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New shareholders’ rights directive may have impact on remuneration policy


Following the shareholders’ rights directive amended by the European Union, companies may require a revision of a company's current remuneration policy prior to the Annual General Meeting (AGM) in 2020. Companies should already analyse the new requirements and the possible impact. We expect that these EU guidelines, including additional requirements for Dutch companies, will be implemented in Dutch law in the second half of 2019.

The amended shareholders' rights directive applies to listed companies with a registered office in a member state of the European Union whose shares are listed on a regular stock exchange in the EU. This legal framework is aimed at promoting the long-term involvement of shareholders and creating more transparency between companies and investors. The deadline for all EU Member States to implement the provisions of the directive in their national law has passed, but the process of the Dutch implementation is still in progress. The Commission of Justice and Security discussed the next procedures and preparations its meeting on 2 July 2019. The commission has decided to provide input for the preliminary report on 10 September 2019.

New requirements for remuneration policy and report

The amended shareholders' directive includes a say-on-pay that relates to a vote on both the remuneration policy and the remuneration report for both executive and non-executive directors (supervisory board members). Dutch companies with shares listed in the EU will have to prepare a new remuneration policy and obtain approval from the shareholders at the Annual General Meeting (AGM) in 2020 if the current remuneration policy is older than three years, or the current remuneration policy is not in line with the requirements of the Directive. A resolution to adopt the remuneration policy at the AGM in 2020 will require a majority of at least 75 per cent of the votes cast in the general meeting of shareholders, unless a smaller majority is prescribed in the company’s Articles of Association.

Influence on preparations for shareholders meeting 2020

It has not been clear if the 2019 remuneration report or the 2020 remuneration report is the first remuneration report that will have to apply with the new requirements. This application was clarified in the responses from the Minister for Legal Protection on questions from the Senate of the Dutch Parliament. For companies with 31 December as the reporting date, the remuneration report for financial year 2019 will have to be prepared in line with the new requirements and will be subject to an advisory vote on the AGM in 2020.

This clarification from the Minister may affect your planning and preparations for the AGM 2020. Since the requirements for the remuneration policy and report will be effective immediately, it is important to analyse the new requirements and the possible impact during the second half of 2019. In this planning, is it also key to take into account the required governance and the internal processes, including timing of Supervisory Board meetings.

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