withdraws such statutory presumption, if a late publication would be due to the consequences of the COVID-19 pandemic. What the effect of this change might be in court proceedings remains uncertain and will probably depend on the circumstances. The bankruptcy trustee must indeed take this temporary withdrawal into consideration, however may try to prove that the late publication of the annual accounts had not been caused by the COVID-19 pandemic. We would advise that the annual accounts are at all times deposited within the twelve months period, and that, if that should not be feasible because of reasons caused by the COVID-19 pandemic, such reasons and circumstances and noted in detail in the minutes of the management board and of the general meeting.

The temporary changes explained above may all have an impact on the corporate compliance policy of your Dutch company. The management board must comply with these new mandatory provisions so as to ensure that all shareholders resolutions are validly adopted in electronic shareholders meetings. Please consult one of the experts in the corporate team of Fieldfisher in order to bring your corporate compliance policy up-to-date.