On 13 November 2012, the Dutch Senate passed the Corporate Governance Bill. The purpose of the Bill is to further improve the Dutch corporate governance system. Although no official announcements have been made yet, the Bill is expected to enter into force on 1 January 2013.
In this Corporate Alert you will find an overview of the most important changes.
2. Most important changes
New minimum threshold for disclosure of capital interests
The Bill introduces a new minimum threshold to disclose significant holdings in listed companies (a public limited company incorporated under Dutch law (naamloze vennootschap or "NV") whose shares or depositary receipts are admitted to trading on a regulated market as referred to in Section 1:1 of the Financial Supervision Act (Wet financieel toezicht)). After the Bill enters into force, an investor will have an obligation to notify the Dutch Authority for the Financial Markets (Autoriteit Financiële Markten) if its (actual or deemed) share capital interest and/or voting rights reaches or passes (in an upward or downward direction) a threshold of 3%. The current minimum threshold is 5%.
Obligation to disclose gross short positions
Besides the new minimum threshold for the disclosure of total capital interests (gross long positions that can consist of both shares and rights to acquire shares whose value appreciates if the share price rises), the Bill introduces an obligation to disclose gross short positions in listed companies. The gross short position consists of financial instruments whose value appreciates if the share price falls. The same disclosure thresholds that apply to gross long positions will also apply to gross short positions. Apart from the obligation to disclose gross short positions, the EU Regulation Nr. 236/2012 on short selling and certain aspects of credit default swaps entered into force on 1 November 2012 (for more information on this subject see our Corporate Alert of 31 October 2012). The Regulation does not provide for the disclosure of gross short positions that are regulated by the Bill. However, the gross short position must be determined to calculate the net short position.
The introduction of the obligation to disclose gross short positions aims to clarify the actual – net – economic interest of an investor. Additionally, such an obligation to disclose also reveals so-called 'empty voting' (voting by a person who is legally entitled to exercise the voting rights in the general meeting of shareholders, but has little or no corresponding economic interest).
Higher threshold for placing items on shareholder's meeting agenda
The threshold for the right of shareholders to have items placed on the agenda of the general meeting of shareholdings will be raised from 1% to 3% of the issued share capital. The provision applies to both listed and unlisted NV's. In this context, we also refer to the Bill Financial Markets 2013 (Wetsvoorstel Financiële Markten 2013). According to this Bill, the shareholder who makes a request to place an item on the agenda of the shareholder's meeting will also have to provide to the company details of its entire economic interest (both long and short) in shares and financial instruments and rights to shares and financial instruments. This Bill will also most likely enter into force on 1 January 2013.
The current alternative threshold that applies to shareholders of listed NV's having a share ownership with a market value of at least € 50 million will be abolished. The company's articles of association may provide for a lower (not a higher) percentage threshold.
Identification of shareholders
Currently, Dutch listed companies do not typically know the identity of their shareholders. The Bill will allow Dutch listed companies and foreign companies with a listing on a Dutch stock market or multilateral facility to better trace the identity of their investors. The objective of the Bill is to enhance effective communication between companies and their shareholders and thus contribute to the relationship between companies and their shareholders.
A listed company may request Euroclear Netherlands, member institutions, intermediaries, foreign institutions and custodians of investment institutions to provide identity information of those investors for whom they administer shares or depositary receipts for shares. It should be noted that the listed company must take the necessary technical and organizational measures to protect the identity information against loss or any form of unlawful processing. This also applies to a third party granted with a power of attorney to request identity information on behalf of the company.
One or more shareholders who, either individually or jointly with other shareholders, have a share capital interest of at least 10%, have the right to request the company to identify its investors. The company is under the obligation to honor such a request, but is not entitled to share the information with those who made the request.
To secure the privacy of small investors, the procedure can only be used to identify investors with an interest of at least 0.5%.
Passing on of information
A shareholder who, either individually or jointly with other shareholders, holds at least 1% of the shares or holds shares with a market value of at least € 250,000, will have the right, prior to the shareholders meeting, to request the listed company to pass on the information that it has made available to other shareholders. The information must be related to an item which is on the agenda of the general meeting. Unless there is a statutory ground for refusal, the company must pass on the information or publish it on its website, within three working days. If the company decides to pass on the information, then it must also publish such information on its website.
3. No mandatory publication of strategy
Earlier on in the legislative process, a regulation had been proposed pursuant to which a company would be under an obligation to disclose its strategy on its website and shareholders with a share capital interest and/or control rights of more than 3% were under an obligation to disclose whether they had any objections to that strategy. Due to widespread criticism, this regulation has been deleted from the legislative proposal.
4. Date of entry into force
The Bill is expected to enter into force on 1 January 2013 and, from that moment on, will be the applicable law. An implementation decree that is still in progress will possibly remove certain uncertainties with respect to the new regulation to remove any lack of clarity.
Shareholders that are currently under an obligation to disclose their share capital interests, control rights and/or gross short position because of the new 3% threshold, are permitted to disclose such interests up to four weeks after the date of the entry into force.
For further information, please feel free to contact one of our Stibbe contact persons.