On 6 January 2023 European Investors-VEB (‘EI’) reacted to the Netherlands Governments’ public consultation on a draft Bill on the Virtual General Meeting of Shareholders in certain legal entities (‘the Bill’) legislated for under the Dutch Companies Act.
In essence, the Bill accommodates holding virtual only general meetings of shareholders. As a result, the shareholders’ meetings of Dutch listed companies could – if the Bill becomes law – be held without their shareholders being allowed physically to attend. Needless to say that this marks a drastic turn from the practice until today – EI is of the view that depriving shareholders of listed companies from the right to be at their own shareholders meeting in person, deprives them of a fundamental right. EI strongly recommends revising the Bill, and it requests the EU to legislate for an EU-wide requirement that shareholders may not be banned from physically attending their meetings.
A Bill which allows company boards to shield themselves from direct interaction with those who provide their capital, must be prevented. EI’s consultation reaction clearly illustrates why virtual only meetings erode the corporate governance. Whilst the general meeting exists for, and on behalf of the shareholders, it is for the shareholders themselves to decide on its order and organisation. Insights from behavioural sciences clearly demonstrate how much decision making in a company is influenced by interpersonal, direct, contact between important stakeholders. The voting percentages are higher if decision-making happens in physical, real-life shareholders’ meetings. On this, one can think of attention to remuneration, sustainability and carbon emissions; even where these items on the agenda are ’for discussion only’.
In its reaction to the consultation, EI passionately pleas for hybrid general meetings: all shareholders wishing to participate in their meetings can either participate in person or digitally. Whereas the Bill would, at first glance, appear to be a domestic Dutch matter only, there is, in the eyes of EI, an important European dimension that may not be overlooked. This is to do with the EU-Retail Investment Strategy. The Retail Investment Strategy, in pursuance of the combined objectives of the European Green Deal and the Capital Markets Union, aims to advance retail investors entering pan-European capital markets. EI has stressed, once more, that the Retail Investment Strategy will not get off the ground if shareholders are not confident that their fundamental rights are recognised and that they may seek protection through effective collective action throughout the EU.
For the consultation reaction please see: consultation reaction