15 January 2019

Our choice of corporate issues for listed companies to consider in 2019

What are the key corporate governance developments that will affect listed companies in the Netherlands in 2019? We gaze into the corporate advisory crystal ball and summarise the main issues you may want to anticipate. One issue is a possible change in the statutory rules for Dutch NVs (public limited liability companies). Another matter – which will affect executive pay, among other things – is the implementation of the EU Shareholders Rights Directive. Response measures and board diversity will also be in the spotlight. Finally, we briefly highlight how we can help you navigate the new Dutch Corporate Governance Code.

Modernisation of Dutch NV law
In his letter (in Dutch only) of 20 December 2018, the Minister for Legal Protection looks ahead at expected developments in company law. One of the main topics is the further modernisation of NV law. The government intends to convene meetings with stakeholders in the first quarter of 2019 to discuss the need for changes in areas such as: (i) claw back of bonuses, (ii) issue of shares without a nominal value, (iii) depositary receipt holders rights, (iv) introducing shares without voting or profit rights, and (v) a new, shorter period to convene general meetings. Once we know both the outcome of the stakeholder meetings and any related proposals, we will provide clients with more detailed information.

 

Executive pay and related party transactions

By 10 June 2019, the revised Shareholders Rights Directive must be implemented into Dutch law. The main topics evolve around: (i) say on pay, allowing shareholders more involvement in matters relating to the remuneration of directors, and (ii) disclosure and approval of related party transactions. The Dutch bill was submitted to parliament in October 2018. We refer to our previous newsletter with more details on this topic.

 

Response measures
In December 2018, a draft bill was published for consultation, providing a statutory right for management boards of Dutch NV companies listed on a stock exchange in the Netherlands or abroad, to invoke a response time of up to 250 days. The draft bill aims to give boards more opportunities to consider takeover offers or shareholder-initiated changes in the composition of their board and explore alternatives. We set out the details of this draft bill in our previous newsletter.

 

Board diversity

As 2020 approaches, companies will need to consider their board diversity. The provisions on gender balance in the Dutch Civil Code, requiring large companies (these can be BVs or NVs) to have at least 30% female and 30% male board representation, lapses on 1 January 2020. An evaluation of the statutory target is scheduled for 2019. A government-appointed monitoring committee concluded in March 2018 that the number of women sitting on boards had slightly increased, but not enough to reach the target. In June 2018, the government sought the advice of the Dutch Social and Economic Council (SER) on measures that enhance gender diversity and cultural diversity in boards. This advice is expected in 2019. In its evaluation, the government will decide whether non-compliance of this provision will lead to legal penalties.

Board diversity will remain a pressing topic at the upcoming annual general meetings of the big corporates. As in previous years, proxy advisors like ISS, Glass Lewis and Eumedion still have this on their respective agendas. Clients need to remain aware of developments.

 

Works councils

As of 1 January 2019, the Works Council Act explicitly requires companies with 100 or more employees to discuss at a “consultation meeting” with the works council: (i) the terms and conditions of employment at the company, and (ii) the previous year’s pay ratios at the company for each group of employees, including directors. This must be done at least once a year. Companies do not have to provide salary information on individual executives or employees. We refer to our previous newsletter (in Dutch only) for more detailed information.

 

Corporate Governance Code 2016

In December 2016, the revised Corporate Governance Code was published introducing important new themes, such as long-term value creation and culture. In our Corporate Governance Toolbox, we included guidance on compliance with the Code. As the Code and its compliance are not static, we keep track of these developments and expect to publish an update of our handbook, Corporate Governance in in Nederland in 2019.

In December 2018, a new Dutch Corporate Governance Code Monitoring Committee was installed, with Pauline van der Meer Mohr acting as chairperson. The new monitoring committee has a four-year mandate from 1 January 2019. This is the fourth monitoring committee since the first Code was published in 2003.

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