On 10 October 2017 the new Dutch coalition government presented their policy roadmap for the period 2017-2021.
From a corporate litigation perspective we highlight that the new government intends to introduce specific takeover defense measures for (i) companies that are deemed "vital" from a national security perspective and (ii) listed companies.
(I) PROTECTING VITAL COMPANIES
Companies active in “vital sectors” are companies that may impact national security. A takeover of a company that has been designated a “vital” company will only be possible after active approval by the Dutch government. The approval of the Dutch government may be subject to certain conditions or may require specific safeguards. The government will investigate whether this protective regime should also apply to companies active in the agricultural sector or the regional infrastructure sector.
With this proposed measure, the government is responding - at least in part - to the WOCD report "Vitale vennootschappen in veilige handen" (in Dutch).
(II) TAKEOVER DEFENSES AND LISTED COMPANIES
Further measures are taken to - in the words of the policy document – “shift the influence from certain activist shareholders who are primarily focused on short term value creation to shareholders or other stakeholders who are focused on the long-term value creation”.
- For listed companies: if a shareholder proposes a fundamental change in the strategy of the company in the general meeting a retention period of 250 days may be invoked by the company, provided that this does not affect the movement of capital. During this period, the management board must explain the company’s strategy and all stakeholders involved in the company must be consulted. Importantly, the measure cannot be used in conjunction with corporate protection structures such as the issue of preference shares or priority shares. We note that currently the Dutch Corporate Governance Code ("DCGC") already contains the so called "response time" (4.1.7 DCGC). If one or more shareholders intends to request that an item that may result in a chance of strategy of the company be placed on the agenda, the management board can stipulate a reasonable time to respond. This should be a reasonable time that does not exceed 180 days.
- Listed companies with an annual turnover of more than EUR 750 million may ask shareholders holding more than 1% of the share capital to register as major shareholder with the Financial Markets Authority (AFM).
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