Modernization NV-law

25 May 2020

A simplification and flexibilization of NV regulations and a more balanced male/female ratio in the management board and supervisory board of NVs and public limited companies (‘’BV’’).

On the 15th day of April 2020, the official preliminary draft of the amendments to Book 2 of the Dutch Civil Code was submitted for consultation. The object of this preliminary draft is to modernise the law of the private limited company (‘’NV’’) and to make the male/female ratio in the management board and supervisory board of NVs and public limited companies (‘’BV’’) more balanced.

A simplification and flexibilization of NV regulations
NV regulations will be amended in line with the simplification and flexibilization of BV regulations in 2012. The following points are proposed in the draft bill:

  • It is no longer obligatory to capture an authorised share capital in the articles of association. If the NV nevertheless chooses to include an authorised share capital in the articles of association, at least one-fifth of that capital must still be paid up. There will be no change to the minimum issued capital, which remains at least € 45,000;
  • The nominal amount of the shares may consist of fractions of eurocents. The nominal amount of the shares may also consist of a foreign currency unit;
  • By law, holders of shares of a certain type may be designated as an organ of the NV without the need to create a new class of shares;
  • It will be possible for the company to be associated in the deed of incorporation with the payment of costs related to the incorporation. As a result, it will no longer be necessary for the board to confirm this separately;
  • The voting right attached to a share may be granted to a pledge/usufructuary at a later time than when the pledge/usufruct is established. The granting of the voting right shall take place by agreement;
  • Furthermore, the transfer of voting rights to the pledge is made possible subject to a conditions precedent (this does not apply to the usufructuary);
  • The following amendment only applies if all shareholders are either directors or supervisory directors of the NV. If that is the case, the signing of the annual accounts shall mean as well an adoption of the annual accounts and shall serve to discharge the members of the management board and the supervisory board from liability. It is possible to exclude this method in the articles of association. (These rules are not entirely the same as the current rules for the BV. The rules for the BV will therefore be made in line with the current rules for the NV at a later date.);
  • The 10% limit for the repurchase of own shares will be repealed;
  • Making decisions outside a general meeting will be simplified.
    • Firstly, it is no longer necessary for a provision on decision-making outside a meeting to be explicitly included in the articles of association. It is sufficient that all those entitled to attend meetings agree to this method of decision-making;
    • Secondly, decision-making outside a meeting will become possible if depository receipts for shares have been issued with the cooperation of the company. The prohibition of the NV-law to do so will be repealed. Furthermore, unanimity will no longer be required for decision-making outside a meeting.

 

  • It will be possible in the articles of association to designate a place outside the Netherlands for the general meeting;
  • It will be easier to hold the general meeting in a place other than the domicile of the NV or the place mentioned in the articles of association;
  • In addition, it is emphasised that every financial year at least one (physical) meeting is held or at least one decision must be taken outside a meeting.

More balanced ratio of men and women in the board
Besides the modernization of the law of the private limited company (‘’NV’’), the object of this preliminary draft is to make the male/female ratio in the management board and supervisory board of NVs and public limited companies (‘’BV’’) more balanced.

This point consists of two measures:

  • An ingrowth quota for the supervisory board of listed companies. The male-female ratio on the supervisory board of a listed company must grow to at least one third of the number of men and one third of the number of women. As long as the composition of the supervisory board does not meet this ratio, no persons may be appointed as supervisory board members if the appointment does not contribute a balanced composition. An appointment that does not contribute to a more balanced ratio between men and women shall be null and void. The same applies to boards of directors if a one-tier board model has been chosen. The ingrowth quota does not apply to the reappointment of supervisory directors.
  • The bill contains an obligation for large companies to set appropriate and ambitious targets in the form of a target figure to increase the diversity of men and women in the management board and supervisory board, as well as the diversity in the sub-top to be determined by the company. A large company is deemed to exist if the company meets two of the three following requirements on two subsequent balance sheet dates:
    • a balance sheet total of more than € 20 million;
    • a net turnover for the financial year of more than € 40 million and;
    • an average number of employees of 250 per financial year.

A format will be developed and made available for reporting the target figures to the Social and Economic Council.

In case of large listed companies, the ingrowth quota applies to the supervisory board and the target figure applies to the management board and the sub-top.