ホイセン法律事務所 新型コロナ関連 ヘルプデスク
Phone: +31 (0)20 312 2800 (平日9:00 ~ 17:00)
- アップデート 19 - ジェネラル - Relaxation of the Covid-19 measures by 11 May 2020
- アップデート 18 - 会社法 - 法人に関する緊急対策法
- アップデート 17 - 労働雇用法 - Holiday issues during Corona crisis
- アップデート 16 - 訴訟 - Judgment in proceedings by Netherlands Commercial Court (NCC)
- アップデート 15 - 会社法 - Never waste a good crisis. Also the corona crisis provides opportunities – M&A Magazine #1 2020
- アップデート 14 - 訴訟 - General overview of the measures imposed by the council for the judiciary
- アップデート 13 - 労働雇用法 - NOW（雇用維持のための暫定的緊急つなぎ措置）におけるグループ会社についてのコンセプト変更
- アップデート 12 - ジェネラル - New adjusted measures
- アップデート 11 - 会社法 - Emergency bill for holding virtual general meetings in the making
- アップデート 10 – 労働雇用法 - Roadmap application temporary emergency bridging measure for job retention (NOW)
- アップデート 9 – 会社法 - M&A and COVID-19: Due diligence investigation during and after the times of the coronavirus
- アップデート 8 – 会社法 - Commercial contracts and the COVID-19 outbreak: when is reliance on force majeure successful?
- アップデート 7 – 労働雇用法 - 雇用維持のための暫定的緊急つなぎ措置 (NOW)
- アップデート 6 - 会社法 - M&A and COVID-19: Purchase price mechanisms in times of the coronavirus
- アップデート 5 - 労働雇用法 - Update on the temporary emergency bridging measure for sustained employment ("NOW")
- アップデート 4 - 会社法 - New measures to protect jobs and economy in times of corona crisis
- アップデート 3 - 労働雇用法 - Not ill but absent from work: to what extent is there an obligation to continue to pay wages in the event of absence in connection with corona?
- アップデート 2 - 労働雇用法 - Introduction temporary emergency bridging measure for job retention
- アップデート 1 - 労働雇用法 - Employers in the Netherlands can save on labour costs in case of less work due to coronavirus
Update 19 - General
UPDATE: RELAXATION OF THE COVID-19 MEASURES BY 11 MAY 2020
Following in the footsteps of several other European countries, the Netherlands will also relax the Covid-19 measures. Despite the fact that people are still dying every day from the effects of the virus in the Netherlands, a positive trend is visible in the Covid-19 figures. As a result, society's demand for more freedom became more and more evident. The Dutch Government has therefore decided to relax the restrictive Covid-19 measures within various sectors as from 11 May 2020. The Dutch Government has also made a number of predictions about how it expects to shape future relaxations.
In the first instance, the Dutch Governments relaxation of the measures will focus on the adaptation of local measures. These relaxations will not directly lead to more people on the streets, in traffic or in public transport. Future relaxations of the measures at regional level, and later at national level, will follow.
Relaxation of the measures as from 11 May 2020
Primary schools, including special (primary) education, and day care and childminding service will re-open on 11 May 2020.
Sports and games
Children will step by step be allowed to practice sports and games. Children up to and including the age of 12 will be allowed (under supervision) to play outdoor sports together. Youngsters from 13 up to and including 18 years of age will also be allowed to do so, but they will have to keep a distance of one and a half meters. In addition, outdoor sports in groups will be allowed for all ages, provided that a meter and a half distance is kept. However, no matches may be played and the changing rooms and showers will not be accessible.
The practice of most contact professions will be allowed again. Such professions include driving instructors, certain medical professions, beauty care professions and alternative medicine practitioners. Again, the work must be organized at a distance of one and a half meters as far as possible.
As far as public transport is concerned, it should only be used if necessary. The advice is to avoid rush hour, to give each other space and to wear non-medical mouthpieces. In view of the expectation that public transport will become busier from 1 June 2020, the wearing of mouth masks in public transport will become mandatory from that date.
As mentioned above, relaxation of the Covid-19 measures is possible because the customers of these sectors mainly live nearby. The risk of a crowded public transport and of large groups of people travelling is therefore not very high. It is also relatively easy to comply with the health advice in the sectors mentioned above, such as regular hands washing.
However, it is clear that, also in other sectors such as the hospitality industry, the call for relaxation of the Covid-19 measures is increasing. The Dutch Government therefore wants to implement these relaxations step by step in consultation with companies and organizations that have made plans that fit within the one-and-a-half meter society.
Expectations as of 1 June 2020
If the virus remains under control, the intention is to re-open secondary education on 1 June 2020. However, it has not yet been fully worked out how this is to be done. Terraces that provide space to create seats where customers are able to keep a minimum distance of one and a half meters from each other will also be allowed to reopen. In addition, cinemas, restaurants and cafes and cultural institutions such as concert halls and theaters may reopen. These openings are subject to the conditions that a maximum of 30 people may enter the establishment and that they are able to maintain one and a half meters distance to each other. In addition, visitors must make reservations in advance and the entrepreneur must assess, by means of a conversation with the client prior to the visit, whether the visit may involve any risks.
Expectations per 15 June 2020
It is expected that, again provided the virus remains under control, it will be possible to give practical lessons and take exams within senior secondary vocational education (mbo) as of 15 June 2020.
Expectations as of 1 July 2020
From 1 July 2020, the communal toilets and showers on campsites and holiday parks are expected to be allowed to reopen. The maximum number of visitors to cinemas, restaurants, cafes and cultural institutions may also be increased to 100 by then. This will also apply to organized gatherings, such as church services, weddings and funerals.
Expectations as of 1 September 2020
If the virus is still under control on 1 September 2020, fitness clubs, saunas and wellness centers, club canteens, coffee shops and casinos may reopen. In addition, all contact sports and indoor sports will be possible again for all ages.
アップデート 18 - 会社法
電子的手段 (例えばライブ•ストリーム) のみを介して総会を開催する条件として、株主は総会の７２時間前までに、総会時の対話を促進するため、書面もしくは（イーメール等の）電子的手段で総会の議題についての質問を出すことができます。が、この緊急対策法は、上記がなされない場合も、総会で採択される決議の有効性には影響を及ぼさないとしています。
上記についてまたはその他ご質問等ございましたら、お気軽に当事務所の新型コロナ関連ヘルプデスクにご連絡ください。(email@example.com, +31(0)20 312 2800).
Update 17 - Employment law
HOLIDAY ISSUES DURING CORONA CRISIS
The impact of the coronavirus lasts longer than expected. Although cinemas, restaurants, cafes and museums will (cautiously) reopen from 1 June 2020, it will still take some time before our daily lives return to normal. Also, it is not yet clear whether a holiday abroad will be possible this summer. As a result, many employees are requesting to withdraw the already determined holiday and to save their holiday entitlement for a later moment. On the other hand, the employer whose business has significantly slowed down during this period, will benefit from employees taking holidays particularly now. Moreover, the employer foresees problems with regard to the holiday roster as soon as the restrictions are lifted. After all, employees will most likely all want to use their holiday entitlements at the same time. This first of all raises the question whether employees can be bound by the already determined holiday. Moreover, it is relevant to determine to what extent employers can reject holiday requests after the restrictions in connection with the coronavirus have been lifted.
Being bound by an already determined holiday
In principle, the employer cannot bind an employee to an already determined holiday if the employee wishes to withdraw this. The main reason for this is that the employer must determine a holiday in accordance with the wishes of the employee. The fact that the holiday was initially requested and determined during a different period does not alter this. In addition, in line with good employment practice, an employer can only obligate an employee to take an already determined holiday against his/her wishes if a so-called reasonable exists. An example of such a reasonable interest is the situation whereby the employer has already arranged a replacement for the employee. Purely financial considerations, such as the fact that labour productivity is lower than usual, are not sufficient to qualify as such. The same applies to the argument that employees will otherwise save their holidays and request to take these later and all during the same period. After all, for that problem, the legislator has given the employer the possibility to refuse a holiday request.
Be that as it may, and despite the fact that - as outlined - this is not permissible, the employer can assume the position that the already determined holiday cannot be withdrawn. It is then up to the employee to convince the employer (or the judge) that this position is contrary to statutory holiday regulations and/or good employment practice.
Refusal to grant a holiday request
An employee is entitled to take at least the statutory minimum number of holidays (20 days with fulltime employment) each year. The employer determines the holiday in line with the employee’s request, unless so-called valid grounds exist, or unless parties have agreed otherwise in writing or a CLA stipulates otherwise. So an employer may in principle refuse to grant a holiday request if so-called ‘valid grounds’ exist. However, the employer must thereby always first weigh the consequences of the absence for the employer against the consequences of rejecting a holiday request for the employee. Operational pressure such as will occur in the hospitality industry after the restrictions have been lifted may qualify as such a valid ground. The same applies to roster problems due to the fact that a number of employees has already planned to take his/her holiday during the period in question.
In view of difficulties in holiday planning which may arise after the lifting of restrictions, employers would be well advised to take the (initial) position that already determined holidays cannot be withdrawn. Moreover, the employer may point out to employees that it may well not be possible (and that the employer will in principle not be obliged) to grant all holiday requests after the restrictions have been lifted. Although employees are in principle not obliged to take any holidays against their will and although they may be able to force the employer to accept a withdrawal of already an determined holiday, this may have the effect of employees taking holidays during the restrictions after all. This would seem to be to everyone's benefit.
Update 16 - Litigation
JUDGMENT IN PROCEEDINGS BY NETHERLANDS COMMERCIAL COURT (NCC)
On 29 April 2020, the Netherlands Commercial Court ('NCC') in summary proceedings in Amsterdam rendered a judgment in proceedings pending between an American and a Dutch party. The main question is whether a Transaction Agreement ('TA') has been agreed and in the alternative, if it is held that this is not the case, whether the agreed “break-up fee” should be paid or should be modified, mitigated or reduced in the light of COVID-19. Dutch law governs these questions.
The plaintiff (a New York based company) and Tennor (defendant) spent months discussing a proposed transaction for Tennor to acquire the plaintiff's 50% interest in an equestrian show-jumping business. At the end of December 2019 they signed a Letter of Intent ('LOI'). The LOI stipulated that each party could choose to withdraw from the deal at any time before the deadline, but the withdrawing party would have to pay the other party a break-up fee of EUR 30 million. The deadline was 2 March 2020. The plaintiff did the paperwork for the deal. Tennor's lawyers and other advisors made several statements about the deal (e.g. "The drafts are final" and "[…] will come back with the signature pages in a few minutes"). However, Tennor did not sign the paperwork.
The plaintiff seeks an order for Tennor to take the stake and pay the price (EUR 169 million) or, in the alternative, an order for Tennor to pay the break-up fee of EUR 30 million.
Tennor’s defence has three prongs:
- Tennor argues that there is no deal as its authorised representative did not sign.
- Tennor relies on Articles 6:248, 6:258 and 6:260 of the Dutch Civil Code ('DCC') and contends that any deal must be dissolved, or its effects must be modified, in light of the current COVID-19 circumstances and their impact on the business.
- Tennor insists, on similar grounds plus Article 6:94 of the DCC, that the break-up fee should be dissolved, modified or reduced to zero.
In response, in addition to its argument that the deal was done, the plaintiff contends that the business has retained its long-term value and that Tennor’s change-of-circumstances arguments would effectively shift the COVID-19 burden entirely onto the plaintiff.
It is acknowledged that Tennor did not sign the paperwork for the TA. The requirement of "execute and deliver" in the LOI is not a formal requirement under Dutch law, but is important as proof of the existence of an agreement. In the M&A practice, in which the parties operate, this means that there is a high threshold for the acceptance of an agreement based on conduct or statements made by Tennor's advisors. The NCC expresses this as follows: “Accordingly, there is no sufficiently clear and reliable communication in the record that a reasonable person in the same circumstances as plaintiff would have understood to mean that Tennor wished to enter into the agreement (offer and acceptance). That means there was no deal.”
On the above grounds, at this early stage and on a preliminary basis, the NCC finds that there is not a sufficient likelihood of success on the merits so as to justify an interim measure as sought by the plaintiff in its main claim. The court considers the information put forward by the plaintiff insufficient to assume that a TA has been established. The main claim is therefore denied.
With respect to the alternative claim, the NCC notes that it is not in dispute that a break-up fee of EUR 30 million should be paid in the event of failure to sign the TA. The question is whether the break-up fee should be modified, mitigated or reduced in relation to COVID-19. Tennor relied on three Articles in the DCC in support of its defence which provide the framework for the Court’s discussion:
- Article 6:248 (2) DCC states that a contractual provision is unenforceable in certain circumstances (the restrictive effect of the principles of reasonableness and fairness);
- Article 6:258 DCC authorises the courts, at the request of one of the parties, to dissolve a contract or modify its effects in circumstances which were in the future when the contract was agreed and for which the contract makes no provision, which are of such a nature that, according to the standards of reasonableness and fairness, maintenance of the contract cannot be expected;
- Article 6:94 DCC authorises the courts to reduce or eliminate a penalty on the grounds of fairness.
Under all three Articles, the courts must exercise caution. Contracts must generally be enforced as agreed. COVID-19 may be an unforeseen circumstance, but not of such a nature that the plaintiff, according to standards of reasonableness and fairness, may not expect an unaltered continuation of the break-up fee obligation. In this respect the NCC in summary proceedings will look at the underlying basis of the break-up fee. After all, this was to encourage the parties to enter into a transaction, to allocate the risks and to express their commitment.
The NCC refers to the “share the pain” philosophy, advocated by Prof. mr. R.P.J.L. Tjittes to the effect that in case of unforeseen circumstances, such as the COVID-19 crisis, parties may, on grounds of reasonableness, have a renegotiation obligation in order to reach an allocation of the harm. The NCC further focuses on preserving the parties’ contractual equilibrium in the current circumstances. This is, in the Court’s analysis, the right way to look at the agreement here. As Tennor states, the harm to the business may be substantial and structural but the best “share the pain” solution, to preserve the contractual equilibrium in the agreement, is for Tennor to pay the break-up fee as written. This allocates a defined risk to the defendant. If the break-up fee were to be reduced in any business downturn, the fee’s purpose – comfort and confidence to get the deal done – would not be accomplished. The break-up fee would be eviscerated in precisely the circumstances in which the parties intended it to be robust. The Court therefore allows the alternative claim, and orders the defendant to pay the EUR 30 million break-up fee.
It is likely that when entering into an agreement the parties did not take into account the consequences of a pandemic such as COVID-19 and - in particular - its far-reaching consequences. Recourse to unforeseen circumstances (6:258 Dutch Civil Code) in the light of major financial problems could lead a court to rule that the agreement – or its impact - must be modified, mitigated or reduced. However, in the above judgment and in this specific case, the NCC does not proceed to amend the agreement and leaves the break-up fee of EUR 30 million intact in the light of the “share the pain” approach. The purpose of the provision to be amended - at Tennor's request – already entailed an allocation of risk. However, the NCC's ruling does not in any way imply that every court will rule equally: not only because this is a decision in summary proceedings, also because a court will always rule in light of all the specific circumstances of the case.
You can further read into the case on the site of the Judiciary.
If you wish to know more about the implications of the coronavirus crisis on the litigation practice or if you need any assistance in this respect, please do not hesitate to contact our Corona Helpdesk team (firstname.lastname@example.org, +31(0)20 312 2800)
Update 15 - Corporate law
NEVER WASTE A GOOD CRISIS. ALSO THE CORONA CRISIS PROVIDES OPPORTUNITIES – M&A MAGAZINE #1 2020
Suzanne Beijersbergen has been interviewed for M&A Magazine about the changes after the corona crisis. Does the corona crisis provides opportunities to certain parties involved in M&A transactions? Which sectors will benefit from this corona crisis and which innovations will accelerate due to the corona crisis? To read the online version of this article (in Dutch) click here.
Would you like to discuss any the impact of the Corona crisis on M&A transactions or are you seeking for advice on this matter, please contact Suzanne S. Beijersbergen or our Corona Helpdesk team (email@example.com, +31(0)20 312 2800).
Update 14 – Litigation
GENERAL OVERVIEW OF THE MEASURES IMPOSED BY THE COUNCIL FOR THE JUDICIARY
Recently litigation has undergone major changes. The measures taken by The Council for the Judiciary (the Judiciary) as a result of the outbreak of Covid-19 are addressed in brief below.
General scheme for case handling and temporary arrangements
It has now been 6 weeks since the Judiciary decided to close the doors of the courts, tribunals and special colleges. Cases are still being dealt with, but in a different manner.
General deviating regulations
The general regulations contain general rules concerning attendance in court, oral proceedings, safe mailing and other matters.
The basic principle remains that, in principle, no hearings take place and the parties are not physically present. In principle, the parties will be heard by telephone or other means, such as Skype for Business, will be used. Written proceedings will continue to take place as much as possible, just as before.
Temporary deviating regulations
Each sector/area of law has also drawn up and implemented its own temporary regulations. Consequently, for civil summons cases, the courts also deviate from the normal rules. Due to special circumstances caused by the Corona crisis, the Judiciary has published Temporary deviating regulations for civil summons cases before the courts. This document describes, among other things, how new cases can be brought and stipulates that all docket sessions will continue to take place in writing. All written actions, such as submitting a statement of defense, take place in the usual manner.
Until further notice, no oral hearings will take place in the presence of the parties. Already planned oral hearings will be held for the time being. The court will also ask the parties whether they agree to a written procedure instead of an oral hearing.
In principle, judgments will be delivered and circulated.
In deviation of the temporary regulations, the handling of highly urgent cases and other urgent cases will continue as much as possible, in writing or via a telephone of video connections. Very urgent cases are cases where an judgement must be delivered without delay. Urgent cases include urgent summary proceedings, partial disputes, provisional reliefs and urgent applications for attachment and requests for the renewal or extension of lease agreements.. The court shall decide whether a case can be considered very urgent and whether a hearing should take place and if so, in what way. Other urgent cases include summary proceedings, dismissal of managing directors, notices of objection and appeals in bankruptcy proceedings and provisional provisions in appeal proceedings on the merits. On the website of the Judiciary there are lists of types of cases that fall into the categories urgent or very urgent.
New regular civil cases can be brought before court in the usual manner. Such cases shall be dealt with as much as possible in writing, with due observance of all (temporary) regulations.
Online hearings and safe emailing
The Judiciary intends to allow daily practice to continue as much as possible, whether or not through (digital) means. For this reason the Judiciary has opted for online court hearings as an alternative to oral hearings in court where the parties are physically present. In addition, the Judiciary has launched a secure platform as an alternative to submitting litigation documents.
The aim of the Judiciary is to allow as many cases as possible to proceed. To this end, the Council for the Judiciary has made special arrangements to hold such meetings online via the Skype Web App.
Litigation documents and messages that are normally sent by post or fax can be sent temporarily via the Safe Emailing system of the Judiciary. To this end, the Judiciary has launched a secure platform (ZIVVER). Via this platform, in addition to the courts themselves, lawyers, other professionals, organisations and the general public can quickly and easily exchange documents and messages. Documents that need to be signed must follow by post within 14 days.
Relaxation of measures from 11 May 2020
From 11 May 2020, it will be possible, where necessary, to hold further meetings with the physical presence of the parties concerned. However, the number of hearings will be limited and priority will be given to criminal, juvenile and family cases and not to civil cases. To enable the physical presence of the parties involved, courtrooms will be set up in all court buildings in such a way that hearings can be held in a responsible manner. The "one and a half meter distance standard" and other restrictive measures to protect public health are taken into account. Since the relevant provisions may vary from court to court, it is advisable to consult the website of the court in question for up-to-date information.
If you wish to know more about the implications of the coronavirus crisis on the litigation practice or if you need any assistance in this respect, please do not hesitate to contact our Corona Helpdesk team (firstname.lastname@example.org, +31(0)20 312 2800).
アップデート 13 - 労働雇用法
- 申請をするグループ内の個別の企業は、従業員数20名以上の場合、従業員代表組織 (従業員協議会等) から雇用維持についての同意を得る必要がある。
- 申請をするグループ内の個別の企業が、いわゆる”staff entity” (グループ内の企業に従業員を配置し労働力を提供する企業) については対象外となる。
Update 12 – General
NEW ADJUSTED MEASURES
COVID-19 (the coronavirus) is still the topic of the day in the Netherlands. The extreme consequences are now clear and the figures published by the RIVM on 21 April this year show that COVID-19 now have already caused more than 34,000 infections, almost 10,000 hospital admissions and almost 4,000 deaths. The daily fight against the virus continues. On 21 April, the Cabinet extended the existing measures until 19 May 2020.
The tentative conclusion is that the Dutch Corona approach seems to be pushing the Netherlands in the right direction. Employees in all kinds of sectors are doing their utmost to deal with the virus as well as possible. The numbers of people admitted to hospital are steadily decreasing. Although the situation is still unstable, there is some room for careful maneuvering. This room is mainly created for parents who have to combine their work with the teaching of their children now that the schools have been closed for some time. Also, children and young people can go back to school or engage in sports in small steps. Below is an overview of the changes to the existing measures presented by the Cabinet and their practical implications.
Education and childcare
Elementary schools, including special (elementary) education and day care will officially be opening on 11 May. Elementary schools will have to reduce the group of children in the classroom by 50%. In this way, children will be able to attend school for 50% of the time. The practical details of how to organize that children will be at school for 50% and at home for 50% will be left to the school to determine.
Contrary to the above, special education in elementary schools will be open fulltime and secondary schools (high schools) are encouraged to make preparations so that the pupils can go back to school (at least in part) from Tuesday 2 June. The manner in which the school days in secondary education will be practically filled in will be announced at a later date.
Children up to and including 12 years of age are allowed to – under supervision – practice and participate (team) outdoor sports. Children between the ages of 13 and 18 are also allowed to do this, but they must keep 1.5-meters distance from each other at all times.
For all other ages, team sports are not yet allowed. However, individual sports are allowed as long as a distance of 1.5 meters is observed at all times.
Independently living elderly
The advice not to visit elderly over the age of 70 is adjusted. As of 29 April 2020, independently living elderly people aged 70 years and older, can be visited by one or two regular visitors on a regular basis.
All events of more than 100 visitors (i.e. events subject to permit requirements) pose the risk that they could result in the virus spreading too widely and too quickly. The current measure prohibiting the organization and attending of events will be extended until – at least – 1 September 2020.
The impact on society and social-economic consequences
The impact of the Corona-crisis on society and the social-economic consequences are immense. Since the Netherlands currently remains in good financial state, the government is able to continue to provide first aid to businesses, self-employed persons and affected sectors, branches and industries.
However, until – at least – 19 May 2020 (big group) gatherings remain prohibited and many companies in a wide range of sectors and branches are still not allowed to open their doors and continue to carry on their business. The restrictive measures still apply to all eating and drinking facilities, sports clubs, fitness areas, saunas, casinos, amusement arcades, museums, concert halls and theatres. Also carrying on a business requiring to have physical contact with other individuals, such as a hairdressing salon, nail salon or massage parlor, remain closed.
Update 11 – Corporate law
EMERGENCY BILL FOR HOLDING VIRTUAL GENERAL MEETINGS IN THE MAKING
On 3 April 2020, the Council of Ministers announced emergency legislation that will make it possible for all legal entities to hold a virtual general meeting. Under current Dutch law, such a virtual meeting is not permitted. However, because holding a physical meeting is difficult in view of the measures taken in connection with COVID-19, it will also temporarily become possible to hold virtual meetings.
The press release announcing the emergency legislation mentions the following key points that will be included in the bill:
- The management board may decide to hold a general meeting that can only be followed via a live stream (audio or video). In that case, the members or shareholders, as the case may be, can submit questions prior to or during that meeting, which must be answered no later than at the meeting itself.
- If a member or shareholder has not been able to participate optimally in such a meeting, the resolutions passed will still be legally valid.
- The management board may postpone the deadline for holding the general meeting and the deadline for preparing the annual accounts.
The Council of Ministers has sent the bill to the Council of State for advice. When the bill is submitted to the Lower Chamber of Dutch Parliament, the text of the bill will also become public. The press release does not mention a time schedule in this respect. We will circulate regular updates on the progress of the emergency legislation.
Update 10 - Employment Law
Update 9 – Corporate law
M&A AND COVID-19: DUE DILIGENCE INVESTIGATION DURING AND AFTER THE TIMES OF THE CORONAVIRUS
The coronavirus pandemic is currently affecting the M&A market. Despite all uncertainties and all difficulties parties are dealing with, there are parties who are still considering to acquire or sell a target company at this stage in time. Private equity parties with a good cash position may be looking for investment opportunities while a seller might be looking for the opportunity to divest (part of) its non-core business in order to use the proceeds for the continuation of its key operations.
Conducting a proper due diligence investigation is a key step in the process of an acquisition. What specific considerations should be taken into account when conducting a due diligence investigation during or shortly after the coronavirus crisis?
Given the possible implications of the coronavirus crisis on a transaction, a buyer should conduct an extensive due diligence investigation in order the assess the risks at the level of the target company. Under Dutch law, a seller has the duty to provide information to the buyer, consequently the seller should make sure that the data room contains information concerning the possible impact of the crisis on the target company.
During the coronavirus pandemic and shortly after the corona crisis is over, parties should pay extra attention on the following items:
- Has the board of managing directors of the target company performed its statutory and fiduciary duties to safeguard that the company has acted in the interest of the business of the target company and all its stakeholders? Although it is difficult to factually check whether the board of managing directors complied, investigation can be done into the measures taken by the board of managing directors, such as implementing and maintaining an adequate risk management control system.
- Has the target company performed a risk assessment reflecting the implications of the coronavirus crisis on the (i) operating results and liquidity of the target company, (ii) supply chain disruptions, (iii) revenues of the target company and (iv) material transactions of the target company?
- Are all corporate resolutions of the target company adopted during the coronavirus crisis in line with the statutory requirements? It should be checked whether the general meeting and management board can adopt resolutions without convening an actual meeting and whether the formal requirements that apply were met.
- Is the target company (still) able to perform its obligations under its material contracts? Are the counterparties to these material contracts able to perform their obligations towards the company?
- Do the material contracts to which the target company is a party contain any rights that allow a party to terminate such a contract in case of non-compliance or in event of a force majeure?
- Does the insurance portfolio of the target company cover any damage as a consequence of the coronavirus crisis or is such an event excluded in the policies?
- Did the target company implement adequate rules and guidelines concerning health and safety issues in order to protect its employees?
- Are there any licensing or personal data implications threatening as a result of remote working by employees during the coronavirus crisis and did the target company take sufficient measures to avoid any issues?
Would you like to discuss the implications of the coronavirus crisis on the due diligence investigation in more detail or do you need any assistance, please do not hesitate to contact our Corona helpdesk team (email@example.com, +31(0)20 312 2800).
Update 8 – Corporate law
Commercial contracts and the COVID-19 outbreak: when is reliance on force majeure successful?
Governments worldwide are taking measures because of the COVID-19 outbreak (the coronavirus). These measures have far-reaching consequences, also for businesses. If businesses have concluded contracts, the basic principle is that they must comply with the obligations arising from these contracts. What if, as a result of the corona crisis, you are unable to meet your contractual obligations, such as supplying goods to your customers? Can your customers claim compensation from you on that basis, or can you successfully invoke force majeure? And what are the consequences if such an appeal is successful?
The starting point under Dutch law is: a party to an agreement is liable for all damages resulting from his failure in the performance of an agreement, unless such failure is not attributable to him. A failure is not imputable if the relevant party is not to blame and if he is not accountable according to the law, a legal act (e.g. a clause to this effect in an agreement) or generally accepted practice. If the failure in performance is not imputable, then there is force majeure. Force majeure shall stand in the way of performance. In that case the relevant party is not obliged to pay damages to the other party as the failure in performance by the relevant party is not imputable. However, in principle the other party does have the possibility to terminate the agreement, unless the failure in performance, in view of its special nature or minor importance, does not justify this termination with its consequences.
If a party fails to fulfill his obligations due to the outbreak of the COVID-19 virus and the sudden and unforeseeable measures as a result, does this qualify as force majeure? In answering this question it is first of all important whether the parties have included a force majeure clause in the agreement (or general terms and conditions).
If the parties have included a force majeure clause in the agreement, then the court will have to assess whether the COVID-19 outbreak qualifies as force majeure on the basis of the so-called Haviltex criterion (i.e. when interpreting an agreement, not only the literal wording of the contract must be taken into account, but especially what the parties intended and what they could reasonably expect from each other). In interpreting the force majeure clause, the intention of the parties and the legitimate expectations on both sides are therefore decisive.
If the parties have not included a force majeure clause in the agreement, the court will have to determine whether force majeure is present on the basis of the law and generally accepted principles. What is important here is the direct cause of the failure in performance. For example, if there is an export and/or import ban that makes the delivery of goods impossible, it can be argued that the failure cannot be attributed to the party that is obliged under an agreement to deliver the goods, because he is not to blame and he should not be accountable for the failure in performance. After all, the failure in performance is caused by the government's emergency measures.
Also in the absence of a force majeure clause it will have to be assessed on a case by case basis whether a party’s failure in performance is imputable to him. The following aspects, among others, are important in this respect:
- whether the relevant party can fulfil his obligations in an alternative way (e.g. importing from a country that is not subject to an import ban; delivery by ship instead of by plane);
- whether the Dutch government or a foreign government has designated the COVID-19 outbreak as a force majeure situation; and
- similar cases in case law, such as rulings in connection with bird flu.
We are currently not aware of any court ruling as to whether or not a party’s reliance on force majeure in connection with his failure in the performance of an agreement as a result of the outbreak of the COVID-19 epidemic is successful. If the court is asked to give an opinion on whether or not force majeure is present, then, based on the interpretation of the force majeure clause included in the agreement or general terms and conditions (if any) and all the circumstances of the case, it must be assessed whether a reliance on force majeure is recognized.
アップデート 7 - 労働雇用法
オランダ政府は雇用維持のための暫定的緊急つなぎ措置 (NOW) の詳細を発表しました。NOWの目的は、従業員雇用を維持するために補助金というかたちでより多くの企業をサポートすることです。少なくとも２０％の売上高損失を予想する雇用主は、その損失に当たり３か月間の賃金コストに対する補助金を申請することができます。助成金申請期間は２０２０年４月６日から２０２０年５月３１日までです。
M&A AND COVID-19: PURCHASE PRICE MECHANISMS IN TIMES OF THE CORONAVIRUS
The effects of the coronavirus (Covid-19) on the global economy are becoming increasingly clear. The Dutch government has presented a comprehensive emergency plan with the aim of "not only protecting our health, but also our jobs and income and cushioning the consequences for self-employed persons, SME entrepreneurs and large companies". This package provides support to entrepreneurs and businesses for as long as necessary. Various sectors, such as the hotel and catering industry, the travel industry and the flower industry are already suffering from the consequences of the coronavirus.
The consequences are also noticeable within the Dutch M&A practice. The central question in this article is how the buyer of a company should deal with the future uncertainties of the current crisis. To what should the buyer pay extra attention, and are there ways to limit the future uncertainty for the buyer as much as possible?
In times of economic uncertainty, and especially now with the enormous uncertainty as a result of the corona crisis, it is important for the buyer to pay extra attention to the due diligence investigation in an M&A project. In the current situation, for example, additional research into the entire supply chain of the target company or a thorough check of the target company's insurance policies and coverage and possible exceptions for cases such as the Corona virus can be considered. Also, the contracts to which the target company is a party will have to be reviewed in order to determine to what extent the target company will be able to either perform its contractual obligations, suspend its contractual obligations or whether there are possibilities for termination of the contract as a result of the corona crisis. In addition to the due diligence investigation, the buyer will want to formulate the conditions precedent, warranties and indemnities in such a way that the consequences of the corona crisis will also be covered by these provisions. The wording of the so-called MAC clause will also deserve extra attention.
In addition, it is important for the buyer to determine which mechanism will be used to determine the purchase price for the shares in the target company. In this article, I will discuss two purchase price mechanisms commonly used in the M&A practice: the "locked-box mechanism" and the "closing accounts mechanism". In this context, I will pay attention to the effects of the corona crisis on a purchase price determined by the “locked-box mechanism”, and a purchase price determined by the “closing accounts mechanism”. In addition, I will discuss the possibility of making the purchase price dependent on the outcome of the uncertain (economic) times by means of an “earn-out”. This may also offer the buyer some extra security where the future results of a target company will be extremely uncertain.
Purchase price mechanisms: “locked-box” and “closing accounts”
The coronavirus will have a major impact on the revenues of businesses, including target companies in M&A transactions. In an M&A transaction, the purchase price is often based on a forecast of the target company's revenues after the transaction. In the current circumstances it will obviously be difficult to make a good estimate of the revenues of the target company.
The purchase price for the shares in a target company is generally determined by using either the "locked-box mechanism" or the "closing accounts mechanism". Both mechanisms have advantages and disadvantages. Below, I will discuss which purchase price mechanism is the most beneficial for the buyer given the current circumstances.
If the “locked-box mechanism” is used, the purchase price will be determined by looking at the financial status of the target company on a date several months prior to the date of the transfer of the shares. The purchase price is often determined on the basis of the most recent financial figures of the target company, usually its most recently (audited) annual accounts. The economic risk of the target company is transferred to the buyer as per the same date as the date of such financial statements or accounts. This date is called the effective date. However, the purchase price is only paid upon transfer of the shares and will in principle not be adjusted after transfer. The parties agree that the target company will continue its operations on a normal course of business basis from the effective date and stipulate that only any withdrawals of value of the business (other than resulting from normal operations), also referred to as "leakage", between the effective date and the transfer date must be reimbursed by the seller.
When the “closing accounts mechanism” is used, provisional closing accounts of the target company, including an acquisition balance sheet, are drawn up as per the time of the transfer of the shares in the target company. These provisional accounts reflect the target company's expected financial position on the date of the transfer: the closing. The provisional purchase price is determined on the basis of these provisional closing accounts. The provisional purchase price is paid to the seller at the closing. From that moment on, the target company is operated for the account and risk of the buyer.
Some weeks after the closing, the final closing accounts will be drawn up. On the basis of a comparison between the provisional closing accounts and the final closing accounts, the definitive purchase price is determined. It is possible that the final purchase price differs from the provisional purchase price. In that case, either the seller will have to repay part of the purchase price to the buyer, or the buyer will have to pay an additional part to the seller.
The parties may also agree on a so-called "earn-out". If an “earn-out” is agreed, part of the purchase price will be paid on the date of transfer. This part is called the basic purchase price. The parties also agree that another, additional part of the purchase price, the so-called "earn-out", will not be paid on the transfer date but will only be payable by the buyer after certain conditions agreed between the parties have been met within a certain period of time.
There are several reasons to agree on an "earn-out". One reason may be that the future results of the target company are difficult to estimate. In the case of such an “earn-out”, the payment of part of the purchase price is made conditional to the future results of the target company.
Influence of the coronavirus-crisis
In times of uncertainty, it seems more favorable, at least for the buyer of a company, to opt for the "closing accounts mechanism". If the “closing accounts mechanism” is used, the final purchase price will be determined only after the transfer, and the provisional purchase price already paid will be subject to adjustment. As a result, the purchase price will better reflect the state of the target company purchased on the date that the buyer obtains the operational risk of the business of the target company than in the case of the “locked-box mechanism”. In that case, the purchase price will be set at a value of the target company on a date in the past (the effective date), which may no longer correspond to the value of the target company at the time of the acquisition. The "locked-box mechanism" may have an even bigger detrimental effect on the buyer when the effective date is set before or at the beginning of a crisis. The potentially negative result between the effective date and the date of transfer of the shares in the target company is for the account and risk of the buyer.
As indicated above, agreeing on an “earn-out” will provide additional security for the buyer. In case of economic uncertainty, as is currently the case due to the corona crisis, the future results of the target company are difficult to predict. An “earn-out” can then be a solution, as it can take the possible future negative consequences of the corona crisis into account which will result in a lower purchase price to be paid.
The effects of the corona crisis are widely felt. This is also the case in the M&A practice. In these times of uncertainty, it is very important for the parties involved to consider certain specific aspects of an M&A transaction. In this contribution, I have discussed the consequences of choosing a particular purchase price mechanism, concluding that in an uncertain economic climate it is beneficial for the buyer to use the "closing accounts mechanism" to determine the purchase price. In addition, by agreeing on an “earn-out” with the seller, the buyer can make part of the purchase price to be paid dependent on future results to be achieved by the target company.
UPDATE ON THE TEMPORARY EMERGENCY BRIDGING MEASURE FOR SUSTAINED EMPLOYMENT (“NOW”)
Although it is still not possible to apply for a compensation of wage costs on the basis of the NOW, we can provide you with the following update.
The Tax and Customs Administration urges employers that will apply for a compensation of wage costs on the basis of the NOW to submit their (monthly) payroll tax return quickly if they have not already done so. Reason for this is that the UWV will need this information when processing the NOW-application. Only if the UWV has the most up-to-date information from your payroll tax return, you will quickly receive what you are entitled to.
Please note that it is not required to actually pay the payroll tax. If you have run into payment problems due to the coronavirus, you may request a special postponement of payment.
For more information with regard to the coronavirus in the area of employment law, such as the rights and obligations of employees in connection with the coronavirus, please contact our Corona helpdesk team (firstname.lastname@example.org, +31(0)20 312 2800).
NEW MEASURES TO PROTECT JOBS AND ECONOMY IN TIMES OF CORONA CRISIS
The consequences of the spread of the coronavirus (COVID-19) in the Netherlands are becoming increasingly clear. According to the latest figures of 19 March 2020 from the National Institute for Public Health and Environmental Protection (RIVM), there are currently 2460 people in the Netherlands infected with the virus, and 76 have died as a result of the virus. The economic consequences are now also noticeable.
On 17 March 2020, the Dutch Government presented the emergency package for jobs and the economy, containing far-reaching measures aimed at "protecting not only our health, but also jobs and income and cushioning the consequences for self-employed persons, SME entrepreneurs and large companies. The measures ensure that businesses can continue to pay their employees, provide a bridge for the self-employed and enable money to remain in businesses through more flexible tax regimes, compensation and additional credit opportunities".
Below, I will present a brief overview of the measures presented by the Dutch Government.
1. Setting up a temporary scheme for the compensation of wage costs
An entrepreneur who expects a loss of turnover of at least 20% can apply to the Employee Insurance Agency (UWV) for a period of three months for an allowance in the wage costs of up to 90% of the wage bill. The amount of the allowance depends on the loss of turnover. The UWV will provide an advance payment of 80% of the requested allowance. The purpose of this measure is to enable companies to continue to pay their employees.
For a detailed explanation of the temporary scheme, I refer to the news item "Introduction Temporary Emergency Measure Bridging Work for the Preservation of Work: a considerable reduction in labour costs for employers affected by corona" by Sam van Well, published on our website on 18 March 2020.
2. Additional support for independent entrepreneurs
Self-employed entrepreneurs can receive additional income support for a period of three months through an accelerated procedure. This income support supplements the income up to the social minimum and is non-refundable.
3. Relaxation of tax deferrals and reduction of fines
Entrepreneurs can more easily apply for tax deferrals. In that case, the Tax Authorities immediately cease to collect taxes due. The taxes covered by this rule are income, corporation, wage and turnover taxes. Any default fines for not paying the taxes on time do not have to be paid. The entrepreneur is also given more time to provide evidence. In addition, the interest on overdue tax is temporarily reduced to almost 0%.
4. Extension of the Guarantee Scheme for Entrepreneur Financing
If Enterprises are having problems obtaining bank loans, they can make use of the Guarantee Entrepreneur Financing Scheme. The Government proposes to increase the Guarantee Entrepreneurial Finance Scheme's guarantee ceiling from) EUR 400 million to EUR 1.5 billion. The Guarantee Entrepreneur Financing Scheme will help both SMEs and large enterprises by providing a 50% guarantee on bank loans and bank guarantees.
5. Interest rebate for small entrepreneurs on microcredits
Qredits, a provider of microcredit aimed at small businesses and start-ups, is introduced a temporary crisis measure: for small entrepreneurs that run into difficulties due to the corona crisis, a deferral of repayment is offered for a period of six months. In addition, the interest rate is automatically reduced to 2% during this period.
6. Temporary guarantee for agricultural and horticultural businesses
A special scheme will be introduced for agricultural and horticultural businesses: a temporary guarantee will be introduced for working capital under the SME Agricultural Credit Guarantee Scheme. By means of this scheme, the State guarantees the loans of agricultural entrepreneurs. The measure will apply from 18 March 2020.
7. Consultation on tourist tax and the cultural sector
The Cabinet will consult with the Association of Netherlands Municipalities on the possibility of stopping (provisional) local tax assessments being imposed on entrepreneurs and revoking tax assessments already imposed. This concerns in particular the tourist tax. In addition, the government is in consultation with the cultural sector in order to assess whether generic measures and possible special measures can be applied, if necessary.
8. Compensation scheme for specific sectors
The Government measures have major consequences for income in a number of sectors, specifically the compulsory closure of the hospitality industry and the countless cancellations in the travel sector. The loss of income in these sectors can hardly be made up when the corona crisis is over. The Government therefore proposes a compensation scheme with appropriate measures for businesses in the sectors mentioned. This scheme is currently being worked out and will be submitted to the European Commission for the assessment of whether (lawful) state aid is involved.
Update 3 - Employment law
NOT ILL BUT ABSENT FROM WORK: TO WHAT EXTENT IS THERE AN OBLIGATION TO CONTINUE TO PAY WAGES IN THE EVENT OF ABSENCE IN CONNECTION WITH CORONA?
If an employee is ill as a result of the corona virus, the rules are clear: the employee reports sick in the usual manner and adheres to the policy as applied by the employer. In return, the employer is obliged to continue to pay wages due to illness. This is no different if the employee stays at home on the advice of the National Institute for Public Health and the Environment ("RIVM") in case of colds or flu up to 38.0 degrees. Recent developments, however, raise the question of whether and to what extent there is an obligation to continue to pay wages if the employee is not ill but still does not want to or cannot appear at work. In the following, a number of situations will be discussed, together with the corresponding form of leave if applicable.
Necessary childcare: emergency leave, followed by another solution
As a result of the closure of schools and childcare centers, employees may be forced to care of their children. In this situation, a few days of emergency leave may be taken. During these days, the employer must continue to pay 100% of the salary. The law does not provide for emergency leave for the entire period during which schools and childcare centers are closed. Although employees are themselves responsible for the care of their children, employers should be understanding towards employees who fail to arrange full childcare for the hours they normally work. An obvious solution is working from home in combination with childcare. If this is not possible, a solution can be found in shifting working hours, taking overtime or holidays or taking unpaid leave.
Necessary care for a sick person: short-term care leave
If an employee has to take the necessary care due to the illness of a person as described in the Work and Care Act (“Wet arbeid en zorg”), the employee can take short-term care leave for this purpose. During this leave, the employee is entitled to 70% of the salary, but at least the statutory minimum wage. The condition for granting the leave is that the sick person needs care and that the employee in question is the only one who can provide this care. The leave amounts to twice the working hours per week per period of 12 months.
Stranded abroad: the employer's risk sphere
If an employee is stranded abroad and is unable to return to the Netherlands because a flight has been cancelled, this is considered a force majeure. Now that the failure to perform work does not lie within the employee's sphere of risk, the employer must in principle continue to pay 100% of the salary. However, in some cases it may be reasonable to insist on taking (extra) holidays. This depends inter alia on the circumstances under which the employee is abroad.
Fear of infection: refusal to perform work (“werkweigering”)
Finally, there are employees who do not want to appear at work because they are afraid of being infected by customers or colleagues. If the employer does not agree with the absence of the employee or the employee working from home, the absence is considered as a refusal to perform work. The employer is then entitled - after the employee has been warned of the consequences - to stop the payment of wages. It should be noted that the RIVM has not advised to close down departments, factories or organisations. Not even if more than 100 people work side by side.
The fact that employees may belong to a risk group does not change the above. Although the RIVM has advised to avoid contact with other people in that case, this does not mean that employees belonging to risk groups are relieved from the obligation to perform duties. Measures such as working from home and the introduction of spread working hours if this is not possible are in principle sufficient as to prevent a contamination.
Update 2 - Employment law
INTRODUCTION OF TEMPORARY EMERGENCY BRIDGING MEASURE FOR JOB RETENTION: A SIGNIFICANT REDUCTION IN LABOUR COSTS OF DUTCH EMPLOYERS AFFECTED BY CORONA CRISIS
As mentioned earlier, Dutch companies coping with financial problems as a result of the spread of the coronavirus may apply for a permit as to a reduction in working hours at the Ministry of Social Affairs and Employment. By means of a reduction in working hours, non-worked hours are paid by the UWV (“Uitvoeringsinstituut Werknemersverzekeringen”) as unemployment benefit (“WW-uitkering”). Last night, the Dutch Government announced an even more comprehensive compensation regulation. As a result, it is no longer possible to apply for the reduction of working hours permit. Applications that have already been submitted will be dealt with under the new scheme.
The Temporary Emergency Bridging Measure for Job Retention
The Government announced the introduction of a modified reduction in working hours regulation, the so-called ‘Temporary Emergency Bridging Measure for Job Retention’. The regulation will be introduced with retrospective effect from 1 March 2020. The new regulation is part of the measures in the support package for companies affected by the corona-crisis. The new regulation differs from the existing reduction in working hours scheme in the following respects:
- The possibilities for employers to apply for the fund will be considerably broadened.
- In order to qualify for the compensation, the employer must expect a loss of turnover of at least 20%.
- Employers will not be compensated up to a maximum of 75% of the maximum daily wage, but up to a maximum of 90%. The final percentage depends on the loss of turnover.
- The compensation will also apply to employees with a 0-hour contract and on-call employees.
- The compensation is granted for 3 months, which period may be extended with another 3 months.
- Employees may not be dismissed for economic reasons during the subsidy period.
Supplementing unemployment benefit up to 100% of the salary
There is lack of clarity as to whether the unemployment benefit should be supplemented up to the full salary level in case of a reduction in working hours. However, as a result of the introduction of the new regulation and the increase of the maximum percentage of compensation, this discussion has lost some of it importance. Be that as it may, the Minister of Social Affairs and Employment indicated during an interview that was broadcasted by the television programme ‘Nieuwsuur’ that employers are obliged to continue to pay the full salary in the event that they appeal to the emergency fund.
 The recent Unworkable Weather Regulation states that the employer is exempted from the obligation to continue to pay wages, while the Ministry of Social Affairs and Employment has so far given the impression that the employer must continue to pay wages in full during the term of the reduced working hours permit.
Update 1 - Employment law
EMPLOYERS IN THE NETHERLANDS CAN SAVE ON LABOUR COSTS IN CASE OF LESS WORK DUE TO CORONAVIRUS
The Dutch Cabinet has classified the coronavirus as an exceptional circumstance that does not fall under the normal entrepreneurial risk. This means that Dutch companies coping with financial problems as a result of the spread of the coronavirus can apply for a short-time working permit at the Ministry of Social Affairs and Employment. By means of a reduction in working hours, non-worked hours are paid by the UWV (“Uitvoeringsinstituut Werknemersverzekeringen”) as unemployment benefit (“WW-uitkering”).
In order to qualify for the permit, companies must demonstrate that there will be at least 20% less work for a period of at least 2 to a maximum of 24 calendar weeks and that there is a direct link with the coronavirus.
If the conditions are met, the Ministry of Social Affairs and Employment may grant a permit for reduced working hours for a period of no more than six weeks. This period may be extended three times at the employer's request.
Once the permit has been received, the unemployment benefit can be applied for. The unemployment benefit will be paid to the employers directly, while the employees remain employed and receive their wage in the usual manner.
No reduction in working hours for on-call employees and temporary workers
A reduction in working hours is not possible for on-call employees with a zero-hours contract and temporary workers.
For more information with regard to the coronavirus in the area of employment law, such as the rights and obligations of employees in connection with the coronavirus, please contact our Corona helpdesk team (email@example.com, +31(0)20 312 2800).