On the 17th day of October 2018 the Minister of Finance and the Minister of Justice and Security jointly submitted a new legislative bill (the “Bill“) to implement the EU Directive 2017/828 (the “Directive“) into Dutch law.
The focus of the Bill is to promote the ‘long-term involvement’ of shareholders of listed companies, by increasing the possibility of identification of shareholders and their influence on the listed company’s remuneration policy.
Under current Dutch law the general meeting is already the corporate body entitled to adopt the company’s remuneration policy, however, the Bill adds that the remuneration policy has to be (re)adopted at least once every four years. Only under exceptional circumstances or until a new policy has been adopted, the company is allowed to deviate from its remuneration policy.
Under the Bill, a listed company becomes obliged to annually draft and publish a remuneration report. The general meeting shall have an advisory vote regarding the presented report. The subjects that need to be included in the remuneration report are (amongst others):
- an explanation on how the remuneration policy contributes to the company’s strategy, long-term interests and the sustainability of the company;
- how the general meeting’s advice has been incorporated in the remuneration policy; and
- the process followed to adopt, revise and implement the remuneration policy.
Furthermore, a listed company is obligated to explain how the remuneration of its managing directors and supervisory directors has developed over the past year in relation to the remuneration of an average employee within the company.
The Bill also provides for more insight with respect to ‘material transactions’ between a listed company and a related party (such as its managing directors, supervisory directors or large shareholder(s) (10% or more)). These transactions will be – apart from some limited exceptions – subject to the approval of the board of supervisory directors and should be made publicly available.
Finally, to increase the transparency of the investment strategy of listed companies and, among others, institutional investors and asset managers, the Bill includes provisions whereby these parties are obliged to publish an ‘engagement policy‘ in which their investment strategy is explained.
The Directive has to be implemented by June 10th, 2019 at the latest.
The full text of the Bill can be found here. (available in Dutch only)
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