Convening a general meeting of shareholders of a Dutch BV: What you need to know
In our Dutch corporate law practice, we have observed that the convening of a general shareholders meeting of a limited liability company (a Dutch BV) often goes wrong, sometimes without the parties involved being aware of it. Inaccuracies in the notice of the meeting can have significant and unpleasant consequences.
For example, a decision of the shareholders taken during a general meeting may be void (non-existent) or annulled (declared unlawful by a Dutch court). It is therefore very important that the convening of general meetings takes place in the correct manner. In this blog, we will answer the most frequently asked questions about convening (also known as summoning or inviting) general meetings of a company in the Netherlands. We will answer questions such as: who can convene a general meeting? What deadline should be observed? Can the invitation also be sent digitally (by email)? Finally, we will provide an example / template of the notice of the general meeting of shareholders of a Dutch BV.
What is the general meeting of shareholders of a Dutch BV?
The general meeting of shareholders (also known as AGM or general meeting) is considered to be the ‘highest body’ of the Dutch private limited company. This means that the general meeting has the most important power within the BV. At least once a year, a general meeting (also known as the annual meeting of shareholders) takes place in the Netherlands.
In this annual meeting, the shareholders decide on (among other things) the approval of the annual accounts. But there can also be occasional (extraordinary) meetings of stockholders). For example, because the circumstances regarding the Dutch enterprise require a decision by the shareholders (such as the appointment/dismissal of a director). Important shareholder decisions include: appointment, suspension and dismissal of directors and supervisory directors, giving instructions to the board, approval of board decisions, approval of the annual accounts, amendment of the articles of association, issuance of shares, reduction of capital and restructuring (such as a merger and a takeover).
Who can call the meeting?
The board of directors and (if applicable) the supervisory board or the non-executive board are authorized to convene a general meeting. Note that this concerns the board and not an individual director as such. The board must jointly decide to convene the shareholders meeting. The Articles of Association of the Dutch BV can provide for exceptions. For example, by stipulating that one or more shareholders and/or directors can independently (without the cooperation of the board) convene a general meeting. This may be desirable, for example, for the majority shareholder who wants to be able to decide on the dismissal of a sitting director at any time without the cooperation of the board.
Can shareholders of a Dutch BV request a general meeting?
Under Dutch law, the initiative for holding or convening the general meeting lies with the board. However, shareholders of the BV representing at least 1% of the issued capital (read: more than 1% of all shares) can request the board in writing (including by email) to convene a general meeting, stating the topics to be discussed. This meeting must be held within 4 weeks of the request from the shareholders. The board may only refuse the request if there is a material interest of the Dutch BV against it. If the board does not cooperate or refuses the request, the shareholders can request the court to grant authorization to convene the general meeting.
Alternatively, under the laws of the Netherlands the Articles of Association can stipulate that another than the board may also directly convene a general meeting without having to request the board to organize this.
How should a general meeting be convened?
The general meeting is convened by sending a written notice (the notice letter) to the shareholders and any entitled attendees (such as certificate or pledge holders). The notice letter is addressed to the addresses of the shareholders as recorded in the shareholders’ register that is to be kept by the board.
Can the convocation also be sent digitally (by email)?
Calling a general meeting of stockholders in the Netherlands by using the addresses in the shareholders’ register often fails since these records are very often outdated: address changes are not recorded, the register is lost, and/or the person wishing to summon the meeting (e.g. an individual shareholder) does not have access to the register. Therefore, the shareholder can also provide another (electronic) address (email) to the board that can be used for the notification of a meeting. In addition, shareholder agreements often include provisions regarding (electronic) communication with the shareholders.
Should board members be invited to the general meeting of a BV?
It is highly advisable to invite all directors / board members to the general meeting, in addition to all the shareholders. During the general meeting, the executive and non-executive board members have an advisory vote. This means that they are allowed to advise the general meeting before shareholders vote.
What topics should be mentioned in the invitation?
The invitation letter provides the agenda, so which topics will be discussed (and possibly voted on) during the meeting. This is a best practice for a shareholders meeting of a Dutch company, but not mandatory. The invitation can indicate that the (full) agenda is available for inspection at the company’s office. The purpose of the agenda is to allow shareholders to prepare and decide whether or not to attend. A well-drafted agenda usually distinguishes between topics for discussion and/or notification to the shareholders (e.g. on business and market developments) and topics for the shareholders to really vote on (such as the decision to approve the annual accounts).
Is the suspension and/or dismissal of a board member to be on the agenda?
Yes, and such director must have been given the opportunity (before or during the meeting) to be heard regarding the intended suspension or dismissal so he or she can respond to it.
Can shareholders place topics on the agenda?
Shareholders of the BV who have at least 1% of the issued share capital have the right to request items to be placed on the agenda. They can request the board in writing to include a topic in the agenda for the next shareholders’ meeting. The request must be received by the board no later than the 30th day before the general meeting.
Where is the general meeting of shareholders to take place?
The general meeting must take place in the Netherlands at the location prescribed in the Articles of Association. This is usually the statutory seat (the municipality) of the BV. Within this municipality, a different location than the usual office can be chosen, for example, a meeting room or a local law firm. Dutch companies with international shareholders sometimes also include Schiphol as a meeting location.
When can the general meeting take place?
The convener must comply with the legal notice period. There must be at least 8 days between the notice and the general meeting. For example, if the notice is given on Monday the 1st, the meeting cannot take place before Wednesday the 8th.
Is the convocation mandatory to hold a general meeting?
Yes, if the general shareholders meeting takes place in the traditional way by inviting shareholders to a (physical) meeting. However, it can be different. If all shareholders agree, deviations from the formal requirements (such as the location, the agenda, and convocation period) can be made. Decisions can also be taken ‘outside the meeting’, for example, by a written shareholders’ resolution. The directors and supervisory board members must have been given the opportunity to provide advice (the advisory vote).
What is the formalities for a shareholders meeting have not been met?
Under Dutch law, an incorrect convocation of a general meeting can have unpleasant and far-reaching consequences for the decision-making of the shareholders. Examples of incorrect convocations that we have encountered in our practice are:
- The convocation by a shareholder who is not authorized to do so;
- A convocation to a wrong address;
- A convocation with a too short notice period of 5 days;
- Not mentioning the agenda;
- A meeting location in a different municipality in the Netherlands or even a meeting outside the Netherlands;
- Not inviting the board members.
If the invitation does not meet the correct formalities, the conclusion may be that the general meeting has been convened unlawfully or that decisions on the agenda items cannot be made. There may be defects in the formalities of the decisions. The shareholders’ resolutions may then be void or voidable. The annulment can only be pronounced by a judge, so you cannot achieve this without a Dutch lawyer.
Do you want to challenge a shareholder’s decision?
Then consider the statute of limitation period. The authority to have a decision of shareholders of a Dutch BV annulled by a judge expires after 1 year!
Conclusion: what are the requirements for the notice of a shareholders meeting?
After reading this blog, you will know that the invitation for the general meeting must be sent by the board of directors to all shareholders and meeting participants and it must (at least) include:
- The location where the general meeting will be held;
- The day and time of the general meeting;
- The topics to be discussed and voted on (the agenda).
Need inspiration?
Take a look at our example / template for the notice for summoning a meeting of shareholders in the Netherlands. We also publish other Dutch law templates on our website, such as an example of a shareholders’ agreement for a BV and a board resolution.
Do you want to know more about the corporate household of a Dutch BV?
Do you have any questions after reading this blog or after reviewing our template for the notice of a meeting of stockholders? Or do you want to learn more about Dutch company law regarding shareholders, directors, and supervisors? Then visit our website www.penrose.law or directly contact Thomas Schutte (t.schutte@penrose.law) or Hans Klaver h.klaver@penrose.law. Tel. +31202400710.