BTI Guideline for Security Test Act – Internal restructurings

The Bureau for Investment Screening (Bureau Toetsing Investeringen, “BTI”) recently published guidelines to provide clarification regarding the scope of the Investments, Mergers and Acquisitions Security Test Act (Wet veiligheidstoets, investeringen, fusies en overnames, also referred to as “Vifo Act”). The Vifo Act applies to Corporate M&A activities of companies that are active as vital providers of (highly) sensitive technology, operators of corporate campuses, or vital infrastructure providers in The Netherlands. The BTI is responsible for the substantive screening of these investment activities.

The BTI guidelines relate to the following topics:

1. Being active in sensitive technology
2. Internal restructurings
3. Assets

The BTI guideline ‘Internal restructurings’ focuses on whether an internal restructuring of a company could fall under the scope of the Vifo Act. This is particularly relevant if the ultimate control of a group company changes after a transaction.

Definition of internal restructuring
In principle, the change of control or the acquisition of significant influence by a shareholder will be considered as an internal restructuring that falls under the scope of the Vifo Act. However, if an internal restructuring only results in the transfer of the company’s (legal) corporate seat from one country to another, then this will not be qualified as a transaction subject to the Vifo Act as long as the (indirect) ultimate shareholders of the company remain unchanged.

Different factors
The BTI guideline provides a list of different factors that could have impact on the above definition of internal restructuring.

Sole shareholding
In the event that there is an internal restructuring which results in one ultimate sole shareholder that remains unchanged, then this will not be considered as a transaction subject to the Vifo Act. If not all the shares in the subsidiary are immediately held by a single parent company acting as sole shareholder and the subsidiary has other (minority) shareholders in the meantime, this transaction will fall under the scope of the Vifo Act. Although the restructuring takes place in multiple steps and the parent company eventually acquires the remaining shares to become the sole shareholder, the reporting obligation towards the BTI still remains in full force.

Temporary management
If an internal restructuring takes place involving temporary management in the form of trust office, notary or custodian of the company, then this will be viewed as an investment transaction which requires BTI notification. This also applies if the transaction takes place in a short period of time, e.g. over the course of one weekend.

Entry of new shareholder
In case that an internal restructuring takes place in relation to a target company (group) active in highly sensitive technology and the ultimate beneficial owner remains unchanged and participates through an intermediate holding company, this will be deemed notifiable to the BTI and subject to the Vifo Act.

Investment funds
A shareholder’s interest in an investment company may be transferred from one investment fund to another managed by the same manager, but only after notifying the BTI in accordance with the Vifo Act. This is due to the possibility that an investment fund could possibly be funded by a variety of capital providers acting more than solely ‘passive’ investors.

Conclusion
The guideline provides M&A practice with valuable practical insights on the definition of ‘Internal restructurings’. Please note that the guideline may be amended and updated by BTI from time to time based on changing insights, developments in the market / technology or as a result of amended regulations.

If you have any questions regarding the Vifo Act or require assistance with filling in the BTI notification form, please contact Friederike Henke, Susanna Tang or any of the other BUREN specialists of our Corporate department.