In its judgment of 20 April 2018 in the case of Boskalis/Fugro, the Dutch Supreme Court clarified the law on the shareholder right to request that the board puts resolutions and other items on the agenda in advance of the general meeting. Under Dutch law, the agenda of the general meeting of a public company is drafted by the board of directors (s. 2:109 Dutch Civil Code). Shareholders solely or jointly holding a minimum of 3% of issued shares, however, may request that the board include items in the agenda (s. 2:114a Dutch Civil Code), thereby allowing shareholders a certain degree of influence over general meeting proceedings. The conditions for exercising this right as well as the extent to which such shareholder requests are enforceable have long been unclear.
In this regard, Boskalis/Fugro has shed light on a number of relevant matters for shareholders. In particular, the court ruled that:
- The right to request the board to put an item on the general meeting's agenda is not limited to subjects which are within the powers of the general meeting. Shareholders may put items on the agenda with regard to which the board is the competent body (A-G, 4.3)
- If the general meeting is the competent body, the board must include the item in the agenda as requested by the petitioning shareholder(s) (A-G, 4.3).
- If the board is the competent body, the board may decide whether to include the item in the agenda. In such event, the board is not bound by the wording of the shareholder request and may therefore decide on the manner in which the requested item will be put on the agenda (A-G, 4.3; 4.37). This also means that the board may decide whether the item will be put on the agenda as a resolution requiring a vote or as a point of discussion (A-G, 4.49-53; 4.60-62).
- In any event, when putting an item on the agenda, the board must indicate whether this item is a resolution requiring a vote or whether this item is put on the agenda as a point of discussion (A-G, 4.39).
- The board may refuse a shareholder request to put an item on the agenda when such request amounts to a fraud on power, as would be the case where shareholders engage in frivolous requests which do not relate to the company or its business (A-G, 4.26; 4.34).
- The board may refuse a shareholder's request to put an item on the agenda when the item is within the powers of the board. Specifically, the board may refuse such request if it regards its tabling to be contrary to the interest of the company. This may be the case where tabling, in the view of the board, would result in considerable share price fluctuation (A-G, 4.65-66).
Shareholder rights and the general meeting agenda after Boskalis/Fugro
The decision of the Supreme Court has provided certainty in an area of law which is of fundamental importance to the exercise of shareholder rights. Boskalis/Fugro has clarified that shareholders have wide-ranging powers to exercise their right to put items on the agenda for the general meeting, provided such items are within the powers of the general meeting. In cases where the right to put items on the agenda is used for purposes of accountability, the board may decide not to include the requested item in the agenda. To a certain degree, this entails that the board is able to frustrate the functioning of the general meeting as a forum for accountability. Shareholders confronted with an unwilling board of directors will, however, be able to choose alternative routes to achieve the latter aim.
Firstly, shareholders representing at least 10% of the issued share capital may petition the district court in summary proceedings for the power to convoke a general meeting (s. 2:110 Dutch Civil Code). Such petition will be granted if the court finds the petitioning shareholders to have a reasonable interest in convoking the general meeting (s. 2:111 Dutch Civil Code). In such event, the shareholder may exercise its convocation right and in doing so will be able to decide on the contents of the general meeting agenda. Secondly, shareholders may raise any matter they wish to see discussed during the course of a general meeting. The chair of the general meeting may only refuse a shareholder from voicing his opinion in the general meeting if such intervention would result in a fraud on power by the shareholder.