The COVID-19 virus, and the measures adopted by the Dutch government as a consequence, not only have a profound impact on public life, but also have an impact on the process of adopting resolutions by legal entities. Due to the requirement, either by law or based on the Articles of Association, that a physical meeting is held, many legal entities find themselves in a situation where it has become impossible to hold meetings, due to the ban on public gatherings. This situation affects all legal entities with numerous shareholders or members, and ranges from public companies listed on a stock exchange to associations. As a result, many legal entities are unable to validly adopt resolutions.
In order to alleviate this situation, the government has published an emergency act. This emergency act contains, amongst other measures, rules with regard to the adoption of resolutions by legal entities. The emergency act deviates from certain sections of the Dutch Civil Code, and applies to all legal entities: public companies, private companies, associations, cooperatives and foundations. The sections of the emergency act are materially the same for companies, cooperatives and associations.
In deviation of Dutch law and, in most cases, the Articles of Association, the management board of a legal entity may determine that access to general meeting of shareholders, or member's meeting, will be possible ''in electronic form'' only. In line with common practice for Dutch legislation, the emergency act does not specify the exact meaning of the term ''in electronic form'', but this term will include means of electronic communication whereby persons can both hear and be heard, such as audio (and/or video) livestream. In that case, the management board may determine that shareholders or members will not have physical access to the meeting.
This is subject to the following requirements:
- shareholders or members have electronic access to the meeting;
- shareholders or members are given the opportunity for a period ending ultimately 72 hours prior to the meeting, to ask questions with regard to the topics on the agenda, either in writing or in electronic form.
The questions will be responded to either during the meeting or prior to the meeting, and the responses will be put on the website of the legal entity. In addition, the management board will facilitate that questions can be raised during the meeting in electronic form, unless this cannot reasonably be facilitated given the circumstances. The emergency act furthermore provides that any resolutions adopted in deviation of these provisions with regard to the right to ask questions will nonetheless be valid.
In addition to the measures concerning the adoption of resolutions, the emergency act contains provisions which allow the management board to extend the period for holding the annual general meeting, as well as the period for preparing the annual accounts, both of which without the approval of the shareholders or members being required.
In line with its nature, the emergency act is a temporary measure, and will lapse on 1 September 2020. The government may determine in a Royal Decree that certain of its provisions will have retro-active effect as per 23 March 2020.
The emergency act has been adopted by the Second Chamber of parliament on 8 April. It is expected that the emergency act will come into force at short notice.