March 25, 2021 – The Temporary Act COVID-19 Justice and Security (Tijdelijke wet COVID-19 Justitie en Veiligheid, the “Temporary Act“) has been effective in Dutch corporate law since March 2020, and has since then been extended multiple times. In this alert we will give you an update on the current status of the Temporary Act as well as a short summary of the changes the Temporary Act made to Dutch corporate law. For the avoidance of doubt, please note that the Temporary Act covers multiple legal areas, but we will only focus on those that impact corporate law.
Expiration and extension
As previously noted, the Temporary Act entered into force on April 24, 2020 but works retroactively from March 16, 2020. Originally the Temporary Act was supposed to expire on September 1, 2020. Due to the ongoing COVID-19 measures, the Dutch government has invoked the integrated extension clause five times over the last year (each time with an extension of two months), with the latest expiration date on June 1, 2021.
The Dutch government is aware of the fact that extending the Temporary Act with two months at a time could lead to uncertainty which makes the planning and convening of a general meeting problematic. To provide more certainty in this respect, the government therefore intends to give at least two months’ notice when provisions of the Temporary Act will not be extended again. In addition to this, the government has also already stated its intent to extend the period of validity until August 1, 2021. However, this remains subject to change.
As an exception to this, we note that the provisions on directors’ liability included in the Temporary Act, are set to expire on September 1, 2023 instead of June 1, 2021. This is related to the period for which claims based on Article 2:138/248 of the Dutch Civil Code can be submitted.
Changes to Dutch corporate law
Under the Temporary Act the following changes / additions apply to Dutch corporate law:
- Electronic general meetings
The management board of a legal entity can decide to make general meetings accessible through electronic means of communications only, with physical access being prohibited. Voting and speaking at the general meeting will also be conducted through electronic means of communication, whereby the management board can decide that votes may be cast by electronic means or in writing prior to the meeting. The management board has to include the measures in the convocation. If the board has already convened the meeting without including the intended measures in the convocation, the board can still take these measures until 48 hours before the start of the meeting.
The Temporary Acts gives the management board and supervisory board the power to deviate from statutory provisions and similar provisions of articles of association regarding physical meetings.
- Extension of drawing up annual accounts
Based on the Temporary Act the management board, instead of the general meeting, can decide to extend the period for drawing up the annual accounts up to ten months after the end of the fiscal year. However, the latter does not apply to listed companies that are subject to the Financial Supervision Act (Wft). Those companies are excluded since the extension of this period could impact their position on the market.
- Directors liability
If, in case of bankruptcy of an NV or a BV, the management board failed to meet the obligation to publish the annual accounts, but it can demonstrate that this was due to the outbreak of the COVID-19 pandemic, the Temporary Act states that this failure to publish will not be taken into account when determining directors’ liability.
For more information regarding the Temporary Act, we refer to our previous alert from April 22, 2020.
Should you have any questions regarding the Temporary Act and/or the impact for your business, please do not hesitate to contact us.