Doctorate thesis: “issuance of preference shares offers and proofs best protection"
The Hague, 11 January 2018
The proposal by the Dutch Cabinet Rutte III for a 'legal time out of 250 days’ to give Dutch listed companies more time during hostile takeovers by foreign parties is undesirable and unnecessary. The possibility of issuing protective preference shares ('prefs') is by far the most effective means to gain time. More than half of the Dutch listed companies can protect themselves in this way. Contrary to popular belief, there is no maximum duration under which preference shares may remain outstanding. If the survival of a public limited liability company and its affiliated enterprise were at stake, preference shares can easily be issued to a continuity foundation by the exercise of a 'call option'.
These are some of the conclusions of the doctorate thesis "Protection of listed companies through the issuance of preference shares" by Robrecht A. F. Timmermans, corporate lawyer at Buren. He will be awarded a PhD by the Radboud University Nijmegen in the Netherlands on 11 January 2018. As corporate lawyer at Buren, a corporate law firm with lawyers, notaries and tax advisors, Robrecht Timmermans specialises in Dutch corporate law and corporate governance. He is also a as a researcher and lecturer at the Van der Heijden Institute at Radboud University Nijmegen and regularly publishes in his field. The thesis also appears in book form with publisher Wolters Kluwer.
Shareholder activism and foreign hostile takeovers attempts, such as recently at Dutch listed blue chip companies PostNL, Unilever, Akzo Nobel and previously KPN, are becoming increasingly common. This raises discussions about the question whether Dutch heritage companies should be sold to foreign parties, as well as the question whether Dutch companies should be better protected or whether existing protection measures are sufficient.
From implementation to termination
In his dissertation, Timmermans explains in detail how listed companies with registered offices in the Netherlands can protect themselves by issuing protective preference shares. The issuance will give the company management time to talk with those involved - such as the hostile party, (minority) shareholders, employees, trade unions - and to explore alternatives or to drive decisions by the general meeting of shareholders.
The survey shows that the issuance of preference shares is the ideal means to protect companies against a wide range of undesirable external influences. This instrument can easily be implemented, is not bound to a hard time frame and involved companies are adequately protected. Other protective measures, such as a 'legal time out', are mainly passive means and have little or no effect. They do not provide solutions for the final decisions to be ratified by the general meeting of shareholders. The study also provides detailed suggestions on how the preference shares can be financed.
In addition to its scientific value, this doctorate dissertation offers a step-by-step description of how a company's protection can be organized in practice and offers a complete overview of associated problems. The thesis and book is, among other things, intended for executive management, directors, general counsels, corporate secretaries, advisers of Dutch listed companies, and continuity foundations AND for activist shareholders and acquirers. The dissertation was published by Wolters Kluwer in the ‘Series Vanwege het Van der Heijden Institute' in Nijmegen, part 147, ISBN 9789013145342 (740 pages, € 69.50).
Buren is an internationally oriented corporate law firm with more than 70 lawyers, notaries and tax advisors who work closely together in multidisciplinary teams. The firm has over 125 employees and offices in Amsterdam, Beijing, The Hague, Luxembourg and Shanghai.
Buren has various international practice groups and desks (China, Japan, Russia / CIS, Germany / Austria, Latin America and Hong Kong) for its (inter)national clients, such as multinationals, medium-sized (listed) companies, institutions and investment funds. For more information and a biography of Robrecht Timmermans: https://www.burenlegal.com/en/people/robrecht-timmermans
About Radboud University
Radboud University in Nijmegen, the Netherlands, stimulates its best research. Corporate law is one of its top research areas, focusing on the functioning of companies in modern societies, including the corporate governance of companies, reorganisations of companies in financial distress and the supervision of banks. Spearheads of the research are property law, corporate law, financial law and insolvency law. Characteristic of its research is the collaboration with law and notary firms, banks and multinationals.
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Robrecht Timmermans is one of the keynote speakers at the Seminar Van der Heijden Instituut (OO&R) "Bescherming van beursvennootschappen en