Corporate

Around mid-March the Corona pandemic brutally shut down international football. Two months later the German Bundesliga was the first football competition that made a cautious restart. Matches are being played in empty stadiums with fake fans and fake fan noises. Many other European countries including Spain, Italy and England intend to restart their competitions in the course of June.

In The Netherlands the first football league (“Eredivisie”) had to be terminated prematurely as a result of the corona measures taken by the government. As a consequence it was up to the Royal Dutch Football Association (RDFA) to decide about the outcome of the Eredivisie. Basically there were two options:

1. to annul the current football season 2019/2020 with the consequence that no promotion and relegation takes place;
2. to designate a champion and two clubs which are relegated to the second tier league of Dutch football based on the ranking of the Eredivisie when it was shut down. At that time around 75% of the matches had been played. Obviously in case of relegation also two clubs would promote from the second tier league to the Eredivisie.

In the resolution procedure of the RDFA the final decision was preceded by a so-called poll. In this poll all 34 professional clubs were given the opportunity to express their opinion regarding promotion and relegation. The outcome of the poll was pretty clear at face value: 16 clubs voted in favour of promotion/relegation, while 9 clubs voted against it and 9 clubs were neutral.

Decision RDFA followed by proceedings

Subsequently the RDFA decided to annul the current season, meaning that there will be no promotion or relegation. To the opinion of the RDFA there was no overriding majority of the clubs in support of the promotion/relegation scheme and therefore the current season, which could not be finished, was declared null and void. Hence RKC, a team which was trailing the other teams in the Eredivisie by 11 points, escapes from relegation. The other side of the coin is that Cambuur, which was the leading in the second tier league by 11 points, will not promote to the Eredivisie. Cambuur and De Graafschap, being the runner-up in the second tier league, challenged the decision of the RDFA and filed injunctive relief proceedings with the Dutch court. Cambuur and De Graafschap requested the court to set aside the decision of the RDFA and to determine that they would yet be promoted. The court ruled on 14 May and upheld the decision of the RDFA. The claims of the plaintiffs were denied.

The regulations of the RDFA

The Dutch football clubs are members of the RDFA and hence they are bound by the resolutions of the RDFA, unless the clubs could argue that such resolution is invalid and should be annulled. An annulment could be invoked successfully in case there is a breach of statutory provisions or regulations or if the decision is contrary to the rules of reasonableness and fairness. As the relevant resolution belongs to the exclusive authority of the RDFA, the RDFA has a wide margin of appreciation and the court can only marginally review its decisions.

Cambuur and De Graafschap argued that the Professional Football Matches Regulations, more specifically the Promotion and Relegation Regulations, of the RDFA provide that the leader and the runner-up of the second tier league are promoted to the Eredivisie. Therefore, according to the clubs, the RDFA just should abide by the regulations and is not allowed to deviate therefrom. However in the opinion of the court this unfinished and irregular competition creates a special situation where, under the relevant regulations, the Board of the RDFA has the exclusive power to tie the knot as it has done.

Rules of reasonableness and fairness

Cambuur and De Graafschap also argued that the decision of the RDFA violates the rules of reasonableness and fairness. The complaints of the plaintiffs specifically focussed on the poll which was held among the clubs prior to the decision about relegation and promotion. Indeed, the court indicated that the decision-making process in this respect certainly left room for improvement. The procedure was not very clear or transparent, but by holding a poll –instead of a vote- the RDFA still had enough room to make up its own mind and was not bound by the outcome of the poll. According to the court, the fact that certain clubs suffer damages as a result of the decision is not sufficient to argue that such decision is careless or unreasonable and ought to be annulled as a result thereof.

The door to the Eredivisie has not been closed yet for Cambuur and De Graafschap. They may still lodge an appeal although the chances of success are not high in injunctive relief proceedings. At the same time the case will be put to vote at the upcoming general meeting of members of the RDFA. Last but not least the clubs are discussing an appropriate financial compensation with the RDFA.

Difficult to challenge decisions of the RDFA

The verdict of the court shows that it is very difficult for clubs to challenge decisions of the RDFA. By the way, for the purpose of participation in European football competitions the RDFA based its decision on the ranking in the current season, meaning that the leader Ajax and runner up AZ will be admitted to (the qualifying matches for) the Champions League. This solution was accepted by the UEFA. Still, these decisions of the RDFA could have easily gone another way. Our neighbours in Belgium namely came to the exact opposite conclusion based on similar regulations. Club Brugge has been crowned as the champion, whereas Waasland-Beveren will relegate based on the ranking of the current unfinished season. Waasland-Beveren has announced that it will challenge this decision at the Belgian sports tribunal. Story to be continued.

In response to the coronavirus, an Emergency Act came into force on 24 April 2020 with temporary provisions for all legal entities. The Temporary Act COVID-19 Justice and Security is intended to enable remote meetings for legal entities and provides for an extension of the term for drawing up the annual accounts. The Temporary Act applies until 1 September 2020, but can be extended by the government by two months at a time if necessary. Pim Lieffering explains for you the points of attention of the measures taken with regard to the private limited company (B.V.) and the association (vereniging).

Digital shareholders meeting

At present, many articles contain a provision for electronic voting at a general meeting. However, some articles of association do not provide for the possibility of a digital shareholder meeting. The purpose of the Emergency Act is to allow temporary derogations from legal and statutory provisions concerning the holding of physical meetings and related time limits and sanctions.

On the basis of the Emergency Act, the board may determine that the shareholders’ meeting is temporarily held electronically, regardless of what is provided for in the articles of association. This intention must be stated no later than the notice convening the meeting. If the convocation has already been sent, the manner of meeting can be changed to a digital meeting up to 48 hours before the meeting.

Tip: make sure that the convocation also contains a manual of the digitally chosen meeting system. This allows shareholders to familiarise themselves with the system prior to the meeting.

The following points should be taken into account when holding an digital shareholders’ meeting:

• The general meeting can be followed via a live video or audio link.
• The management board can determine that the voting right can be exercised (exclusively) by means of an electronic means of communication. In addition, the Board may determine that votes cast electronically no more than 30 days prior to the general meeting will be treated the same as votes cast at the time of the meeting. This must, however, be stated in the notice convening the meeting.
• The shareholders must be given the opportunity to ask questions in writing or electronically about the items on the agenda no later than 72 hours prior to the meeting. In the event that a convocation for the shareholders’ meeting has already been sent and the management board has exercised its right to stipulate no later than 48 hours prior to the meeting that the meeting is to be held exclusively by electronic means, the term is 36 hours.
• Questions posed by shareholders must be answered during the meeting at the latest, thematically or otherwise. The answers must then be posted on the website of the private limited company or association or made accessible to the shareholders via an electronic means of communication.
• The management board must ensure that shareholders can ask further questions during the meeting by electronic means or otherwise, unless the chairman of the general meeting determines that this cannot reasonably be asked in the light of the circumstances.
• If the above provisions on asking questions during the meeting are deviated from, the resolutions passed at the meeting will still be valid. The legal validity also remains in the event, for example, of a faltering connection at one of the shareholders.

The rules described above for the benefit of shareholders also apply to the members’ meeting of the association.

No postponement of the general meeting

The board of directors of the private limited company or the association does not have the possibility to extend the term for holding a general meeting. The Emergency Act does give this possibility for the public limited company (N.V.).

Extension of term for drawing up annual accounts

Usually the board of directors of the private limited company prepares annual accounts within five months after the end of the financial year. This period may normally be extended by the general meeting by a maximum of five months due to special circumstances. A possible extension by a maximum of 6 months applies to the association.

On the grounds of the Emergency Act, the board of the private limited company may extend this period by a further maximum of 5 months. The board of the association may extend the usual period of 6 months by a further maximum of 4 months.

Tip: If the articles of association give you the option of holding a digital shareholders’ meeting, first try to obtain an extension via this shareholders’ meeting. This will allow you to make maximum use (if necessary) of the possible extension up to 10 months. If the board makes use of the possibility under the Emergency Act, the general meeting can no longer make use of its power of extension.

Directors not always liable in case of late filing of annual accounts

If directors are late in filing the annual accounts and the company subsequently goes bankrupt, the directors can be held personally liable for the shortfall of assets. At such a time, there is a presumption that the mismanagement is an important cause of the bankruptcy.

The Emergency Act relaxes this strict regulation. If it is established that the late filing is due to the consequences of the outbreak of COVID-19, the directors are not directly personally liable under the law. This will be assessed on the basis of the circumstances of the case and must be proved by the Board.

This regulation applies for 3 years until 1 September 2023. In the explanatory notes, the reason given for the date is that, in the event of bankruptcy, a claim can be filed on the grounds of improper performance of duties in the period of three years prior to the bankruptcy.

The board of directors of the private limited company must, however, comply with the accounting requirements of Article 2:10 of the Dutch Civil Code, despite the COVID-19 virus. However, the presumption of proof still applies in this respect.

On Tuesday, 20 November 2018, we heard the sad news that our firm’s much-loved partner and colleague Georg van Daal passed away in the night of 19 November 2018.

Georg became a partner in the Corporate Law practice group of Ekelmans & Meijer in 2014. He played a significant role in our partnership and in making our firm more international.

Georg was an eloquent and witty lawyer and he had wide interests, which he continued to develop. At Leiden University, he studied not just Dutch law but also Chinese language and culture, spending some time at the University of Wuhan in China. in 2008, he obtained his PhD at Erasmus University Rotterdam with a thesis on corporate law.

He was involved in the community and social causes, assisting start-ups pro bono and working to specifically help people with diverse (cultural) backgrounds.

Georg worked for a wide range of national and international clients, covering the entire field of corporate law. He was also very active in our international network Legalink; he founded the Legalink Academy in 2017 and recently gave a talk on cryptocurrencies in Mexico. He made contacts around the world with verve.

He published a great deal and wrote five books. Georg was sharp, in both his analyses and his comments. That was evident in his monthly columns for his fellow lawyers in Advocatie.

We remember him as a committed and socially minded person who was always interested in the perspective of his clients and the associates at the firm. He found proper communication and “sharing” things important.

We are grateful to him for everything he has done for us and our clients. We will miss him