Shareholder Meetings and Corporate Governance

3. The Netherlands case study

Abstract

This case study chapter highlights policies and good practices for general shareholder meetings in the Netherlands at a time when policy changes on this topic are under consideration. Some annual general meetings taking place in 2023-24 experienced disruptions by climate activists which led companies to adopt enhanced security measures. Practices and companies’ internal rules play an important role in shaping the shareholder meeting landscape and are commonly accepted by market participants. Companies record substantial shareholder participation during meetings, which is also fostered by the active role played by VEB and Eumedion, the investor associations respectively representing retail and institutional investors in the country.

3.1. Introduction

This case study on general shareholder meetings in the Netherlands offers insights on general meeting trends in one of the more dynamic European markets, at a time when policy changes on this topic are under consideration. A potential reform being discussed in Parliament may soon put an end to the prohibition to hold virtual only meetings and allow companies that have a provision in their articles of association to hold virtual only or hybrid meetings with the possibility to ask questions and vote. In 2023 and 2024, several Dutch listed companies faced increased disruptions by climate activists outside and inside meeting rooms during their general shareholder meetings (AGMs). These disruptions triggered increased scrutiny for verifying the identity of shareholders, enhanced security measures and new practices. Another interesting feature of the Dutch corporate governance framework is that actual practice and companies’ internal rules are shaping AGMs more than regulatory requirements. For instance, it is common practice that a notary attends AGMs and advises the chair in making sure formal rules are respected and votes are correctly registered and counted.

Over time, shareholder engagement and voting turnout has increased, particularly among the largest publicly traded companies, with shareholder rights in meetings largely respected. Compared to institutional investors, retail shareholders tended to show less appetite to vote. However, in 2024, for the first time, AGMs of the largest Dutch listed companies on the AEX index1 saw 80% of shareholders casting their votes, up from 79% in 2023. Whereas the average voting turnout amongst AMX companies2 slightly decreased from 75.2% in 2023 to 71.5% in 2024 (Eumedion, 2024[1]; 2023[2]). Stakeholders unanimously agreed that procedures for AGMs rarely require enforcement action, as companies comply with the legal framework. The Netherlands also stands out for facilitating the participation of foreign investors. Many shareholder meetings are conducted in English or with simultaneous interpretation, with meeting materials and reports also prepared and published in English. Courts play an important role in managing corporate disputes. Active monitoring by shareholders is also a fundamental feature of effective AGMs, corporate governance and the overall investment climate in the Netherlands.

3.2. Corporate governance landscape and context

The Dutch market ranks among the largest capital markets in Europe compared to the size of the economy, representing 157% of GDP (IMF, 2024[3]). Despite having a relatively low number of listed companies (128 issuers as of February 2024), it demonstrates significant growth in market capitalisation, surging from EUR 676 billion in 2015 to EUR 1.5 trillion in 2024.3

Euronext Amsterdam, the Netherlands’ main stock exchange, has a global investor base and a high number of companies with operational headquarters outside the country.4 Twenty-nine per cent of the companies listed on Euronext Amsterdam are international issuers,5 accounting for more than one-third of total market capitalisation.6 The 25 most actively traded companies listed on Euronext Amsterdam comprise the AEX index. The Exchange also has an AMX index for the next largest 25 companies.

The Netherlands has a dispersed ownership structure compared to other European jurisdictions and to the 49 jurisdictions covered by the OECD Corporate Governance Factbook of 2023. In 2022, 17% of Dutch listed companies had their largest shareholder owning more than half of shares. In contrast, the median ownership concentration among the jurisdictions examined in the Factbook is 32%. Additionally, in the Netherlands 38% of companies had their three largest shareholders owning more than half of the shares combined, compared to 45%, the median value across the Factbook jurisdictions (OECD, 2023[4]). At company level, on average, the three largest shareholders in listed companies in the Netherlands held 42% of the company’s equity capital, while the median value of the Factbook jurisdictions is 55%. Furthermore, the 20 largest shareholders owned an average of 60% of equity in Dutch listed companies, whereas the median value across the 49 Factbook jurisdictions is 65% (OECD, 2023[4]). In addition, small/mid cap listed companies in the Netherlands have slightly more concentrated ownership compared to large cap companies.7

Euronext Amsterdam has a large retail investor base compared to other trading venues of the Euronext group and can count on large support from international institutional investors. In 2022, institutional investors were the most dominant shareholders in the Netherlands, where they owned at least 38% of equity. Private corporations were also important owners of listed companies, with 22% ownership. These owners were followed by strategic investors, public sector, and other free float with 7%, 3%, and 31% respectively (OECD, 2023[4]). Within this diverse ownership landscape, investor associations are well established actors in the AGM environment and highly active in the Dutch market. They also engage among each other and generally have aligned views. VEB, a 100-year-old non-profit association, advocates for about 30 000 Dutch retail investors and supports them in domestic litigation when seeking redress (VEB, n.d.[5]). Eumedion, another non-profit organisation, represents institutional investors holding shares in Dutch listed companies (Eumedion, n.d.[6]). Both associations actively promote shareholder engagement in the country.

The Netherlands, like other global and European markets, is facing significant challenges in attracting interest for public equity listings and encouraging domestic investment. Most of the demand is being met by active private markets. Stakeholders mentioned that current trends in capital market development include a shift from public to private investments and a move away from traditional (brown) to sustainable (green) investment options. This shift is causing small and mid-cap companies to struggle and underperform. Although the number of listed companies is decreasing, with 74 de-listings in 2014-24,8 market capitalisation has remained robust in the Netherlands. With market capitalisation exceeding EUR 536 billion in 2014-24, de-listings (including liquidation of SPACs and specific corporate actions) accounted for a decline of EUR 171 billion. Despite this, the net growth was still close to EUR 365 billion.

Euronext Amsterdam does not currently have a dedicated growth segment unlike other Euronext trading venues. Such a segment had been established in the past and closed in 2014, mostly due to insufficient capital supply to local companies. Retail investors in the Netherlands are risk averse. The largest pension funds in the country invest only 1-2% of their portfolios domestically, representing 0.4% of the total market value of shares listed on Euronext Amsterdam.9 They find it too expensive to focus on small markets and prefer to invest abroad. Euronext is exploring policies and possible incentives to encourage institutional investors to increase domestic investments, with the belief that greater convergence across the EU will help.

Trust foundations are a unique feature of the Dutch market, although they are less widespread than in the past. Currently, 7% of listed companies have shares held by trust foundations.10 A trust foundation holds the shares, while non-voting listed certificates are issued to the providers of capital. A depository receipt holder (in a listed company) can ask a voting proxy from the trust foundation to vote at the AGM. However, the trust foundation retains the right to vote the shares for which no voting proxy was asked. As a result, shareholder rights, including voting rights, can be exercised by trust foundations, specifically by their boards. However, if the document that defines the relationship between the trust foundations and the depository receipt holders provides that the board must follow the instructions of the holders when exercising voting rights, the board is obligated to do so. Conversely, the document can also grant the board the discretion to exercise voting rights independently. In 2020, this arrangement was a common method used by Dutch listed companies to access capital without losing control of the company (Houthoff, 2020[7]). While the phenomenon is now less common, trust foundations still tend to vote in favour of management or abstain, rather than question decisions and effectively engage during AGMs.

The Dutch regulatory framework provides for some flexibility in board structures, allowing listed companies to establish one-tier or two-tier boards. Most companies, especially those traditionally established in the Netherlands, have adopted a two-tier board structure (Buren, 2024[8]), separating supervisory and management functions. In the two-tier system, the supervisory board typically comprises non-executive board members, while the management board is composed entirely of executives. The Dutch Corporate Governance Code recommends that the supervisory board should regularly report on how it discusses and oversees the implementation of the company’s strategy by the management board.

The Ministry of Justice and Security, Ministry of Finance, and Ministry of Economic Affairs have shared and specific responsibilities for capital markets development and corporate governance, but each with a different focus. The Ministry of Justice and Security oversees the Dutch Civil Code and is responsible for providing a legal basis to the application of the Corporate Governance Code. The Ministry of Finance focuses on capital market development and access to finance with an investor protection dimension. The Ministry of Economic Affairs is responsible for the appointment of the Monitoring Commission of the Corporate Governance Code11 as well as for providing secretariat support to the Monitoring Commission. This support, consisting of one to two persons, deals with the actual monitoring of the code and maintains contact with market participants.

As the Dutch Civil Code (Book II) is the primary source for AGMs, enforcement of AGMs generally pertains to the civil court system or in proceedings by a specialised court for corporate law matters and cases with a social economic impact (the Enterprise Chamber of the Amsterdam Court of Appeals). The body responsible for supervising and enforcing the corporate governance practices of listed companies in the Netherlands is the Authority for the Financial Markets (AFM). However, the role of the AFM is limited only to the securities law as civil rules on corporate governance are mainly supervised and enforced privately (OECD, 2023[4]). Therefore, the AFM has no supervisory role concerning AGMs.

3.3. Main elements of the legal and regulatory framework

The rules governing AGMs are provided in the Dutch Civil Code (Book II). Based on the current legal framework, Dutch companies are allowed to hold in-person or hybrid meetings only. Since the pandemic and expiration in February 2023 of the temporary legislation allowing virtual meetings, virtual meetings are currently not allowed. The Dutch Civil Code requires a physical location for the meeting, either the place referred to in the articles of association or the municipality where the company has its registered office. If a general meeting is held elsewhere, legally binding decisions can only be taken if the entire issued capital is represented.

The legal framework allows hybrid AGMs since 1 January 2007, if the company’s articles of association explicitly provide for this option (Dutch Civil Code Article 2:117a). Based on a study conducted in 2020, 75% of the Dutch companies listed on Euronext Amsterdam included the hybrid AGM option in their articles of association (Abma, 2024[9]). More recent research by VEB, conducted in 2024, showed that 37 out of the 50 largest listed companies (AEX and AMX index) have a provision to organise hybrid AGMs. However, based on this research, only 14 companies (out of 37 where this is allowed) held a hybrid AGM in 2024. The pandemic most likely influenced this trend as more companies have included the hybrid AGM option into their articles. In the current framework, hybrid meetings can take place with different modalities: companies may hold a hybrid meeting providing 1) shareholders attending remotely with the possibility to ask questions and vote; or 2) the possibility to either intervene or vote remotely. Moreover, in-person AGMs with a webcast only are also conducted but are not considered as hybrid meetings, as they do not offer ways to engage and participate for shareholders attending remotely as recommended by the G20/OECD Principles of Corporate Governance (sub-Principle II.C.3.).

The Dutch Corporate Governance Code is also an important reference for the AGM framework (Monitoring Committee Corporate Governance Code, 2022[10]). The Corporate Governance Code was updated in 2022 and started applying to publicly traded companies with registered offices in the Netherlands as of 2023. Chapter 4 of the Code is entirely dedicated to principles related to AGMs, which cover important issues including their objectives, the role of the chair, transparency of the agenda, meeting materials and post-meeting disclosures, the procedure for placing items on the agenda by shareholders, attendance by the external auditor, and aspects related to casting of votes. The Code recommends important safeguards, recognising the AGM as a key element in providing checks and balances for companies. As a result, AGMs benefit from very strong shareholder participation.

The Code applies on a “comply or explain” basis. It specifies that “Companies and shareholders share responsibility for good self-regulation according to the “comply or explain” principle so that it can serve as an effective alternative to legislation.” The Code’s preamble notes that it is the responsibility of the management and supervisory boards to account for compliance with the Code at the AGM, by providing a substantive and transparent explanation for any departures from its principles. At the same time, shareholders, governance rating agencies and proxy advisors also play an important role as they should carefully assess the reasons for any departures from the Code. They should engage with management and boards to ensure accountability for compliance with the Code.

The Corporate Governance Monitoring Committee is responsible for annually publishing national reports on corporate governance, evaluating companies’ adherence to the Code’s “comply or explain” practices. The latest national report on corporate governance that assessed compliance of listed companies with the Code was published in 2022 for the 2021 financial year, with monitoring focused on certain sections of the Code. There has been no aggregate reporting of the updated 2022 Code. A new Corporate Governance Monitoring Committee is currently being formed and is expected to resume monitoring once its members and chair are appointed.

The securities regulator or stock exchange have not issued other guidance documents considered to have a significant impact on practices for AGMs. However, it is common for publicly traded companies to voluntarily adopt their own policies and guidance documents for the conduct of hybrid AGMs. These policies are generally called terms and conditions for hybrid meetings and adopted by boards, with technical support from lawyers and notaries. They provide specifics on the technology used, shareholder rights, and the procedures for amending these documents.

3.3.1. Recent developments and reforms

Virtual-only shareholder meetings are no longer allowed in the Netherlands since the emergency legislation enacted during the COVID-19 pandemic ceased to be in force in February 2023.12 On 11 January 2024, the Minister of Legal Protection presented a Bill (Digital General Meeting of Private Legal Persons Act)13 to Parliament, which would allow all Dutch companies14 to hold virtual-only meetings, if there is a provision in the company’s articles of association. The possibility of including a provision is subject to a simple majority without a specified quorum, unless the articles of association already require a quorum or qualified majority. The Bill was submitted to Parliament in January 2024 and is being discussed. The process of parliamentary review by both chambers may take up to one year, according to the Ministries, assuming there are no drafting changes to the Bill. Therefore, if adopted, the Bill would be expected to enter into force either on 1 July 2025 or 1 January 2026.

In addition to introducing the possibility to hold virtual-only AGMs, the Bill includes a transitional regime as well as safeguards to ensure shareholders’ protection and identification. The Bill would also require that shareholder meetings in both virtual and hybrid format provide for two-way audiovisual communication to allow shareholders attending remotely to participate and vote. This amendment would broaden the options for shareholders attending remotely to both ask questions and vote during meetings conducted in hybrid format. The Bill also addresses some issues that would arise in case of virtual-only meetings. For example, the Bill seeks to clarify when the location of an AGM affects the application of other laws and regulations. Since virtual meetings have no physical location, the Bill clarifies the applicable location would be the one the AGM chair connects from. The Bill would also set aside the need to obtain shareholder consent to convene an AGM via a digital message (i.e. via e-mail), unless the company’s articles of association provide otherwise.

Stakeholders have different views on the Bill. While welcomed by companies, some investors fear that virtual-only meetings would be used to diminish dialogue, undermine the crucial role of AGMs in holding directors accountable, and limit shareholders in decision making and engagement. Nevertheless, there is common agreement on the benefits of virtual-only AGMs, which would include (i) convenient access to meetings; (ii) reduced environmental impact due to less travel; and (iii) the promotion of prompt decision-making.

Companies plan to amend their articles of association to enable virtual only shareholder meetings to also address security costs and concerns after protests and disruptions occurred in 2023 at some of the largest listed companies’ AGMs (Eumedion, 2024[1]; 2023[11]). Two such proposals were tabled in 2024 before the Bill was even approved. However, in one company the proposal was rejected by 81% of votes, with the opposition of international investors and proxy advisors, who advised against it. In the other case, the agenda item was ultimately withdrawn five days prior to the AGM due to the lack of shareholder support. Other companies did not include this item for discussion during their 2024 AGM after critical feedback by shareholders during their pre-AGM dialogue (Eumedion, 2024[1]). Furthermore, to include a provision in the articles of association for virtual-only meetings, institutional investors suggested that shareholders should also be called upon to approve a protocol, attached to the articles of association, listing more detailed conditions for calling virtual only meetings. This protocol would provide shareholders with more protection and subject the possibility to call virtual-only meetings to agreed conditions, without providing too much discretion to companies and their boards.

The Bill, if enacted as proposed, would likely change the current policies and practices for AGMs in the Netherlands. Beyond allowing companies to call for virtual-only general shareholder meetings, it would also clarify that hybrid meetings are to provide shareholders with the same conditions for in-person participation. These additional safeguards embedded in the Bill have addressed some of the investor and stakeholder concerns in relation to virtual only meetings. To date, according to stakeholders and companies, most companies that hold hybrid meetings do not register high remote shareholder participation compared to in-person meetings. Shareholders attending remotely are generally less active in asking questions and engaging compared to those attending in person. Both VEB and Eumedion, representing respectively retail and institutional investors, attend AGMs in person. Nevertheless, further to disruptions in 2023 and, to a minor extent, in 2024, as well as the need for increased security measures, companies support the Bill and the possibility of holding virtual-only shareholder meetings.

3.3.2. Voting framework in the Netherlands

Each shareholder is entitled, in person or by written proxy, to attend the AGM, speak during the meeting and exercise voting rights (Dutch Civil Code Article 2:117). It is then up to each company’s articles of association to authorise every shareholder to participate in the AGM and to exercise rights, either in person or by written proxy, also via electronic means of communication.15 The Dutch Civil Code specifies that a company’s articles of association may provide that votes cast prior to the AGM by electronic means of communication or by letter are considered equivalent to votes cast at the time of the meeting (Article 2:117b). The Dutch Corporate Governance Code (Principle 4.3) includes a section on casting votes, underlining the importance of maximizing shareholder participation in the AGM’s decision-making. The company should give shareholders the opportunity to vote by proxy and to communicate with all other shareholders.

Votes cannot be cast before the 28-day ownership record date. The notice must disclose the record date of ownership, as well as the procedures for those entitled to vote or attend meetings to register and exercise their rights (Dutch Civil Code Article 2:117b). The convening notice must include the procedure for participating in the AGM by written proxy (Dutch Civil Code Article 2:114). Shareholders can be represented by a lawyer, notary, assigned notary, candidate notary, registered accountant or accountant-administration consultant.16

Neither the law nor the Code provide precise methods for voting during in-person meetings. This decision is generally left to the AGM chair, who can determine whether voting occurs by show of hands or other means, such as a digital platform. Smaller Dutch companies tend to conduct voting by a show of hands, while larger companies provide for an electronic platform to record votes. In practice, voting takes place after each agenda item is discussed, except in hybrid meetings, where voting takes place at the end, following the discussion of all agenda items. Notaries supervise AGMs as well as oversee the voting process and procedure. Their presence aims to provide a sense of rigor and ensure proper vote counting.

The law does not provide a deadline for casting votes prior to the meeting, making it theoretically possible to cast votes up until the meeting date. According to investors and companies, most votes (98%) occur before the meeting with voting already clear prior to the meeting starts. Further, while technically it is possible to cast votes by proxy in advance of the AGM and request to change the vote at the meeting, this requires an attendance card for the meeting. In practice, it does not happen often.

Moreover, according to institutional investors, most large shareholders consider their proxy advisors’ advice and vote in advance of the AGM. The Dutch Corporate Governance Code (Principle 4.3.1) specifies that shareholders, including institutional investors, should exercise their voting rights on an informed basis and as they deem fit. Institutional investors that use the services of proxy advisors should encourage them to enter a dialogue with the company regarding the voting policy and ensure that their votes are cast in line with their own voting policy. Further, the company should give shareholders and other persons entitled to vote the possibility of issuing voting proxies or voting instructions to an independent third party prior to the meeting (Code Principle 4.3.2). Market participants have different views, with one noting that institutional investors follow proxy advisor voting advice without sufficiently respecting the Code recommendation to express votes on an informed basis subject to their own analysis. On the other hand, others suggested institutional investors tend to apply their own analysis before casting their votes.

A large increase in participation and voting took place over the past decades in the Netherlands. However, according to Eumedion’s 2024 AGM report as well as discussions with stakeholders, there is a lower voter turnout at AGMs of medium-sized and smaller listed companies (Eumedion, 2024[1]). Further, Eumedion reported wide divergence between institutional and retail investors’ appetite to vote. Companies with a relatively large retail investor base continue to have low voter turnout at their AGM. To encourage retail investor participation, according to retail investors, the use of voting rights should be supported and facilitated. This also includes proxy voting mechanisms and proxy solicitation without intermediaries.

Shareholders choosing to be represented must, in addition to registering for the AGM, send in a signed proxy separately. Power of attorney is typically to be received by the company one week in advance. The Dutch Civil Code allows listed companies the possibility to notify the power of attorney electronically (Dutch Civil Code Article 2:117a).17 In some company-level policies for hybrid meetings, when shareholders attending remotely are unable to vote via electronic means, the terms and conditions for hybrid meetings can mention that shareholders will only be able to cast their vote by granting an electronic proxy with voting instructions to the civil law notary referenced in the convocation, or their substitute.

3.4. Before a general shareholder meeting: Scheduling a meeting, eligibility to vote, and information received for voting

In the Netherlands, listed companies must hold at least one AGM per year, within six months after the end of the company’s financial year (Dutch Civil Code Article 2:108). Investors reported that shareholder meetings occur mostly on certain weekdays: Tuesdays, Wednesdays and Thursdays. Only in few cases are general meetings for large cap companies scheduled at competing times.

The law sets the record date of ownership at 28 days before the date of the AGM meeting (Dutch Civil Code Article 2:119). It is not prohibited to sell shares after this date and the person registered to vote remains able to do so even after selling their shares. According to investors, the absence of share blocking since the Shareholder Rights Directive18 has increased engagement, participation and voting during AGMs by 10% compared to 15 years ago. In the Netherlands, there is no legal requirement imposing a deadline for registering a proxy before a shareholder meeting. This is set as a matter of practice by custodians with different timelines for institutional and retail investors. According to institutional investors, further to the latest disruptions that occurred at AGMs in 2023 and 2024, the cut-off date tended to be set earlier at 20-25 days, rather than 10-15 days as occurred in past years (Eumedion, 2024[1]). For retail investors, the practice is to set the cut-off date seven-eight days before the meeting. Given the 42-day notice period to call for a shareholder meeting, although investors had less time to prepare for voting, shareholders are still able to receive and review information for the meeting.

Disruptions at AGMs had another effect: investors faced more difficulties in obtaining their entry cards to attend shareholder meetings in person. Custodians – in particular international ones – implemented stricter procedures and checks to verify the identity of shareholders requesting an entry card. Specifically, international custodians hesitated to grant entry cards to representatives of an institutional investor when the signature did not match with the one of the people who signed the custodian contract on behalf of that institutional investor (Eumedion, 2024[1]). This created uncertainty about whether investors could attend the AGM. When facing difficulties in obtaining entry cards, investors were usually able to obtain them by contacting the companies directly.

The meeting notice must specify the record date as well as the way shareholders entitled to vote or attend the meeting can register and exercise their rights. The notice must include (i) topics to be covered; (ii) the place and time of the meeting; (iii) the procedure to participate by proxy; and (iv) the procedure for participating and exercising voting rights through electronic means of communication. The law does not require specifying the format in which a meeting will take place, although in practice this is often clarified by companies themselves – particularly those that prepare and publish policies with terms and conditions for participation in hybrid AGMs. The Corporate Governance Code recommends companies to include reports on companies’ performance and board member candidates’ profiles with the meeting materials. According to investors, the level of transparency and detail of information shared before AGMs is high.

3.4.1. The notice period for AGMs and extraordinary general meetings

The notice period is set at 42 days for both annual and extraordinary shareholder meetings (Dutch Civil Code Article 2:115). In comparison with other OECD and G20 jurisdictions, this notice period is among the longest (OECD, 2023[4]). The Netherlands lengthened the notice period from 15 to 42 days when transposing the Shareholder Rights Directive I in 2010 (De Brauw Blackstone Westbroek, 2010[12]).

Both institutional and retail investors support the notice period length, as it allows sufficient time to prepare for meetings. This became more important in 2023-24 due to earlier cut-off dates. However, companies argue that 42 days is a long period, especially for extraordinary meetings where more prompt action is needed. Applying the 42-day notice period to extraordinary shareholder meetings may limit flexibility for listed companies, potentially delaying the adoption of time-sensitive decisions.

3.4.2. The right to add items to the agenda: Response time and statutory reflection period

Minority shareholders representing 3% of shares can request the addition of an agenda item 60 days in advance of the AGM (OECD, 2023[4]). The Dutch legal framework includes two similar provisions: the response time outlined in the Dutch Corporate Governance Code (Principles 4.1.6. and 4.1.7), and the statutory reflection period, a more recent provision introduced on 1 May 2021, under the Dutch Civil Code (Article 2:114b). Although the conditions to request them are different as well as their times and consequences, both options allow the board to request time to consult and decide on agenda item requests.

Under the Corporate Governance Code (Principle 4.1.6), the right to put items on the agenda should always require prior consultation with the management board by shareholders. Moreover, if the item can result in a change in the company’s strategy, the management board should have the opportunity to respond within a reasonable time (the response time), not exceeding 180 days and should be used as an opportunity for constructive consultation (Principle 4.1.7). At the end of the response time, the management board should report the outcome of the consultation to the AGM. When a company decides to request a response time, the requested agenda item is not included in the agenda, not even as a discussion item. The response time can only be applied once and cannot be used for items that have already been subject to a statutory reflection period.

The statutory reflection period is longer and can go up to 250 days. It can be used by listed companies upon specific conditions, such as when shareholders require changes in board composition or for hostile takeover attempts. During this reflection period, the general meeting may not vote on shareholder proposals related to appointments of management board and supervisory board members or amend the provisions on these subjects in the articles of association. The shareholders have, unlike for the response time, the right to discuss these topics during the general meeting. If considered unjustified, shareholders representing 3% (or even a lower threshold per the company’s articles of association) may seek redress to the Enterprise Chamber (Allen&Overy, 2021[13]).

The Corporate Governance Code clarifies the differences between these two periods. The response time is typically set earlier and applies to more subjects than the statutory refection period, with different consequences for each. The Code notes how both provisions can co-exist. However, repetitive application of the response time and statutory refection period is not considered good practice.

Stakeholders have concerns about these protective instruments, emphasising that the response and statutory reflection time are extraordinary instruments. Their use could be limited in situations in which a shareholder would like to use an important shareholder right (i.e. the right of submitting a shareholder proposal). So far, companies have only used the response time of up to 180 days twice. No listed company has invoked the statutory reflection period of maximum 250 days, according to local investors.

3.5. Differences among in-person and hybrid general shareholder meetings

In the Netherlands, general shareholder meetings can be held in person, in a hybrid format that allows remote questions and/or voting, or in person with a webcast available for those who want to follow the meeting. According to Eumedion, in 2024, 76% of listed companies held an in-person AGM, a similar level as in 2023 (78%). The remaining 24% held a hybrid AGM. Of the companies that held a hybrid shareholder meeting, 50% offered shareholders attending the AGM online the opportunity to both vote and to ask questions in real-time, 45% offered shareholders attending the AGM online only the possibility to ask questions (without the possibility to also cast their votes) and the remaining 5% offered their shareholders only the possibility to vote remotely (Eumedion, 2024[1]). About 25% of meetings, which are counted as in-person meetings and not included within the 24% share of hybrid meetings, provided only the possibility of following the webcast, without the possibility to ask questions or vote.

AGMs in 2023 were rather chaotic due to disruptions by climate activists, according to stakeholders. Some high profile large, listed companies experienced significant disruptions and even suspensions of their AGMs attended by climate activists. In some cases, the police intervened to remove activists (Eumedion, 2023[11]). As a result of this experience, companies started to focus more on improving stakeholder dialogue before the AGM (as also recommended by the Dutch Corporate Governance Code Principle 1.1.5). They also paid more attention to the chair’s role in ensuring the meeting runs smoothly and maintaining a constructive environment. As such, in 2024, better preparations (including deciding seating arrangements in advance of the meeting) and heightened security led to smoother in-person AGMs, with protests mostly occurring outside shareholder meeting rooms and surrounding the premises. According to Eumedion, this negatively impacted the average number of votes cast at AGMs of medium-sized and smaller listed companies (Eumedion, 2024[1]). Nevertheless, as noted above, despite enhanced measures taken to attending AGMs in person, shareholders were reluctant to approve the inclusion of the virtual-only AGM format in the articles of association of listed companies without additional safeguards, such as a protocol.

To explain this reluctance, it is important to recall shareholders’ experience during the pandemic, where they were restricted from attending most annual meetings in person since the Netherlands implemented lockdown restrictions in 2020. Almost all AGMs were held virtually (Eumedion, 2022[14]; 2021[15]). Virtual attendance lowered investors’ possibility to engage effectively as well as the quality of responses and time dedicated to responses from management. This experience contributed to the reluctance of investors towards allowing virtual only meetings without additional safeguards. The Bill, in this sense, aims to foster shareholder protection by requiring equal opportunities for engagement during in-person and virtual meetings.

3.5.1. Chairing a general shareholder meeting: Handling questions and resolutions

Dutch law does not provide a specific framework for chairing shareholder meetings. This is generally provided for in the company’s articles of association and company policies for AGMs, as well as left to the chair’s discretion, with the support of a notary. The Dutch Corporate Governance Code recognises the role of the chair and responsibility of ensuring the proper conduct of business at meetings to promote a meaningful discussion (Code Principle 4.1.2). Generally, when a meeting starts, the chair provides shareholders with the house rules on interventions, noting interventions can be limited if too lengthy or limiting their number (generally, up to three) and allowing more if time allows. For investors, the way meetings are chaired is important to limit disruptions. For instance, one approach would be to address ESG-related questions and concerns first and then impose strict limits to certain topics to avoid repetition. As a matter of practice, a notary attends shareholder meetings to assist the chair, sometimes helping with the meeting script and providing guidance in case of disruptions.

In practice, even when meetings are held in hybrid format, most questions are posed by shareholders attending in person. Remote attendance is not frequent and among those who join the meeting remotely, few questions are posed. The legal framework requires that companies respond to all questions at the AGM. New resolutions not related to an already existing topic on the agenda can technically be added by shareholders during an AGM but only if 100% of the share capital is represented, which is not common in a listed company.19

In terms of engagement and questions to the external auditor, the Dutch Civil Code (Article 2:117) provides that the external auditor can attend and present the financial statements during the AGM. The external auditor may be questioned at the AGM about the fairness of financial statements, according to the Corporate Governance Code. The chair should ensure shareholders have an opportunity to question the external auditor (Principle 4.1.9). Shareholders generally find it possible to pose questions to the external auditor. In 2024, the quality of engagement improved further to a recent and revised Practice Note of the Royal Netherlands Institute of Chartered Accountants on the role of the external auditor in the AGM (The Royal Netherlands Institute of Chartered Accountants, 2023[16]). Investors would welcome additional disclosure and detailed presentations by the external auditor during the AGM. Often the external auditor’s presentation slides do not correspond with the remarks or only one slide is published. Some companies did not provide the auditor presentation on the website or did not share it prior to the AGM (Eumedion, 2024[1]). Some investors raised concerns about external auditors’ possibility to make statements on matters that are not within their domain of expertise or that fall outside the scope of their audit work, such as company culture. Investors would also welcome more opportunities for engagement with the auditor outside the shareholder meeting, especially considering their foreseen role in providing external assurance of ESG-related disclosures.

Overall, in the Netherlands, the legal framework and practices for in-person and hybrid meetings are aligned, particularly for hybrid meetings conducted in a manner that allows shareholders to ask questions and vote remotely.

3.5.2. Managing technological and digital security risks

The Dutch legal framework does not require or recommend companies to ensure proper management of digital security risks arising from hybrid shareholder meetings. There are also no provisions that ensure the protection of shareholders who have no access to the online platform or who face a digital disruption during hybrid shareholder meetings.

Except when explicitly waived in the company’s AGM policy, it is generally understood that if a shareholder encounters a connection issue, responsibility falls on the shareholder unless the technical problem originates from the company itself. Shareholders who opt not to attend in person assume this risk. Notaries and lawyers often provide their input in drafting such policies and recommend including such a clause to avoid lack of clarity and liability.

This approach differs from the Turkish framework, where the liability of technical failures rests with the operator, the Central Securities Depository (MKK), managing the E-GEM platform to conduct hybrid shareholder meetings. According to the experiences of companies and investors in the Netherlands, there have been no major technical failures or security risks in past AGMs. As a result, the current framework has responded to the needs of companies and investors.

3.6. Ensuring proper and accurate vote counting

The corporate governance framework includes provisions to ensure proper vote counting. The Dutch Civil Code (Article 2:120) requires publicly traded companies to establish and publish, for each resolution, the total number of valid votes, as well as the number of votes in favour, against, and the abstentions. Most listed companies engage a notary to cast proxy votes and assist with vote counting. This is facilitated by the fact that most shareholders vote by proxy ahead of the meeting, as mentioned above. The Civil Code also requires publicly traded companies to confirm the valid registration and counting of votes cast after the general meeting, if requested by a shareholder or a third party designated by that shareholder. These requests must be submitted to the company no later than three months after the AGM.

However, in practice, particularly for votes cast through proxies and custodians, voting confirmations are not sent automatically. According to investors, even when requested, it is not possible to know whether and how votes have been cast. In line with the EU Shareholder Rights Directive, Dutch investors value receiving a confirmation of votes received via electronic voting, either in person or by proxy. In addition, each shareholder should have the possibility to verify after each shareholder meeting whether the vote has been validly recorded and counted by the company.

3.7. After a general shareholder meeting: Transparency and engagement

The Dutch Corporate Governance Code (Principle 4.2.4) recommends companies to post and update information relevant to shareholders, as well as any information required by company law and applicable securities law provisions, on a separate section of their website. The Code (Principle 4.1.10) also recommends that following the AGM, the report be made available upon request to shareholders no later than three months after the general meeting. This is especially important in the context of hybrid meetings when shareholders participate remotely. The AGM minutes must be published on the website three months after the meeting. This is a common practice, and minutes are usually made available on companies’ websites. However, according to investors, at times meeting minutes do not accurately reflect the Q&A session and may not include certain questions. In other cases, minutes are more like transcripts. To ensure accuracy, shareholders take their own minutes and proactively send them to the company after the meeting, requesting that certain issues that had been discussed be included in the official minutes. Investors would like to have more transparency and scrutiny over meeting minutes. They argue that with current technological tools and artificial intelligence, there should be less discretion over minutes’ content. Most AGMs are conducted in English and reports are also published in English, which helps foreign investors more readily consult company documents.

3.8. Enforcement of general shareholder meetings framework

The framework for AGMs and shareholder rights is well respected in the Netherlands. Investors do not see the need to file lawsuits in relation to the conduct of AGMs. Dispute resolution is considered rather quick and predictable by companies and investors, with the Enterprise Chamber playing a key role in the overall investment climate. Investors, companies and stakeholders agree that one of the reasons why companies traditionally choose to list on Euronext Amsterdam is the predictability of corporate disputes. The Netherlands also has a collective redress system since 1 January 2020, the Resolution of Mass Damage in Collective Action Act (known as WAMCA). WAMCA is more costly for investors, as it requires to advance 20% of costs.

In practice the decisions of the Enterprise Chamber, thanks to the specialisation of its judges, have helped to clarify the application of the corporate governance regulatory framework, specifically for matters regarding the management board and shareholder roles in determining the company strategy. Dutch courts have, for example, ruled in favour of companies and their management in cases in which the matter was considered to be within the board’s discretion and closely related to the determination of a company’s strategy.20 These decisions reflect a broader trend in Dutch corporate law to uphold the autonomy of company boards (Vos, 2017[17]).

In addition, case law has provided clarifications relating to the addition of agenda items and information provided by companies. The Enterprise Chamber has, in two cases, ruled once in favour of shareholders and the other in favour of the company. In one case, the court ruled the company was barred from including the agenda item for a vote as the company had failed its disclosure obligation by referring to an independent third party evaluation that would support a takeover price, without providing the report or a summary of it to shareholders.21 In another case, the Enterprise Chamber denied a shareholder request not to include the item on issuance of shares on the agenda based on a claim of faulty information.22

The existence of litigation related to these matters, along with the well-recognised enforcement role of the Enterprise Chamber, contributes to the reliability and predictability of the Dutch business environment and well-functioning of AGMs.

3.9. Key findings

The Netherlands has a flexible corporate governance framework that allows companies to determine the best way to manage and chair AGMs, subject to Dutch Civil Code requirements, corporate governance code recommendations, and company articles of association. The role of a notary in AGMs is also customary, providing certainty over meeting discussions and vote counting. The Enterprise Chamber of the Amsterdam Appeals Court also plays an active role in enforcing shareholder protection embedded in the legal framework and raising awareness of good corporate governance practices. There is still no data and aggregate reporting on the level of compliance with the 2022 Dutch Corporate Governance Code. The expected resumption of monitoring may provide insights into the level of compliance with the detailed recommendations on AGMs and voting contained in Chapter 4 of the Code.

The AGM framework is overall aligned with G20/OECD Principles recommendations on AGMs. The Dutch Civil Code and Corporate Governance Code highlight the importance of shareholder meetings as a venue to ensure shareholder engagement and equal treatment. Shareholders do engage, supported by the established role of investor associations, such as Eumedion and VEB. Market practices also shape the framework for AGMs and are coherently observed by companies and investors.

The Dutch framework has allowed both in-person and hybrid AGMs since 2007, subject to a provision in the company’s articles of association. The Bill presented to Parliament introducing the possibility for virtual-only meetings may change the current framework. The adoption of AGM policies by companies or protocols to provide guidance on remote participation may be beneficial to shareholders. Removing the possibility to hold hybrid meetings that only allow for either remote voting or remote participation may better align the Dutch framework with the G20/OECD Principles (sub-Principle II.C.3.). Dutch companies held on average more in-person than hybrid meetings in 2023 and 2024. This also responds to investor preferences, some of whom are accustomed to in-person participation and had concerns with the possible rise in the use of virtual-only AGMs. During 2023 and to a lesser extent in 2024, Dutch companies experienced more disruptions to AGMs, compared to other case study countries. If the Bill is enacted, it will be important for companies and investors to engage and find the most appropriate balance for the meeting format. The adoption of a protocol or annex to the articles of association may be a suitable solution to provide shareholders with more safeguards. This approach can outline when virtual meetings are permitted, offer guidance on the Q&A section of AGMs and establish safeguards in case of disruptions or technical failures. Some companies already adopt AGM policies with the support of lawyers and notaries. Consultation with shareholders on these policies may increase investor confidence if virtual-only meetings are introduced to the framework and agreed by companies through a shareholder approved provision.

The Netherlands is among the countries that provide a long notice period for general shareholders meetings, with 42 days advance notice required. The same period applies to both annual and extraordinary general meetings. The notice period seems to be accepted by both companies and investors, as it allows sufficient time for investors to carry out voting procedures with custodians and prepare for voting. However, in 2024, shorter cut-off dates were set due to enhanced security measures imposed by custodians and companies, following the disruptions by climate activists in 2023. The same 42-day notice period is considered as too long for companies when they wish to call for extraordinary meetings, which generally require swift decisions and action. Companies have indicated that they would welcome more flexibility for extraordinary shareholder meeting notice periods, for example providing a range of minimum days’ notice or allowing a shorter notice time depending on the item(s) to be decided.

The Dutch framework shows how a light regulatory approach may work well when companies and investors find the most appropriate balance to conduct AGMs through their bylaws and corporate practices, within the boundaries of law and an active and well-established role of a specialised court for corporate matters. The possible adoption of the Bill introducing virtual-only AGMs may require some fine-tuning of corporate practices and more dialogue between companies and investors to maintain the current levels of engagement and shareholder protection.

References

[9] Abma, R. (2024), De ava is dood. Lang leve de ava!, Wolters Kluwer, https://shop.wolterskluwer.nl/100-jaar-VEB-sNP100JVEB/.

[13] Allen&Overy (2021), New statutory reflection period for Dutch listed companies adopted, https://blog.allenovery.com/aoblog/attachment_dw.action?attkey=FRbANEucS95NMLRN47z%2BeeOgEFCt8EGQJsWJiCH2WAWuU9AaVDeFgui8PDzv7kl%2F&nav=FRbANEucS95NMLRN47z%2BeeOgEFCt8EGQbuwypnpZjc4%3D&attdocparam=pB7HEsg%2FZ312Bk8OIuOIH1c%2BY4beLEAeM6IIfIUuN%2Fk%3D&fromC.

[8] Buren (2024), At a glance: responsibilities of company boards in Netherlands, https://www.lexology.com/library/detail.aspx?g=5f68b1fc-0dd4-47ff-83ae-4e56450cce40.

[12] De Brauw Blackstone Westbroek (2010), Bill on shareholders’ and works council’s rights become law, https://www.lexology.com/library/detail.aspx?g=c96a0591-e6e2-4475-ad69-ebb2e6f57c42.

[1] Eumedion (2024), Evaluation of the 2024 AGM season, https://en.eumedion.nl/clientdata/217/media/clientimages/Evaluation-AGM-season-2024-DEF.pdf?v=240718095600.

[2] Eumedion (2023), Annual Report 2023, https://en.eumedion.nl/clientdata/217/media/clientimages/Annual-Report-2023-DEF.pdf?v=240612130555.

[11] Eumedion (2023), Evaluation of the 2023 AGM season, https://en.eumedion.nl/clientdata/217/media/clientimages/Evaluation-AGM-season-2023.pdf?v=240718104910.

[14] Eumedion (2022), Evaluation of the 2022 AGM season, https://en.eumedion.nl/clientdata/217/media/clientimages/Evaluation-AGM-season-2022-def.pdf?v=240718104910.

[15] Eumedion (2021), Evaluation of the 2021 AGM season, https://en.eumedion.nl/clientdata/217/media/clientimages/Evaluation-AGM-season-2021-DEF.pdf?v=240718104910.

[6] Eumedion (n.d.), About Eumedion, https://en.eumedion.nl/About-Eumedion.html.

[18] Euronext (2023), AEX Index, https://www.euronext.com/en/news/aex-index-0#:~:text=The%20AMX%20index%20selects%20the,AEX%2C%20AMX%20and%20AScX%20indices.

[7] Houthoff (2020), The Dutch ’Stichting’, an Effective and Useful Tool in Global, https://www.houthoff.com/-/media/houthoff/publications/pdevries/houthoff-whitepaper---stichting.pdf.

[3] IMF (2024), World Economic Outlook, https://www.imf.org/en/Publications/WEO/Issues/2024/04/16/world-economic-outlook-april-2024.

[10] Monitoring Committee Corporate Governance Code (2022), Dutch Corporate Governance Code 2022, https://www.mccg.nl/site/binaries/site-content/collections/documents/2022/12/20/dutch-corporate-governance-code-2022/Dutch+Corporate+Governance+Code+2022.pdf.

[4] OECD (2023), OECD Corporate Governance Factbook 2023, OECD Publishing, Paris, https://doi.org/10.1787/6d912314-en.

[16] The Royal Netherlands Institute of Chartered Accountants (2023), The performance of the external accountant at the general meeting of shareholders, https://www.nba.nl/wet--en-regelgeving/handreikingen/nba-handreiking-1118/.

[5] VEB (n.d.), What the VEB does, https://www.veb.net/over-de-veb-menu/over-de-veb/.

[17] Vos, T. (2017), The AkzoNobel Case: An Activist Shareholder’s Battle against the Backdrop of the Shareholder Rights Directive, pp. 238–243.

Notes

← 1.  The AEX index forms a diversified basket of largest companies listed on Euronext Amsterdam. The index is seen as the main indicator of the Dutch stock market. It selects 25 of the largest tradable companies listed on Euronext Amsterdam by free float market capitalisation (Euronext, 2023[18]).

← 2.  The AMX index selects the next 25 largest companies not part of the AEX listed on Euronext Amsterdam (Euronext, 2023[18]).

← 3.  Based on data provided by Euronext Amsterdam to the Secretariat.

← 4.  Based on data provided by Euronext Amsterdam to the Secretariat, more than 60% of capital invested in listed companies is non-domestic. For large caps this figure goes above 90%, with investments from the US and UK dominating.

← 5.  These are companies with operational headquarters located outside of the exchange market locations.

← 6.  Data provided by Euronext Amsterdam to the Secretariat based on Euronext/Refinitiv, as of February 2024.

← 7.  Based on data provided by Euronext Amsterdam to the Secretariat, as of October 2024.

← 8.  Data provided by Euronext Amsterdam to the Secretariat of de-listings over the period 2014-2024, including SPACs. De-listings occurred either as voluntary de-listing decisions, M&A, bankruptcy, merger, non-compliance, tender offer, SPAC liquidation or consolidation.

← 9.  Based on data provided by Euronext Amsterdam to the Secretariat, as of October 2024.

← 10.  In total, five Dutch listed companies have transferred their ordinary shares to a Trust Foundation (Stichting Administratiekantoor) and one Dutch listed company has transferred its financing preference shares to a Trust Foundation. This is approximately 7% of the Dutch companies listed on Euronext Amsterdam. It is worth noting that over the past decade many Dutch companies have abolished the depository receipt structure. Before that, it was a popular protective measure with approximately a third of the listed entities having this structure in place.

← 11.  The Corporate Governance Code itself is set up by the market (i.e. not by regulation).

← 12.  The Temporary COVID-19 Justice and Security Act.

← 13.  The Digital General Meeting of Private Law Legal Entities Act, which proposes amendments to Book 2 and Book 5 of the Civil Code and some other laws with a view to adapting the rules regarding the digital general meeting of legal entities and the rules for digital convocation of the general meeting is still in the preparatory phase in Parliament. The Bill was accompanied by an explanatory memorandum, available here (in Dutch).The legislative process can be followed here (in Dutch).

← 14.  The scope of the Bill includes: (i) public limited companies, (ii) private limited companies; (iii) associations, (iv) cooperatives, (v) mutual insurance associations, and (vi) European Public Limited Companies and European Cooperative Societies.

← 15.  The Civil Code specifies that for electronic means of communications to be used, it is required that the shareholder can be identified, can directly take note of the proceedings at the meeting and can exercise the right to vote. The articles of association may also provide that it is required that the shareholder can participate in the deliberations via the electronic means of communication (Article 2:117a).

← 16.  Article 2:117, paragraph 1 Dutch Civil Code also specifies that “The articles of association may restrict the authority of shareholders to be represented. The authority of shareholders to be represented by a lawyer, notary, additional notary, candidate notary, registered accountant or accountant-administrative consultant cannot be excluded.”

← 17.  The requirement of written power of attorney is met if the power of attorney is recorded electronically. If shares of the company or certificates thereof issued with the cooperation of the company are admitted to trading on a regulated market, the company offers the shareholder the opportunity to notify it of the power of attorney electronically.

← 18.  EU Directive 2017/828, 17 May 2017 amending Directive 2007/36/EC.

← 19.  No legal resolution may be passed on subjects the consideration of which was not announced in the notice of meeting or in the same manner in compliance with the period set for the notice of meeting, unless the resolution is passed unanimously in a meeting at which the entire issued capital is represented (Article 2:114, paragraph 2 of the Dutch Civil Code).

← 20.  These cases are: (i) the Boskalis/Fugro case in 2018 where a shareholder (Boskalis) requested that the company (Fugro) be ordered to put on the agenda an item about a protective measure that Boskalis did not approve of. The Supreme Court denied the request because a shareholder does not have the right to put an item on the agenda (for a vote) if the AGM is not allowed to vote on that item (in this case, the item related to the strategy of the company, which was considered a matter for the board, not the shareholders). (ii) The AkzoNobel/Elliot case in 2017, which deals with a request from a shareholder (Elliot) to convene an extraordinary general meeting (EGM) to dismiss AkzoNobel’s chair of the supervisory board. In this case the request was denied by the Enterprise Chamber, also with the argument that the underlying reason for requesting the EGM was a matter of the board.

← 21.  This is the Fortuna case of 2017 and, in this case, the Enterprise Chamber granted the request for immediate relief from shareholders.

← 22.  This is the Highfields/Delta Lloyd case of 2016, where a shareholder (Highfields) requested immediate relief, in order to prevent that a decision would be taken at the company’s (Delta Lloyd) AGM about an issuance of shares. Highfields argued that the provision of information had been so faulty (both the timing and the content) that shareholders had not been able to determine their position on the agenda item. The Enterprise Chamber disagreed and denied the request.