Digital general meetings of legal entities under private law
29 January 2024
On 15 January, 2024, the legislative proposal (in Dutch) on "digital general meetings of legal entities under private law" (the 'Proposal') was submitted to the House of Representatives, accompanied by an explanatory memorandum (MoT) (in Dutch). The Proposal amends the rules on the digital general meeting of legal entities.This contribution is limited to the proposed amendments regarding digital general meetings of cooperatives, BVs and NVs. The Proposal also amends the rules on digital general meetings of other bodies such as associations, the mutual insurance association (onderlinge waarborgmaatschappij), the owners' association (vereniging van eigenaren), the European public limited company (SE) and the European cooperative society (SCE), but we will leave this aside further.
Under current legislation, a fully digital general meeting is not possible. The law requires that the general meeting be held in the place specified in the articles of association, or in the municipality where the company has its registered office. This implies that there must be a physical place where persons entitled to attend meetings can physically participate in the meeting.
However, it is possible to provide in the articles of association that persons entitled to attend the meeting can speak at the general meeting and exercise voting rights by electronic means of communication (e.g. conference call or video call). This is a hybrid general meeting, where it is possible both to appear at the physical meeting place and to participate remotely.
The Proposal makes it possible to hold a fully digital general meeting. In addition, the Proposal sets new conditions for the use of electronic means of communication. Finally, the Proposal amends the rules for convening a (partly or fully) digital meeting.
The fully digital general meetingThe Proposal provides for an extra possibility (in addition to the physical and hybrid meeting) for holding a general meeting: the fully digital meeting. According to the Explanatory Memorandum, to hold a fully digital meeting, there must be support from the majority of those entitled to vote at the meeting. It is therefore only possible to hold fully digital meetings if the articles of association provide for this.
Conditions for the fully digital meetingAccording to the Explanatory Memorandum, the fully digital general meeting must be a fully viable alternative to a physical meeting. Persons entitled to attend meetings must also have the opportunity to ask questions at a fully digital general meeting and the board will have to answer these questions to the best of its knowledge. To achieve this, meeting attendees must be able to participate in the general meeting with sound and vision. The use of a "two-way audiovisual means of communication", such as video calling, will be mandatory. The use of a telephone connection or conference call, as permitted under current legislation, will no longer be sufficient. In addition, the Proposal requires that those entitled to attend meetings be able to participate in the deliberations. Merely being able to take note of the deliberations through a live stream, as permitted under current legislation, will no be longer sufficient. It remains possible to include further conditions in the articles of association.
As is the case under current legislation, those entitled to attend meetings must still be identifiable and able to exercise their voting rights via the electronic means of communication. The Proposal provides no further rules as to how this must take place. In the case of a legal entity with relatively few persons entitled to attend meetings, video calling, with voting by a show of hands (or, we believe, by email to the chair of the meeting) is probably appropriate. For a listed company, a digital environment is envisaged, facilitated by one or more banks or other intermediaries, with the possibility to vote live with a "mouse click".
Under current legislation, persons entitled to attend meetings may only be called to a general meeting by a digital message, such as an email, if they have consented to this. Otherwise, the notice must be sent by post. This consent requirement will be removed, so that persons entitled to attend meetings may always be called "digitally" unless the articles of association provide otherwise.
In addition, it is no longer necessary for non-listed NVs to give notice convening the meeting via a national newspaper. A digital notice or digital announcement (for example, on a website) that is directly and permanently accessible until the general meeting will suffice. This is in line with the current rules for listed NVs.
The Proposal requires the notice convening a (partly or fully) digital meeting to include information about the procedure for digital participation in the meeting and the exercise of voting rights. This is already mandatory under current law for listed NVs and will apply to all legal entities. For example, the notice must state which meeting application is being used and via which link it is possible to participate.
Under the Temporary COVID-19 Justice and Security Act (Tijdelijke wet COVID 19 Justitie en Veiligheid), it was possible to hold digital meetings in certain (emergency) circumstances without a basis in the articles of association. While it is expected that practitioners will embrace digital conferencing and adjust articles of association accordingly when the occasion arises, the ability to hold digital meetings will not always be provided for in the future either. As regards the revision of emergency powers legislation, the minister has announced that consideration will be given to whether it is necessary to make further emergency provision for digital meetings.
To ease the transition from the current to the new legislation, the Proposal provides for transitory law. For example, for one year after the Proposal enters into force it will remain possible to hold meetings under the current rules, for example by conference call instead of audiovisual means. In addition, provisions in the articles of association that allow digital participation in a meeting under current law will be read as referring to the new law once the Proposal enters into force. In other words, if the current articles of association facilitate a hybrid meeting, they will be deemed to facilitate a fully digital meeting once the Proposal enters into force.
If you wish to take advantage of the upcoming option of fully digital meetings, this can be anticipated in the articles of association. By including a "transitory provision", you can ensure that fully digital meetings will be possible as soon as the Proposal enters into force.
The Proposal's intended date of entry into force is still unknown, but the fixed dates for changes (1 January and 1 July of each calendar year) will be taken into account as far as possible. The formation of the government need not delay the Proposal, as the Proposal was declared non-controversial on 24 January 2024.