Trend report: New developments on Dutch loyalty share schemes

Publication

16-03-2023

1 minute read

Over the past years, several listed Dutch companies implemented share loyalty schemes, incentivising long-term shareholdership by granting additional dividend or voting rights to long-term shareholders. Recently, an expert group on the modernisation of Dutch company law published its advice (in Dutch) on the use of loyalty shares by Dutch companies. How will this affect the development and use of share loyalty schemes in listed Dutch companies?

The expert group’s advice offers a further confirmation on the permissibility of loyalty share schemes under Dutch company law. It also underlines that it is important to carefully structure and implement loyalty share schemes, especially in companies having a controlling shareholder. Accordingly, due consideration should be given to (i) the purpose of the relevant loyalty share scheme; (ii) its proportionality in view of that purpose; and (iii) balancing of the relevant interests involved.

Much will depend on the degree of influence a controlling shareholder acquires through the loyalty scheme and the extent to which this is in line with the designated purpose. The degree of progressiveness of the structure, the wider corporate governance structure (including the rights of minority shareholders) and the timing of implementation (e.g., at first admission to listing or mid-stream) also seem to play a determining role in this.

Want to learn more? In this trend report we share our thoughts on how this development may impact Dutch corporate governance standards. Please download the report below.