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  • CRYSTAL BALL GAZING 2020

    January 2020

  • INDEX CRYSTAL BALL GAZING 2020

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    INTRODUCTION 2020 introduces a new decade, one which already promises to be an exciting one for our clients, the legal sector and society in general. In this special newsletter, we gaze into our crystal ball and highlight some of the more important trends and developments which could very well affect or even change the way you do business in the next 12 months. We want to make sure you are well-informed and ready for this year and beyond. Clients tell us that they regularly face increasingly complex challenges that go to the core of their business which also have an impact on society. We know that off-the-shelf legal solutions are no longer enough to meet these challenges. Teams of experts with a broad vision, in-depth expertise and a keen eye to responsibly identify and address society’s needs, must be part of the discussion. Now more than ever. We are very proud of the people at De Brauw who combine their skills to deliver sustainable solutions for the benefit and long term success of our clients. We very much look forward to collaborating and facing the challenges with you and your teams in the upcoming year. Marnix Leijten Anja Mutsaers Dorothee van Vredenburch

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    Corporate GovernanceCorporate AdvisoryFields of expertise

    CORPORATE GOVERNANCE IN 2020: ISSUES FOR BOARDS TO ADDRESS

    REMUNERATION In 2020, Dutch NVs and BVs listed on an EU-regulated market will have to ensure that their remuneration policy complies with Dutch legislation implementing the revised European Shareholder Rights Directive (SRD). Companies that do not currently follow the new rules, must include a revised policy as an agenda item for the upcoming AGM, for approval by the general meeting. Companies will also need to prepare a remuneration report in accordance with the new legislation and submit this to the general meeting’s advisory vote.

    When preparing the new remuneration policy, companies are expected to seek the view of stakeholders to ensure a sound basis for their proposals. This approach is also advocated by Eumedion, the Dutch corporate governance platform for institutional investors, in its 2020 Focus Letter.

    DIVERSITY In 2020, boards at listed companies will have to include diversity in their dialogue with the company’s stakeholders as a means of improving gender diversity within the company.

    Remuneration, diversity and long-term value creation are some of the key corporate governance topics that boards at Dutch listed companies will have to account for in 2020. The new rules on remuneration – effective 1 December 2019 – will be at the centre of discus- sion at 2020 AGMs. The same applies to board diversity, which will be a recur- ring topic at AGMs, as listed companies are being pressed by the government, as well as by proxy advisors and institu- tional investors, to increase gender diversity, not only in the boardroom but also at senior management level. A bill introducing a statutory 250-day response time enables boards at listed companies to identify and weigh the interests of the company and its stake- holders when confronted with a takeover or shareholder-initiated proposal for changes in the board’s composition.

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    EXPERTS

    https://zoek.officielebekendmakingen.nl/stb-2019-423.html https://www.debrauw.com/alert/new-remuneration-and-related-party-transaction-rules-for-dutch-listed-companies-take-effect/ https://www.eumedion.nl/clientdata/215/media/clientimages/speerpuntenbrief-2020.pdf?v=200107192209

  • On 1 January 2020, the statutory 30% representation target for both men and women on boards at large NVs and BVs expired.

    In September 2019, the Dutch Social and Economic Council (SER) issued an advisory report (English summary) on cultural and gender diversity in the boardroom. Regarding gender diversity, the SER called for: • the introduction of a mandatory 30% quota for both women

    and men on supervisory boards at Dutch listed companies • a requirement for large NVs and BVs to set ambitious

    targets at both board and senior management level with a comply or explain character for the company

    In December 2019, a majority in parliament supported two motions calling on the government to implement the SER’s advice. A government proposal along these lines can be expected by the end of 2020.

    Gender diversity is also on the agendas of Eumedion and proxy advisors such as ISS and Glass Lewis. In a gender diversity letter, Eumedion calls for companies to adopt and publicly disclose a diversity policy, including “a commitment to increase gender diversity throughout the talent pipeline and to set an ambitious gender diversity target (of at least 30%), especially at management board and committee level”. Boards will be expected at the 2020 AGM to report on progress made and concrete measures taken in this respect. ISS will recommend voting against the appointment or reappointment of the nomination committee’s chair if a company has no female board directors, although mitigating factors may apply. Also, some institutional investors seem to be introducing policies to vote against the appointment or reappointment of male directors at companies with no or few female board members.

    LONG-TERM VALUE CREATION Companies are being increasingly urged to take a longer-term approach. The focus on long-term value creation is one of the core principles of the Dutch 2016 Corporate Governance Code. In pursuing this, companies must carefully weigh up

    the relevant interests of stakeholders. In other countries, the debate around long-term value creation and the corporate purpose is also unfolding. In the US, the Business Roundtable released a new statement on corporate purpose in August 2019. This was signed by 181 CEOs at major US firms, committing to leading their companies for the benefit of all stakeholders. Long-term value is also promoted by Larry Fink, CEO of the US investment management company BlackRock, in his CEO Letter of 14 January 2020, mentioning climate change as a defining factor in companies’ long-term prospects. In April 2019, the French parliament adopted a law enabling companies to state their purpose in corporate bylaws.

    The range of instruments available to boards at Dutch listed companies to achieve long-term value creation may be widened by a new statutory 250-day response time. A bill (in Dutch) on this topic was submitted to parliament on 19 December 2019. Introducing a statutory response time has been criticised by some parties, as boards already have the possibility to invoke a shorter,180-day response time under the Dutch Corporate Governance Code. The Explanatory Memorandum (in Dutch) clarifies that it is up to the parties concerned to decide if and how this best practice provision needs to be reconsidered.

    An NV or BV qualifies as large when at least two of the following three criteria are met: (i) the value of the assets according to the balance sheet with explanatory notes exceeds EUR 20,000,000; (ii) the net turnover for the financial year exceeds EUR 40,000,000; (iii) there are, on average, 250 or more employees at the company during the financial year.

    For guidance on corporate governance in 2020 and beyond we published an update of our handbook Corporate Governance in Nederland.

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    https://www.ser.nl/-/media/ser/downloads/adviezen/2019/diversiteit-in-de-top.pdf https://www.ser.nl/-/media/ser/downloads/engels/2019/diversity-boardroom.pdf https://www.eumedion.nl/clientdata/215/media/clientimages/2019-10-brief-genderdiversiteit-besturen.pdf?v=191127095134 https://www.eumedion.nl/clientdata/215/media/clientimages/2019-10-brief-genderdiversiteit-besturen.pdf?v=191127095134 https://www.issgovernance.com/file/policy/latest/updates/EMEA-Policy-Updates.pdf https://www.businessroundtable.org/business-roundtable-redefines-the-purpose-of-a-corporation-to-promote-an-economy-that-serves-all-americans https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter https://www.gouvernement.fr/en/pacte-the-action-plan-for-business-growth-and-transformation https://www.tweedekamer.nl/downloads/document?id=c9465f39-bdd8-4c3d-a00a-ece7f2a4c37d&title=Voorstel%20van%20wet%20.pdf https://www.tweedekamer.nl/downloads/document?id=a4ed704c-cb48-41c4-8326-d1ea6c2ea0ff&title=Memorie%20van%20toelichting%20.pdf https://www.tweedekamer.nl/downloads/document?id=a4ed704c-cb48-41c4-8326-d1ea6c2ea0ff&title=Memorie%20van%20toelichting%20.pdf

  • Mergers & AcquisitionsFields of expertise

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    M&A: WHAT

    TO WATCH FOR IN 2020

    The W&I insurance market has been s