Following a recent series of (attempted) unsolicited takeovers by foreign bidders of Dutch listed companies, such as PostNL, Unilever and AkzoNobel, the protection of companies against unsolicited takeovers and the protection of vital sectors have received more attention in both the Netherlands and Europe.
In this respect, the Dutch government has published a government-coalition agreement, which describes measures that intend to shift power away from certain activist shareholders who are looking for short-term gains to shareholders and other stakeholders who have an interest in long-term value creation.
Preliminary draft legislative proposal statutory cooling-off period and obligation to register for shareholders
250-day statutory cooling-off period
The coalition agreement introduces a statutory cooling-off period of 250 days in the event of shareholder proposals for strategy changes. Listed companies facing proposals for fundamental strategy changes at their general meetings will now have the opportunity to invoke a 250-day cooling-off period, provided that this does not interfere with the principle of free movement of capital. The Minister has confirmed that this statutory cooling-off period also applies in the event of unsolicited takeover bids. During this cooling-off period, the company will be accountable for the company's strategy to the shareholders and it will need to consult all stakeholders of the company. This measure cannot be taken in combination with the company's own antitakeover measures, such as preference or priority shares. A preliminary draft of the legislative proposal has been sent to the Council of State for advice on the European-law aspects of the introduction of such a cooling-off period. The Council of State has already delivered its opinion but it has not yet been made public. The preliminary draft legislative proposal is being revised and the new version is expected to be published after the summer.
In addition, large listed companies (with an annual turnover of more than EUR 750 million) will have the opportunity to request their shareholders to register as major shareholder with the Dutch Authority for the Financial Markets if they hold more than 1% of the company's share capital. Under the current legislation, such shareholders are only required to register if they hold a minimum in a company's share capital of 3%. So far, however, it is unclear whether or not this registration for shareholders holding more than 1% will be mandatory and when this will take effect.
Legislative proposal unwanted influences in the telecoms sector
In the Netherlands, the Department of Economic Affairs has published a draft legislative proposal for consultation to amend the Dutch Telecommunications Act to prevent unsolicited acquisition or exercise of control over Dutch telecoms service providers (see our Corporate Alert of 14 March 2017). This proposal is the result of public demand for protection of the Dutch telecoms infrastructure following the attempted takeover of KPN by América Movil in 2013. It will grant the Minister of Economic Affairs the authority to prohibit the acquisition or exercise of control over legal entities and partnerships active in the Dutch telecoms sector if (i) this control leads to relevant influence in the Dutch telecoms sector and (ii) as a consequence, Dutch national security or public order is compromised.
Following consultation, the legislative proposal has been modified on a number of points, with the introduction of a reporting obligation as the most notable change. On the basis of this reporting obligation, a party that is looking to acquire a Dutch telecoms company and, as a consequence, would be able to exercise significant control in the telecoms sector, must report this in advance to the Department of Economic Affairs and Climate Policy. At this moment, it is still unclear what this reporting obligation and the other changes exactly mean. The legislative proposal has been sent to the Council of State for advice and it is expected to be introduced to the House of Representatives after the summer.
Protection of vital sectors
In the Dutch government's coalition agreement, it was announced that designated companies in certain vital sectors can only be taken over if such a takeover is explicitly approved, which may be subject to additional conditions. It is currently being investigated whether this protection regime is necessary not only for the existing list of vital sectors but also for agricultural lands and certain regional infrastructural works. In this context, the EU's draft regulation designed to protect companies of strategic importance against takeovers must be taken into account. With this draft regulation, the European Commission intends to establish a new EU framework for the screening of foreign direct investments on the grounds of security or public order in the European Union.
It was announced that first an ex ante analysis would be conducted in order to map out national security risks in respect of takeovers by foreign companies, as well as to determine whether the government's current instruments provide sufficient safeguards. Depending on the findings of the analysis, further measures may need to be taken. The analysis is still being conducted and the results were expected to be announced in mid-2018.