Houthoff Buruma Amsterdam
In Dutch company law the shareholders of private companies with limited liability (NV) have had several means at their disposal to obtain protection from unfriendly take-overs. The three most common means are the issuance of depositary receipts of shares or cumulative preference shares to a trust office, the use of pre-emptive rights on the issuance of shares and the voluntary set up of a large company regime that reduces the powers of the general meeting of shareholders in favour of the supervisory board. In the past decade these constructions have been the subject of much debate by the corporate sector. Recent developments in the field of European legislation have put them under further pressure.
In November 1997 the Dutch government proposed a bill to restrict anti-takeover measures for companies limited by shares. If this proposal becomes law, a shareholder who has held 70% or more of an NV's issued shares or depositary receipts for over a year would be able to ask the Enterprise Section of the Dutch Court of Appeal to remove the anti-takeover measures. This proposal has been met with a lot of criticism, much of it centered on the one-year waiting period during which the holder of the 70% stake would be unable to exercize corporate powers.
Last June the Council of the EU agreed on an amended proposal for a thirteenth directive on company law, dealing with takeover bids. This proposal has not yet been officially published because Spain, as a result of a conflict with the UK, has exercized a political reservation over it. Regardless, it has been widely circulated. The directive would have a major impact on Dutch company law since it would require all member states to ensure, in order to protect minority shareholders, that rules be in place to oblige a mandatory bid in case of a change of control. The thirteenth directive would not only oblige the Dutch government to amend the bill restricting anti-takeover measures, but would also result in important changes to the Dutch merger code, given that the directive obliges a legal basis instead of rules of conduct.
We can safely assume that the Dutch debate on take-overs and anti-takeover measures will intensify in the coming year and that new legislation will come into force.