IOn the instructions of the Ministry of Finance, Stichting voor Economisch Onderzoek (SEO) evaluated current commission rules and published its findings in its September 2010 document entitled ‘Evaluatie provisieregels complexe producten’ (‘Evaluation of Commission Rules for Complex Products’). According to SEO, current commission rules do not yet result in independent and customer-focused advice. The legislature assumes that a culture change can only be brought about by means of new regulations.

The aim is to introduce a prohibition on fees as at 1 January 2013, which will apply to advisors and intermediaries in the areas of (i) complex financial products, (ii) mortgage loans, (iii) loss-of-income insurance, (iv) funeral products and (v) participating interests in investment institutions. The Financial Markets (Amendment) Act 2013 will provide the basis for the prohibition on fees. After its introduction, advisors and intermediaries will have to receive their remuneration directly from their clients.

SEO‘s evaluation also shows that the current, non-uniform information provision documents do not provide sufficiently clear insight into the nature, costs and quality of the services. The legislative proposal makes recognisable, similar information provision documents compulsory.

Another change is the introduction of a knowledge and experience test in respect of complex financial products. Currently, clients may purchase complex financial products without prior advice or warning. The test serves to make clients aware of their financial understanding, enabling them to make a well-considered choice. If the test shows that a client has insufficient knowledge and experience regarding the relevant complex product, he will receive a warning to first obtain advice.

The legislative proposal is scheduled to be enacted on 1 January 2013.

After the end of the financial year, the board of a public or private company must prepare the financial statements within five months and present them along with the annual report to the Annual General Meeting (AGM). The AGM may extend this term by up to six months by means of a formal written resolution. The shareholders then have two months to adopt the financial statements. If the term for adopting the financial statements has lapsed by two months, the board must disclose the documents that have been drawn up, stating that the documents have not been adopted.

The above entails that the company must disclose the financial statements in the prescribed manner within seven months - or, in the event of an extension by the AGM, thirteen months - after the end of the financial year. In the event that the financial year ends on 31 December, the AGM must therefore have adopted the financial statements by 31 July at the latest. If the AGM has extended the relevant term to the maximum extent, the financial statements must be adopted by 31 January of the subsequent year.

Once the financial statements have been adopted by the shareholders, they must be filed with the Trade Register of the Chamber of Commerce within eight days.

If the financial statements cannot be drawn up within seven months of the end of the financial year, a formal written resolution from the AGM is therefore necessary to extend this term. A lack of such a resolution, just like the failure to file the financial statements or the failure to file them in time, creates an economic offence. In addition, a director can, in principle, be held personally liable for any shortfall in assets if the company becomes insolvent and the director failed to meet his obligation to file the financial statements.

According to the new scheme, a balanced allocation of seats on the Management Board and the Supervisory Board exists if at least 30% of these seats are held by women and at least 30% by men.

This new scheme entails that companies must ensure to the greatest extent possible a balanced allocation within the Management Board and the Supervisory Board when, for example, appointing and nominating managing directors; designating, appointing, recommending and nominating supervisory directors and preparing a profile for the size and composition of the Supervisory Board.

What if the composition of the Management Board or the Supervisory Board does not meet this balance requirement? As with the Corporate Governance Code, companies must give account in the annual report stating why these standards were not achieved (comply or explain) and what the company will do to ensure that the bodies’ composition will be in line with the new scheme in the future. No legal sanctions apply to failures to observe the new scheme.

In a recent opinion (an advisory opinion to the Supreme Court of the Netherlands), the Advocate General expresses the view that this is not the case. The term ‘transfer’ has its own definition in VAT legislation. For a transfer, it is necessary for the power to have control over the property to be transferred. Education law significantly limits the competent authorities’ power to have control over the school building. For example, the school building may not be sold or let without the municipal council’s consent. If the school building is no longer used for education purposes and this has been established, the ownership will, in principle, return to the municipal council.

In the present case, based on an agreement including all limitations imposed by education law, the municipal council had transferred the ownership to the competent authorities at 15% of the building costs. Claiming to have effected a transfer subject to VAT, the municipal council asked to be reimbursed for all VAT on the building costs. If the Supreme Court finds that based on education law, the transfer is indeed not a transfer subject to VAT, this structure to save VAT on the costs involved in constructing a school building will fail. For the sake of the education sector, therefore, let us hope that the Supreme Court will not endorse the Advocate General’s opinion.

After acquiring VNU, Wegener proceeded to merge the regional editorial teams of the two newspapers. That is why the NMa imposed penalties. Individual persons may also be penalised by the NMa, as happened on this occasion. Wegener objected to these penalties because in its view, the conditions set by the NMa in respect of the acquisition did not clearly state that merging the editorial teams was not allowed. However, contrary to advice from its advisory committee, the NMa believes that this is not true and has upheld the penalties. Wegener stated that it will appeal this decision before the Rotterdam District Court.

In 2000, Wegener decided to take over VNU Dagbladen, as a result of which it also acquired companies including BN/De Stem. Wegener already owned Provinciale Zeeuwse Courant at that time. This meant that Wegener acquired a dominant position in the Zeeuws-Vlaanderen region, as the newspapers no longer had to compete with each other there. The NMa set conditions for this acquisition in order to prevent any negative consequences for consumers ensuing from this lack of competition, for example on account of a decrease of news supply or price increases. Those conditions entailed that the reciprocal independence of the two newspapers had to be safeguarded.

If you have any questions about how the competition rules may affect your organisation, please contact Sarah Beeston.

In contrast to authors, performing artists do not own any copyright on their work. Producers who invest in recording and issuing phonograms (sound recordings) are also not entitled to copyright. However, performing artists and phonogram producers do enjoy protection ensuing from the Dutch Neighbouring Rights Act (‘Wet op de naburige rechten’). The rights under that Act are not as far-reaching as copyright and the term of protection (fifty years) differs from the term of protection of copyright (seventy years).

The Council of the European Union has now adopted a directive harmonising the term of protection of neighbouring rights and the term of protection of copyright. The extended, 70-year term of protection serves to ensure that performing artists can reap the benefits from their neighbouring rights throughout their lives. In addition, the extended term of protection should enable phonogram producers to adapt to changing market conditions and continue to invest in new talent.

The directive also provides for measures to reinforce the position of performing artists with regard to phonogram producers, meaning that performing artists can really benefit from the extended term of protection. The directive must be implemented in national legislation within two years of its publication.

As from 1 January 2010, ANBIs must dedicate at least 90% (instead of 50%) of their objectives as well as their actual activities to the advancement of public welfare. This must be assessed on the basis of the activities that the institutions perform using their assets and earnings, according to the State Secretary. The legislature has not defined any exact conditions, also for instance with regard to activities performed through private companies.

Activities such as letting immovable property, extending loans (microcredit) and performing services can likely be performed without any loss of status, provided that:

• 90% of the proceeds from the activities are used to achieve general public advancement objectives;
• the activities are not ends in themselves;
• the activities do not prejudice the promotion of general public advancement.

Assessments should focus on ANBIs’ expenditure in a broad sense. Commercial activities performed at rates that are too low are also regarded as expenditure. Operating a shop near a museum, for example, is permitted if the proceeds go to the museum and the products are not sold at too low a price. The same goes for letting part of the building in which the museum is located.

Written explanation and interim statement of assets and liabilities
As a result of the amended legislation, parties may refrain from drafting a written explanation to the merger or demerger proposal if all the members or shareholders of the merging legal entities have given their consent.

Contrary to publications issued previously, parties may only refrain from drafting an interim statement of assets and liabilities if (i) the relevant legal entity satisfies the requirements for the half-year financial report referred to in Article 5:25d of the Dutch Financial Supervision Act, or (ii) the case involves a demerger in which all the acquiring companies are incorporated upon demerger and the shareholders of the demerging company become the shareholders of the acquiring companies holding the same proportion of shares as they held in the demerging company (within the meaning of Book 2, Article 334hh (2) of the Dutch Civil Code). The exemption at (i) applies to both mergers and demergers.

Providing information
In the event of a merger or a demerger, the merger or demerger proposal to the General Meeting and the other legal entities to be merged or demerged only has to include additional information if there are significant changes in assets and liabilities. With mergers, deviations from this rule are allowed with the consent of all members or shareholders.

Board resolution entailing a merger or demerger
If a wholly-owned subsidiary merges with its parent company, both the board of the acquiring parent company and the board of the acquired subsidiary may decide to merge, to the extent that the Articles of Association do not provide otherwise. This resolution does not need to be adopted by the General Meeting.
Also with a demerging company, the board may adopt a demerger resolution provided that all the shares in the demerging company are held by the acquiring companies and to the extent that the Articles of Association do not provide otherwise.

There is no legislative proposal as yet in which the Pension Agreement has been laid down. However, it is already clear that the pensionable age will be raised to 66 years as from 1 January 2020. Moreover, the Pension Agreement provides for a mechanism to check every five years whether the pensionable age should be increased: for example, it may be established on 1 January 2014 whether the pensionable age should be raised further to 67 years as from 1 January 2025. In anticipation, the pension accrual tax framework for employers’ pensions - what is known as the second pillar - will be amended as from 1 January 2013 and again as from 1 January 2015. As a result of this tax amendment, pension schemes may have to be adjusted.

In addition, the Pension Agreement provides for a flexible retirement commencement date, which may be brought forward or postponed. The consequence is that pension distributions will fall or rise by 6.5% per annum. The pensionable age for the second pillar will therefore also need adjustment, and accordingly also the termination provisions in the employment contract.

So far the state pension side of the matter. In addition, the implementation of the Pension Agreement will lead to the accrual of pension entitlements in the second pillar that fluctuate in line with the stock markets. Compared with the entitlements accrued thus far, these pension entitlements are relatively soft: after all, current pension entitlements can only be prejudiced if a pension fund decides to cut them. Parties from the pensions sector urged that the ‘old style’ pension entitlements be converted into ‘new style’ pension entitlements as the soft rights are introduced in order to prevent the coexistence of two different structures. Various representative organisations have voiced major objections to this ‘invasion of pension rights’, announcing that they will take legal action if necessary. The Pension Agreement therefore does not include any detailed arrangements about the treatment of old pension entitlements in the new system.

The Pension Agreement will have to be made into law. This is not too difficult where state pensions are concerned. However, the introduction of soft rights and any invasion of pension entitlements will be a huge job. On top of that, the employment benefit ‘pension’ is an issue to be taken up by social partners. To that extent, employers will be confronted as yet by FNV Bondgenoten and Abvakabo FNV.

If your organisation is faced with issues on this point, please feel free to contact us.

We are all going to have to work longer. The Cabinet has stated that, in any event, it will raise the pensionable age to 66 years. What are the consequences for employers such as yourself? Does the employment contract still end by operation of law when the employee reaches pensionable age? Will the employment contract and your pension plan need to be amended? And do you even want your employees to keep working for longer? Or, will you be unable to prevent it because of age discrimination issues? Of course, other alternatives, such as early retirement, are also conceivable, but in that case how do you avoid the final levy of 52%? And what about semi-retirement?

The opposite scenario is also possible: what if you and your employee would like to continue the employment relationship? Is that possible for a fixed term? Or would that automatically constitute a permanent employment contract? And, what consequences would this continuation have for the employee’s accrual of pension?

During the seminar, Albert van Marwijk Kooy, Marjolijn Lips and Linda Jansen will address pension-related, employment law and tax aspects of these issues. Of course, the Pension Agreement and its consequences will also be discussed.

The seminar will be held on Friday 18 November 2011 at Van Doorne and the programme will start at 2:15 p.m. The seminar will end at approximately 5:00 p.m., after which drinks will be served and thoughts about this topical issue can be exchanged.

If you are interested to participate please contact Mareille Prevo to sign-up. Please note that the seminar is in Dutch.

In October 2009, the statutory telephone preference service register was introduced (‘Bel-me-nietregister’ - BMNR). With the introduction of the BMNR, advertisers and call centres may only call people without prior notice for commercial, public service or charity purposes if all telephone numbers included in the BMNR have first been removed from the numbers to be called (elimination of double entries). Subsequently, during every telephone call consumers must be informed of the BMNR, offered the option to object to subsequent use of their contact details and offered the option of immediate inclusion in the BMNR.

In the months following the introduction of the BMNR, OPTA conducted various compliance investigations regarding these new obligations for advertisers and call centres, imposing penalties to a total sum of EUR 1.2 million. OPTA has updated its Telemarketing View in response to these penalty decisions and for the sake of transparency. This document is important to every organisation that uses telemarketing to approach potential or existing customers.

Shortly before the summer, the Cabinet announced that transfer tax would be temporarily lowered from six to two percent in order to revive the housing market by making it more attractive for people to buy a home. The decision of 1 July 2011 had retroactive effect up to and including 15 June 2011 and will be formalised by law.

In principle, the transfer tax reduction applies only with regard to the transfer of homes. Office space is therefore excluded. The criterion applied by the Dutch Tax and Customs Administration is the extent to which the immovable property, in its nature, is intended for occupation at the time of transfer. The acquisition of a garden and appurtenances such as garages and sheds may also be covered by the reduced rate, depending on certain criteria.

In the 2012 Budget Memorandum, the Cabinet refers to turning the measure into law as ‘formalising the temporary reduction of transfer tax’. The measure will remain temporary, lapsing on 1 July 2012. The 2012 Tax Plan does not state what will happen to the transfer tax rate after that date.

This case involved the sale of land by a private individual to a municipal council. The municipal council had created a preferential right on that land. The private individual offered the land to the municipal council, following which the municipal council stated by letter that, in principle, it wished to buy the plot of land. Negotiations were then conducted, with an estate manager acting as an intermediary between the parties.

The draft agreements that were created included approval restrictions on behalf of the municipal council, which read as follows: “This agreement is concluded subject to the approval by the Board of Mayor and Aldermen of the Municipality of Barneveld”. In the end, the Board decided not to enter into the agreements. The private individual sought performance of the agreements or damages.

The District Court decided that, given the background of the restriction, it was not possible for a municipal council to be bound by the agreements, despite the body required to give approval not doing so. The circumstance that the Board received frequent feedback about the negotiating process did not detract from this. The restriction was recorded in various e-mail messages and other documents. There were no indications that the Board had made any promises about consenting to the agreements. The argument that because it had created a preferential right, the municipal council could not rely on the approval restriction was also dismissed.

It is important to realise that explicitly including an approval restriction in a draft agreement is not a paper tiger. It could entail that - in the absence of approval - the agreement is not concluded and no damages are due as a result. Although this case involved a restriction on the part of a municipal council, it is quite conceivable that a restriction on the part of a private party would have the same effect. Provided, of course, that a number of requirements have been satisfied.

In summary, the amendments are as follows:

• The specific expertise requirement will take the form of a salary standard (2011: € 50,619 excluding exemptions) instead of an assessment of work experience and education level;
• The deduction rules will be adjusted. The assessment will cover a period of 25 years prior to employment/stay in the Netherlands instead of 10-15 years;
• Employees who live within 150 kilometres from the Dutch border are no longer entitled to the 30% tax facility; A separate tax facility will be in place for young PhD students.

As a result of more stringent deduction rules, the 30% tax facility will often no longer be available to employees of Dutch nationality who return to the Netherlands after a prolonged stay abroad. Employees currently entitled to the 30% tax facility will fall under the new scheme after the 5-yearly check. The new deduction rules will not be discussed here.

Van Doorne’s Technology Team contributed to ‘The International Comparative Legal Guide to: Patents 2012. A practical cross-border insight into patents law’, published by Global Legal Group Ltd, London by writing the Dutch chapter of this document. The article can be downloaded here.