Shareholders’ rights to have an item put on the agenda of the general meeting
The Dutch Civil Code gives shareholders of a corporation the right to have an item put on the agenda of the general meeting. A recent judgement of the district court in The Hague demonstrates that this right has a scope that is more limited than expected.
Fugro NV is a listed public limited company established in the Netherlands. Fugro specializes in conducting geotechnical site investigations and geotechnical engineering analyses. Boskalis Holding BV is a major investor in Fugro with an interest of more than 20 percent. Fugro employs three defensive tactics to protect it from a hostile takeover bid. As a first defensive measure its shares are held by a trust office and only corresponding depository receipts are traded on the Euronext Amsterdam stock exchange. As a second defensive measure Fugro can issue preference shares. The third defensive measure also consists of the possibility to issue preference shares, though not by Fugro itself but by two subsidiary companies that are located on the island of Curaçao (that is part of the Netherlands Antilles). Koninklijke Boskalis Westminster NV, the parent company of Boskalis, has serious objections to the way Fugro protects itself against a hostile takeover. In its opinion, the cumulation of three defensive measures is unusual and especially the third defensive measure is disproportionate. When Boskalis Westminster and Boskalis indicated that they wanted the ‘Antillean’ defensive tactic to be dismantled and expressed the desire to discuss this with Fugro, Fugro declined to open talks on this issue.
On 18 February 2015 Boskalis requested that Fugro put the following item on the agenda of the upcoming general meeting that is to be held on 30 April 2015: ‘Recommendation to the management board and supervisory board of Fugro … to do all that is necessary to immediately bring to an end the defensive measure that is being used at the level of two subsidiary companies established on Curaçao (voting matter)’. Interestingly, Article 2:114 of the Dutch Civil Code gives one or several shareholders or holders of depository receipts who alone or together represent at least three percent of the issued share capital of a public limited company the right to have items added to the agenda of the general meeting. Against the backdrop of this provision, having its origins in EU corporate law, Boskalis was in no doubt that the management and supervisory boards of Fugro would meet its request. However, Fugro refused to put the item on the agenda of the general meeting, at least as a voting matter. Boskalis applied to the district court in The Hague and asked the court to order Fugro (by way of an interim measure) to put the proposed item on the agenda. But to no avail. On 17 March 2015 the court dismissed Boskalis’ claim on inter alia the argument that Article 2:114 of the Dutch Civil Code does not allow shareholders or holders of depository receipts to have an item put on the agenda of the general meeting as a voting matter (admittedly non-binding) when that item ‘raises an issue that concerns corporate strategy and is therefore within the realm of the powers of the management board exclusively’.