The statutory cooling-off period for listed companies

April 30, 2021 – The Dutch Senate adopted a bill on March 23, 2021 introducing (amongst others) a new protective measure for listed companies with their registered office in the Netherlands, which will enter into force as per May 1, 2021. In order to protect the company from hostile takeovers or activist shareholders, the bill provides the management board of a listed company with the possibility to invoke a statutory cooling-off period of 250 days during which the board can reflect on the situation.


Dutch listed companies are characterized by the principles of the Rhineland model, which means that these companies (i) take into account the interests of a larger group of stakeholders, rather than just the interests of their shareholders, and (ii) have a focus on long-term value creation. By invoking the statutory cooling-off period, the management board can take time to weigh up the different interests of multiple stakeholders before taking a final decision.

It is, however, becoming more and more common for a company to have an activist shareholder that is only focused on short-term profits and wants to push his own agenda. A good example is the US-based paint supplier PPG Industries, which made a (hostile) takeover bid on their Dutch competitor AkzoNobel in 2017. After the initial bid was rejected, a number of minority shareholders of AkzoNobel strongly opposed the rejection of the bid and tried to replace the president of the supervisory board who blocked the takeover.

Dutch listed companies may avoid the abovementioned situation with this new measure and can use the measure to improve their focus on all their stakeholders and value creation in the long term.

Contents of the legislative proposal

One aspect of the legislative proposal is the codification of case law, which stipulates that the management board of a listed company has primacy with regard to the company’s policy and strategy. This rule will be codified in article 2:129 paragraph 1 of the Dutch Civil Code.

Another aspect of the proposal is the legal basis for the cooling-off period, which will be included in a new article 2:114b of the Dutch Civil Code. The statutory cooling-off period shall only be applicable to listed companies as defined in article 1:1 of the Financial Supervision Act. The second paragraph of said article states that the company may invoke the cooling-off period in the following circumstances:

(i) if one or more shareholders request a proposal to appoint, suspend or dismiss one or more managing directors or supervisory directors, or a proposal to amend one or more provisions of the articles of association relating to the appointment, suspension or dismissal of managing directors or supervisory directors; and

(ii) if a public offer has been announced or made for shares in the capital of the company, whereby no agreement on the offer has been reached with the company,

and the request referred to under (i) or the offer referred to under (ii) is (in the opinion of the management board) in substantial conflict with the interests of the company and its affiliated business.

Another requirement for invoking the cooling-off period is that the management board’s decision in that regard is reasoned and subject to the approval of the supervisory board (if there is one). Shareholders may, however, request the Enterprise Chamber of the Dutch High Court of Amsterdam to discontinue the cooling-off period.

Duration & consequences of the cooling-off period

  • The cooling-off period is 250 days.
  • The cooling-off period has the effect of suspending the power of the general meeting to appoint, dismiss or suspend managing directors or supervisory directors.
  • During the 250-day period, the management board should gather all the information necessary for careful policy determination. The management board is obliged to consult the shareholders representing at least 3/100th of the issued share capital and the works council.
  • The management board shall draw up a report on the policy pursued and the course of events during the cooling-off period. This report should be made available for review at the company’s office and published online on the company’s website.
  • Holders of depository receipts of shares issued by the company are to be treated as (ordinary) shareholders.

Similarities with the Corporate Governance Code

The legal cooling-off period shows similarities with the response time afforded by the Dutch Corporate Governance Code (“CGC”). The CGC is a code of conduct for listed companies with their registered office in the Netherlands. Article 4.1.7 of the CGC stipulates that if a shareholder puts an item on the agenda which could lead to a change in strategy within the company, the management board may invoke a response time with a maximum of 180 days. Shareholders cannot exercise their right to place items on the agenda of the general meeting during this response time.

Despite the similarities, there are some differences between the cooling-off period which will be included in the Dutch Civil Code and the response time as stipulated in the CGC. The response time prohibits shareholders from placing items on the agenda, whilst the cooling-off period does not affect this right but merely suspends the power of the general meeting. Furthermore, the cooling-off period is a legally binding regulation, whilst the response time arises from a code of conduct that listed companies may deviate from (if duly justified).

The advisory division of the Dutch Council of State has stated that the cooling-off period prevails over the response time, but that the two measures can continue to exist side by side. The two periods must be settled with each other, if they are invoked sequentially by the board of the company. This means that when the response time is invoked first and the cooling-off period second, the duration of the cooling-off period is offset against the duration of the response time. In short: the total period will not last for 180+250 days, but for 180+(250-180) days, so that the total duration of the combination of measures never exceeds 250 days. It’s up to the court to make a decision on this matter on a case to case basis.


With the new statutory cooling-off period, listed companies acquire an additional protection measure, whereby the position of the statutory board is further strengthened.

The full text of the adopted legislation (Dutch only) can be found by clicking on the link.

If you have any further questions with regard to this subject, please do not hesitate to contact us.

Martina Priekaar and Giti Navabi

Martina PriekaarGiti Navabi

VCL Luxembourg flash tax news – March 2021

March 2021

Luxembourg tax authorities publish guidelines on profit-sharing bonus


  1. Introduction
  2. Conditions to be fulfilled by the employer
  3. Conditions to be fulfilled by the employee
  4. Reporting obligations
  5. Executive directors/managers and shareholders
  6. Conclusion


*             *             *

On 11 February 2021, the Luxembourg Tax Authorities (LTA) published guidance (Circular L.I.R. n° 115bis/12, Circular) on the new remuneration model, the profit-sharing bonus model (“prime participative”). The new regime was introduced in Luxembourg’s 2021 budget law adopted by the Luxembourg Parliament and applies as of 1 January 2021.

We would like to share with you our insights thereof.

  1. Introduction

The introduction of the new profit-sharing bonus model was implemented under Article 115.13a of the Luxembourg income tax law (“LITL”) and follows the abolition of the stock option regime. Under this new model, employers may grant a profit-sharing bonus to some or all of their employees, based on the employer’s financial results in a tax attractive manner. Provided that all the requirements are met (as further detailed below), the profit-sharing bonus will be qualified as employment income and subject to a 50% individual income tax exemption. The profit-share premium will be tax deductible at the level of the employer as operating expenses. In addition to the Circular, the LTA published a Q&A section (available in French only) for further details on specific terms used in the Circular[1].

  1. Conditions to be fulfilled by the employer

The employer must fulfil the following conditions in order to be able to grant a profit-sharing bonus qualifying for the new model to its employees:

  • the employer must realise income that qualifies either as commercial profit, agricultural profit or profit deriving from an independent activity during the relevant fiscal year of the bonus payment;
  • the employer must hold regular accounts (comptabilité régulière) during the fiscal year in which the profit-sharing bonus is granted as well as during the previous fiscal year; and
  • the overall amount of the bonus that may be granted to the employees is limited to 5% of the employer’s profit for the fiscal year immediately preceding the year in which the premium is granted[2].

The employer to be considered for the above requirement is the one registered as such with the Luxembourg tax authorities for the relevant employee (i.e. the one mentioned on the tax card) and any company group context is excluded.

  1. Conditions to be fulfilled by the employee

The employee[3] must fulfil the following conditions in order to be able to benefit from a profit-sharing bonus:

  • the bonus may not exceed 25% of the employee’s ordinary annual remuneration (i.e. excluding cash, and/or in-kind benefits, bonuses, premiums, etc.) of the fiscal year during which the bonus is allocated. For the purpose of calculating the 25% limit, the employee’s worldwide annual salary will be taken into account irrespective of a change of the employer; and
  • the employee must be affiliated either with the Luxembourg social security system or a foreign social security system covered by a bilateral or multilateral social security agreement.

Please note that the social security contributions connected to the tax exempt profit-sharing bonus are not deductible.

  1. Reporting obligations

The Circular introduces an obligation for the employer to submit via email a detailed report as prescribed by the Luxembourg tax authorities in the form of an excel file available in French only, to the competent wage tax office (bureau d’imposition RTS). Late filing or omission of filing the form will result in the retroactive cancellation of the 50% individual income tax exemption and engage the personal liability of the employer to withhold taxes.

  1. Executive directors/managers and shareholders

Lastly, the Circular further clarifies that profit-sharing bonuses received by an executive director/manager and shareholder, who may also be the sole beneficiary of the bonus, will be considered as income derived from employment income, and which is subject to both the employer-level and employee-level conditions as outlined above.

  1. Conclusion

The clarifications provided by the circular and its underlying Q&A are very welcome and should allow companies to apply and implement the new profit-sharing bonus model without any difficulties.

The new bonus regime allows the sharing of profits among a wider population than former remuneration schemes and may help companies to attract and retain talent.

Nonetheless, as the profit-sharing bonus is limited to only 5% of the employer’s profits, it is uncertain how useful the new regime will really be in practice. As such, the new remuneration scheme seems to be more handy for larger rather than smaller companies.

Raffaele GargiuloRaffaele Gargiuolo



T: +352 691 205 340

Andrew de Vries

Andrew de Vries



T: +352 691 20 5768

Eduardo Trancho

Eduardo Trancho

Senior Associate


T: +352 691 20 5349

Gabriel Amar

Gabriel Amar

Senior Associate


T: +352 691 205 709


Christina StrauvenChristina Strauven



T: +352 691 205 165

Diego Gonzalez Manso

Diego Gonzalez Manso



T: +352 691 20 5080

[1]     The Q&A is available under the following link: (last accessed on 29 March 2020).

[2]     Account 12 under Luxembourg GAAP.

[3]     Within the meaning of article 95 of the LITL.