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The Netherlands

Trust offices

The First Chamber (Senate) of the Dutch parliament has accepted a legislative proposal for the Supervision of Trust Offices. The proposal is one of the points of action put forward in the memorandum Integrity of the Financial Sector and Combating Terrorism (Integriteit Financiële sector en terrorismebestrijding), and it is intended to improve the integrity of the financial system by regulating the trust sector.

Trust offices (trustkantoren) manage companies and legal entities for other, mostly international, companies. Under the proposed legislation, important parts of the existing rules of behaviour of some trust offices (including the know-your-client principle) would acquire a legal basis and would therefore have a general effect.

The law is expected to come into force in March 2004 at the same time as a new government decree (the so-called decree governing business integrity (overdrachtsbesluit integere bedrijfsvoering), which is now before the Council of State (Raad van State) for advice. In this decree, authority is formally given (by way of direct attribution, rather than by delegation from the Dutch minister of finance) to the Dutch central bank (De Nederlandsche Bank) to draw up further rules governing business integrity. In anticipation of this, the central bank has already consulted with market participants on a regulation governing business integrity. Parliament has also given attention to this draft regulation.

Matthieu Ph van Sint Truiden

Relaxing exemptions for securities deals

The Dutch 1995 Act on the Supervision of the Securities Trade (Wet toezicht effectenverkeer 1995 (Securities Act)) prohibits the offering of securities, or the announcement or solicitation of an offer, for issues in or from the Netherlands and outside a restricted circle. Certain secondary offers into the Netherlands are similarly prohibited. The exemption regulation for the Securities Act (Vrijstellingsregeling Wet toezicht effectenverkeer 1995 (Exemption Regulation)) creates various exemptions from this prohibition. For example, it allows offers on the basis of a qualifying prospectus. Recent amendments to the Exemption Regulation allow more flexibility in the use of exemptions and also introduce a new exemption.

Professional and foreign investors

The amendment of the Exemption Regulation has made it possible to combine the professional investor exemption with the non-resident exemption. Thus, it is now possible to offer securities to persons in the Netherlands who trade or invest in securities in the course of their profession and at the same time offer those securities to professional and retail investors outside the Netherlands. To qualify for the combined exemption, a selling restriction must be included in any offer document and in any advertisement and other document with which the offer is announced or made. The issuer must, before any offer is made, also submit a statement to the Dutch Authority for the Financial Markets (Autoriteit Financiële Markten (AFM)) stating that the offer complies with the securities laws and regulations of any state to which the offer extends.

Offers with a minimum total consideration of €50,000

The amendment of the Exemption Regulation has further introduced an exemption for offers with a minimum total consideration per investor of €50,000 (or its foreign currency equivalent). This exemption requires that the offer, any offer document and any advertisement and other document with which the offer is announced or made contain a statement to the effect that the securities are only being offered as a package with a value of at least €50,000. Any such document must be submitted to the AFM prior to an offer being made. Although this requirement clearly limits the usefulness of the exemption in the context of capital markets transactions, it remains particularly relevant to controlled auctions, which until the introduction of the new exemption required the granting of an individual dispensation by the AFM.

Other changes

The amendment of the Exemption Regulation has also resulted in the elimination of the requirement to submit copies of offer documents, advertisements and related documents to the AFM prior to any offer being made under the professionals exemption. Other changes include the introduction of additional exemptions from the publication requirements under the Securities Act, for instance for issuers which have used the professionals exemption or the two exemptions described above.

Alexander Harmse

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