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Newsletter |
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December 2011 |
Nederlands | English |
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Corporate |
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Reform legislation limits number of positions |
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| The Dutch Management and Supervision Act is expected to enter into force on 1 January 2012 (see also our newsletters of August 2011 and March 2010). The provisions of this act include a restriction on the number of positions that an individual may hold simultaneously. A reform bill was published on 26 September 2011 as a result of a number of obscurities in these regulations. However, the proposed reform legislation has again triggered discussions. Not only are VNO-NCW and MKB Nederland critical, but several parties in the Dutch House of Representatives have asked questions as well. |
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Put briefly, the Management and Supervision Act allows a managing director to combine that position with at most two supervisory board memberships (not as chairman) and supervisory director to hold at most five such positions, in which a position as chairman counts for two.
To ensure that foundations with charitable, cultural or religious objectives are exempt from this rule, the reform act details that this regulation applies to the appointment of managing and supervisory board members of a foundation that is not only ‘large’ but also required to draw up annual accounts. This requirement to draw up annual accounts exists for ‘commercial’ foundations with a certain level of revenue and for foundations subject to extraordinary annual accounts rules, e.g. under the Pension Act, the Subsidized Rented Sector (Management) Decree or the Regulation on financial reporting under Care Institutions (Eligibility) Act. Accordingly, pension funds, hospitals, housing corporations, educational institutions etc. that meet these criteria may be subject to the limitation of the number of simultaneous positions. However, why this restriction on the number of positions does not apply to cooperatives and mutual insurance societies, e.g. Rabobank, Campina, Achmea, etc., remains unanswered.
Even with the reform legislation, it remains difficult to determine whether or not a managing or supervisory director holds more than the maximum number of positions. The restriction only applies to the appointment of managing and supervisory directors of foundations. The articles of the Management and Supervision Act that pertain to the appointment of managing and supervisory directors at public companies and private companies will not change, giving rise to the question of whether positions at such companies must be added to those at ‘large’ foundations that are not required to prepare annual accounts. Furthermore, when counting positions, ‘large’ public and private companies or foundations must be taken into account. In determining whether those legal entities are ‘large’, the annual accounts must be assessed, but which annual accounts is unclear: the last annual accounts adopted or the annual accounts that have been prepared but have not yet been adopted? The consolidated annual accounts of the group or those of the entity itself?
The treatment of the reform bill in the House of Representatives appears to have been delayed by the questions submitted. The date on which the reform legislation is intended to take effect is unknown as yet.
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Employment |
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No automatic end to employment contract upon becoming 65 |
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| The preliminary relief judge in Utrecht recently rendered an interesting judgment on the question of whether an employment contract ends automatically when the employee reaches the age of 65, either on the basis of customary retirement at that age or on the basis of customary practice within the company. |
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First, the facts: an employee who reached the age of 65 on 1 September 2011 has not been admitted to the work place since that time. In preliminary relief proceedings, this employee sought readmission to work and continued payment of his salary. The employer argued that, based on general custom, the employment ends automatically when the employee reaches the age of 65, or at any rate that it ends on the basis of customary practice within the company.
The preliminary relief judge disagreed: he held that a permanent employment contract does not end ipso jure - i.e. without prior notice - if that was not agreed in advance. If only for that reason, the judge rejected the employer’s argument that, based on custom, the employment contract ends automatically when the employee reaches the age of 65. Moreover, the employer’s argument fails in the face of the judgment of the Netherlands Supreme Court of 13 January 1995 (Codfried/ISS). The preliminary relief judge held that it does not entail from that judgment that an employment contract ends automatically upon reaching the age of 65.
The judge also rejected the employer’s reliance on the customary practice within the company to stop working and retire at 65. When interpreting ‘custom’ as referred to in that article, one cannot ignore what is customary in general in society. According to the judge, the trend in society - influenced by the public debate about raising the retirement age - is to continue working after 65, certainly also in positions such as that held by the employee in question (sales director). Accordingly, the Preliminary Relief Judge allowed the work readmission claim.
All in all, this judgment highlights the need to carefully verify whether the employment conditions of your staff include a retirement dismissal clause. In view of the relevant legislation, such a retirement dismissal clause must be carefully drafted.
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Employment |
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European Works Councils Act amended |
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| The Amendment to the European Works Councils Act entered into force on 15 November 2011. This amendment was sparked by changes to the EWC Directive. |
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As a result of the amendment, the European Works Councils Act (WEOR) details that a European Works Council (EWC) must be informed and consulted in good time. Important in that respect is that the process of information and consultation must be organised such that the relevant decision can still be influenced in practice. Also new is that a new EWC agreement must be renegotiated in the event of extensive changes in the business structure, such as mergers, demergers or takeovers, even if no relevant arrangements have been agreed between the parties involved..
These are a few of the changes ensuing from the amended European EWC Directive from 2009, also known as the Recast Directive. The first EWC Directive, established in 1994, was implemented in the Netherlands by means of the WEOR. Since 1997, the WEOR has applied to enterprises with at least 1,000 employees, 150 of whom are employed in at least two other European Member States. The WEOR enables employees with large Dutch multi-national companies to conclude an agreement with their management regarding the establishment and functioning of a EWC. The EWC is informed and consulted by the management on cross-border subjects. Partly to promote the effectiveness of those information and consultation rights, the Recast Directive was adopted in 2009. That directive has now been implemented in the European Works Councils Act.
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European and competition law |
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Van Doorne helps Frisian hospitals obtain merger approval |
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| NMa, the Netherlands Competition Authority, approved the merger of Medisch Centrum Leeuwarden (MCL) and De Tjongerschans as yet this autumn. |
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This means two of the five hospitals in the Dutch province of Friesland will merge, making it easier for them to specialise and improve the quality of care. Concentration in the care sector can facilitate quality and distribution. In this case, however, approval by the NMa required an exceptionally large dose of patience. It took no less than eighteen months.
MCL and De Tjongerschans already reported their merger plans to the NMa in April 2010. Their report indicated that there was virtually no overlapping among their activities and no competition between the two institutions: patients in Friesland go to the nearest hospital.
However, the NMa opined that the outflow of patients was sufficient to designate Friesland as a single market, and that concentration would result in a party holding 50 to 60 percent market share. It was for this reason that the NMa decided that the hospitals had to apply for a permit for their plans.
After a lengthy permit procedure, the NMa ultimately accepted that competition between the two hospitals is limited, making it possible for the hospitals to implement their merger plans as yet. |
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Intellectual Property |
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New domain name extensions in 2012 |
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| There are currently 22 generic domain name extensions (e.g. .com and .org) and some 250 country domain extensions (.nl and .co.uk) This is to change dramatically in 2012. As per 12 January 2012, companies will have the option of registering a brand as a gTLD (generic Top-Level Domain extension). |
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This means companies can choose to register the domain name ‘domainname.brand’ rather than ‘domainname.com’. Alternatively, a generic word such as ‘.legal.’ or ‘.bank’ can also be registered as a domain name extension. Even non-Latin signs can serve as a domain name extension. The expansion of domain name extensions can be significant for a company not only in light of enhanced brand recognition, but also in terms of securing its internet domain and improving the interaction with visitors.
Mark proprietors have until 12 April 2012 to file a registration application. This can be done via the web site of the organisation issuing the domain names: Internet Corporation for Assigned Names and Numbers (ICANN). On that date the registration period ends, and the registrations, as well as any objections by third parties, will be assessed. Descriptive marks might pose a problem (e.g. .apple for computers or the apple industry). If a domain name extension might be infringing, it is possible to file an objection for seven months.
The completion of this phase is followed by the choice of the part of the domain name preceding the extension (e.g. vandoorne.extension). In order to counter any mark abuse of that part, mark proprietors may have their mark registered centrally, after which they can act against mark infringement of that part of the domain name in what is known as the ‘sunrise period’. While this is not a requirement, it does obviate the need to use the regular objection procedure in such cases. |
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Notarial Practice |
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More transparency with the new central electronic register of shareholders |
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| The House of Representatives has proposed the introduction of a central electronic register of shareholders for private companies and non-listed public companies (the “companies”). One of the aims of the central electronic register of shareholders is to prevent financial/economic crime, such as bankruptcy fraud and tax fraud. |
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Central register of shareholders
The introduction of a central register of shareholders is to help fight malpractices by and with companies. The board of the company must keep information relevant to the legal situation of the securities up to date in a public register of shareholders, e.g. information about the holders of shares, of depositary receipts for shares and of the rights of pledge and usufruct in shares. Any execution or protective attachment of shares will also be recorded.
Location
Such a register can be integrated in the Commercial Register as kept by the Chambers of Commerce.
Register accessibility
For privacy reasons, a central electronic register of shareholders should only be accessible by a limited group of individuals and authorities, such as the board of the company, the civil-law notaries and tax and criminal investigation units. However, this remains unclear for the time being.
The role of the civil-law notary
The civil-law notaries will have better and, especially, more efficient insight in the context of investigating ownership rights, limited rights, attachments and the like. Also in view of the abolition of the preventive supervision of companies by means of a ‘declaration of no objections’, the civil-law notary will more easily carry out the role of gatekeeper through access to a central electronic register of shareholders. |
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Notarial Practice |
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Gift and inheritance Tax Act to become part of 2012 Tax Plan |
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| The Gift and Inheritance Tax Act (‘Geefwet’) was adopted by the House of Representatives as part of the 2012 Tax Plan on 17 November 2011. It introduces several tax measures that provide added incentives to individuals and companies making gifts and promote the entrepreneurial conduct of the Public Benefit Organisations (‘ANBIs’). |
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First of all, a multiplier has been introduced for gifts to cultural institutions. As a result, an additional 25% may be deducted compared to the actual gift. This additional tax deductible is capped at € 1250.
In addition, the Cabinet would like to see increased commercial and entrepreneurial conduct from ANBIs. Consequently, it has been announced that ANBIs will get more leeway for generating income. This will be fleshed out in further regulations.
The bill also contains the possibility of a once-only tax deduction of gifts made to the foundations of Public Interest Organisations (‘SBBIs’). SBBIs include musical societies, sports and youth clubs, hobby associations and the like.
Finally, the gift deductible has been broadened for the purposes of corporation tax. It has been raised from 10% to a maximum of 50%. The threshold of € 227,- has been cancelled and the aggregate of tax-deductible gifts may not exceed € 100,000.
For legal entities with a public interest that are subject to corporation tax, the profit limit will be doubled, to € 15,000, with a maximum of € 75,000 over a five-year period.
The plenary treatment by the Senate is scheduled for 12 and 13 December 2011.
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Pension |
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Leaked White Paper provides new insight into Europe’s pension policy |
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| The European Commission’s recently leaked draft White Paper gives a peek under the bonnet regarding upcoming European pension policy. It forms the follow-up from the Green Paper published in the summer of 2010. |
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The Commission states that a properly functioning pension system is essential to the social and economic success of Europe. While, according to the Commission, the primary responsibility for the design of pension systems remains with the member states, it also proposes 25 measures to be taken by the Commission.
The White Paper is to ensure adequate, sustainable and safe pensions across the member states. The European Commission asserts that this aim can be achieved by increasing labour market participation by men and women alike. More specifically, this translates into: linking the retirement age to a higher life expectancy, (further) limiting the possibilities for early retirement, and applying the same retirement age for men and women.
In this context, the Commission will closely monitor the member states’ pension policies and support pension reform advice both financially and communicatively. In addition, it will publish recommendations in 2013 detailing how member states can restrict access to early retirement schemes and how they can deal with the equal treatment of men and women.
With respect to second-pillar pensions, the Commission intends to review the IORP Directive in 2012. Also in 2012, the Commission will develop initiatives to protect employees more effectively when their employer goes bankrupt. Moreover, jointly with social partners and pension federations, the Commission will draw up a European version of the ‘Principles’ (the 'Code of Good Practice for Occupational Pension Schemes'). Further, in 2012 the Commission will issue an amended proposal for the Portability Directive.
Whether all 25 points will be fleshed out is anyone’s guess for now, but it is a given that we can expect more to come from Brussels in the years ahead. |
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Privacy |
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Stricter rules for on-line transactions with consumers |
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| The European Directive on Consumer Rights was adopted on 10 October 2011. This new directive imposes more information obligations on web shops. It also requires them to observe a more extensive right of withdrawal in B2C transactions. |
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Consumers who purchase a product on-line already have a right of withdrawal, meaning they have a reflection period to determine whether the product is satisfactory. If not, the order can be returned without stating reasons. This reflection period is currently seven working days but will be extended to fourteen calendar days by the new directive. If the web shop fails to inform the consumer of the right of withdrawal, the reflection period will even be extended to one year in the future.
In addition to the right of withdrawal, web shops’ information obligations with regard to, inter alia, product delivery periods and any complaint procedures are also expanded by the new directive. In addition, the directive prohibits charging consumers more for using a credit card than the actual relevant costs incurred by the web shop.
On-line B2C traders would be wise to take these new rules into account now when configuring their websites, even though the directive has yet to be implemented in the national law of the Member States. |
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Property |
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Construction rules for extra student housing changed |
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| Minister Donner of the Interior and Kingdom Relations announced on 17 November 2011 that the student housing shortage will be addressed with a National Student Housing Plan of Action 2011-2016 (Landelijk Actieplan Studentenhuisvesting - LAS). With this plan, the possibilities for temporarily deviating from an applicable zoning plan will be expanded. |
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The LAS sets out that the Ministry of the Interior and Kingdom Relations will endeavour to extend the zoning plan exemption option from 5 to 10 years. The underlying idea is that it will be easier to utilise excess office space for temporary student housing.
This exemption is currently limited to a term of 5 years. An environmental permit can be obtained for a temporary exemption, making it possible to deviate from a zoning plan (Article 2.12(2) Environmental Licensing (General Provisions) Act in conjunction with Article 5.18 Dutch Environmental Licensing Decree). The exemption cannot be extended after the 5-year period, which means that after this period has expired, the permit holder must return everything back to its original state. This requirement gave many property owners cause to abandon the entire initiative. Extending the exemption period could change this.
Whether the exemption extension from 5 to 10 years will only apply for temporary (student) housing is as yet unclear. As the 5-year exemption period has often proved to be insufficient in actual practice, we would be happy to see the exemption made applicable for other purposes as well. |
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Property |
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No energy performance certificate? Sanctions... |
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| As from 1 January 2013, EU Member States are required to impose sanctions if no energy performance certificate is provided when a home or utilities building is transferred or leased. A legislative proposal to that effect is currently under preparation. |
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The energy performance certificate has an energy performance label indicating the energy consumption of a home. The seller is required to provide the buyer or lessee with the energy performance certificate when a home is transferred or let. The label is also mandatory when utilities buildings such as offices, schools, plants and hospitals are sold or leased.
Since the energy label was implemented in 2008, some 24% of the housing stock and 2.5% of all utilities buildings have been issued energy performance certificates (as at the end of 2010).
In the absence of sanctions, in practice an energy performance certificate is rarely provided. The obligation for EU Member States to impose sanctions (as yet) ensues from the revision of the European Energy Performance Buildings Directive (Directive 2002/91/EC (EPBD, 2003)).
According to information from the Dutch government, sanctions are currently being prepared and will be introduced no later than 1 January 2013. However, their introduction is expected as early as in mid-2012.
The sanctions being considered can be gleaned from a letter from Minister Donner to the House of Representatives of 23 December 2010. In the absence of an energy performance certificate, it would not be possible to register the deed of transfer with the Land Registry, meaning that ownership is not transferred. If a utilities building or non-controlled housing is leased or let, part of the lease or rent would not be due as long as no energy performance certificate has been provided.
Additional information will be made available once a legislative proposal has been submitted to the House of Representatives.
Please do not hesitate to contact us if you have any questions regarding the energy performance certificate or energy performance label. |
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Although this newsletter was prepared with the utmost care, it is only intended to highlight legal issues in general and does not provide for specific legal advice applicable to a specific situation. Van Doorne does not accept liability for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this newsletter and in no event shall Van Doorne be liable for any damages resulting from reliance on or use of this information. Readers should always take specific advice from a qualified professional if and when dealing with specific situations. |
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Van Doorne N.V.
Jachthavenweg 121
1081 KM Amsterdam
Postbus 75265
1070 AG Amsterdam |
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