The Dutch capital market provides for domestic and foreign capital in the form of ordinary equity, debt securities and other securities. The only recognised stock exchange in the Netherlands is the stock exchange of Euronext Amsterdam NV (‘Euronext Amsterdam’) and its parent Euronext NV (‘Euronext NV’ and, together with Euronext Amsterdam, ‘Euronext’). Euronext NV is the first cross-border exchange. It owns the exchange organisations in Amsterdam, Brussels, Lisbon, London and Paris, which in turn hold the regulatory licences to operate the local markets. Euronext NV and Euronext Amsterdam received a joint licence to operate the stock exchange in the Netherlands.
Euronext is going to merge with NYSE. In the beginning of 2007 NYSE Euronext made through its wholly-owned subsidiary NYSE Euronext (Holding) NV an exchange offer for all outstanding shares of Euronext NV. NYSE Euronext plans to initiate, through NYSE Euronext (Holding) NV, a compulsory acquisition procedure in accordance with the Dutch civil code in order to acquire all the outstanding shares of Euronext NV.
On 1 January 2007 the Financial Supervision Act (‘FSA’) entered into force. The FSA provides for a general framework of combined legislation for prudential supervision and conduct supervision. The FSA replaces eight financial supervision acts in effect prior to 1 January 2007, including but not limited to:
The FSA consolidates practically all rules and regulations in effect prior to 1 January 2007 that apply to the financial markets and financial institutions and their supervision. The FSA and further regulations pursuant to the FSA govern the offering of securities, the supervision of financial institutions that exist in the Netherlands (supervision of banks, insurers, collective investment schemes, etc), the providing of services by financial institutions (eg securities brokers or portfolio managers) and, at a later stage, will be governing public takeover bids. In addition to consolidating the various rules and regulations in effect prior to 1 January 2007, the FSA brings about some changes of a substantive nature, including a new regulatory framework, changed terminology and new and changed general and conduct-related standards.
If offered securities are admitted, or likely to be admitted in the near future, to the stock exchange of Euronext Amsterdam, the rules established by Euronext are applicable and a number of rules set by or pursuant to the FSA are not applicable, it being noted that in either case the prospectus requirements are set by or pursuant to the FSA.
The Minister of Finance is the conduct supervisor. The Minister of Finance has transferred its conduct duties and authorities to the Netherlands Authority for the Financial Markets (the ‘AFM’). Licences for institutions that are largely subject to conduct supervision, ie investment firms and investment institutions, will be granted by the AFM.
The Minister of Finance is the prudential supervisor. The Minister of Finance has transferred its prudential duties and authorities to the Dutch Central Bank (the ‘DNB’) and to the Pension and Insurance Chamber (the ‘PVK’). In October 2004 the DNB and the PVK merged under the name De Nederlandsche Bank, so that the DNB now is the prudential supervisor. Licences for institutions that are largely subject to prudential supervision, such as banking institutions and insurance companies, will be exclusively granted by the DNB.
The FSA lays down rules for cooperation between the AFM and the DNB. The AFM and the DNB will cooperate with a view to draw up joint rules and policy rules in respect of matters that are relevant in terms of both conduct supervision and prudential supervision. The AFM and the DNB will furthermore have to involve each other in certain decisions by asking each other for their point of view or advice. The FSA also provides for the exchange of information between the supervisory authorities and for the right of the supervisory authorities to make certain enquiries.
The FSA provides for a legal framework for the self-regulation of recognised stock exchanges. Euronext is responsible for establishing adequate rules and ensuring compliance with it. In turn the AFM supervises, among others, Euronext and market personnel, such as clearing members, market makers, liquidity providers and traders.
3. OFFERING OF SECURITIES OR HAVING SECURITIES ADMITTED TO TRADING ON A REGULATED MARKET
The EU Prospectus Directive (2003/71/EC) (the ‘Directive’) was implemented in the Netherlands in July 2005. The rules implementing the Directive are now contained in the FSA and further regulations pursuant to the FSA. The most important change brought by the implementation of the Directive was the introduction of a European passport for prospectuses.
The FSA prohibits the offering of securities to the public or to have securities admitted to trading on a regulated market, unless a prospectus that has been approved by the AFM or by a supervisory authority in another member state (as defined in the FSA) is generally available with regard to such offering or admission.
The definition of securities includes negotiable shares or other negotiable documents of value or rights considered equivalent to a negotiable share other than units in an open-end investment institution, negotiable bonds or other negotiable debt instruments and any other negotiable document of value issued by a legal entity, company or institution with which a security as referred to above can be acquired by exercising the rights attached to it or through conversion, or which can be settled in money.
The prohibition on the offering of securities without a prospectus does not apply to money market instruments having a maturity of less than 12 months. Furthermore, the prohibition on the offering of securities without a prospectus does not apply to the offers of securities to the public, in respect of an offer of securities:
The Exemption Regulation pursuant to the Financial Supervision Act (the ‘Exemption Regulation FSA’) provides for certain exemptions from the prohibition on the offering of securities or having securities admitted to trading on a regulated market without a prospectus, including but not limited to exemptions in respect of:
(i) are offered or form part of an offer to the public or admissions to trading on a regulated market in a continuous manner where over a period of 12 months at least two separate offerings or admissions to trading of securities of a similar category and/or class are made;
(ii) are not subordinated, convertible or exchangeable;
(iii) do not give a right to subscribe to or acquire other types of securities and that they are not linked to a derivative instrument;
• securities included in an offer where the total consideration of the offer is less than €2,500,000, which limit shall be calculated over a period of 12 months.
In line with the Directive, the Exemption Regulation FSA furthermore provides for certain exemptions in respect of offerings to the public of securities in the secondary market and for an exemption in respect of offerings to persons other than qualifying investors who entered into a discretionary portfolio management agreement with a regulated portfolio manager.
3.4 Issuing of bonds – prohibition to act as a bank without a licence and prohibition on receiving repayable funds from the public
As mentioned above, the issuing of securities falls within the scope of the regulatory framework for the offering of securities described above. However, if the issuer of securities receives repayable funds, eg in case of issuing bonds, and the funds are used by the issuer to on-lend, the issuer may qualify as a bank within the meaning of the FSA.
The FSA prohibits acting as a bank without a licence. Those who make their business of receiving repayable funds outside a restricted circle from persons who do not qualify as professional market parties on the one hand and on-lending such funds on the other hand, qualify as a bank.
As appears from the definition of bank, those who make their business of receiving repayable funds solely from professional market parties and/or within a restricted circle, do not qualify as bank and, therefore, do not fall within the scope of the prohibition referred to above.
The definition of professional market parties includes qualifying investors and certain natural or legal persons appointed as such by governmental decree. In this connection it should be noted that an important new category of professional market parties has been introduced. This new category of professional market parties consist of persons or legal entities who or which (i) provide repayable funds by way of a loan for a minimum amount of €50,000 (or its equivalent in a foreign currency) or by way of purchasing debt instruments (eg notes) with a denomination of at least €50,000 (or its equivalent in a foreign currency) or (ii) purchase (a) the receivables under a loan agreement or (b) debt instruments with a lower denomination than €50,000, in each case against an aggregate consideration of at least €50,000 (or its equivalent in a foreign currency). In case such receivables or debt instruments are acquired in a package (pakket), such package should represent a nominal value (nominale waarde) of at least €50,000 (or its equivalent in a foreign currency) or be purchased against an aggregate consideration of at least €50,000 (or its equivalent in a foreign currency). Although it has not been possible to implement this new category of professional market parties on or before 1 January 2007 (ie the date on which the FSA came into force), it is confirmed by DNB in writing that parties may rely on the new category of professional market parties for the period as of 1 January 2007 until the implementation of this new category as if it had been implemented on 1 January 2007.
The FSA furthermore provides that the prohibition to receive repayable funds outside a restricted circle from persons who do not qualify as professional market parties without a licence is not applicable if:
In order for securities to be admitted to the official listing on the stock exchange of Euronext Amsterdam a request to admission has to be filed with Euronext Amsterdam by the issuer and:
General listing requirements for securities
In order for securities to be admitted to listing, among other things, the following general criteria need to be met:
The issuer shall ensure that securities of the same class have identical rights and are validly issued in a form in accordance with applicable laws and regulations. The issuer shall ensure that securities are freely transferable and negotiable.
An application for admission to listing must cover all issuer’s securities of the same class issued at the time of the application or proposed to be issued.
Additional listing requirements for shares
In order for shares, depository receipts for shares and equity securities to be admitted to listing, the following criteria need to be met:
Additional listing requirements for securities other than shares
In order for corporate bonds to be admitted to listing, the nominal value must be at least €200,000, except in the case of tap issues where the amount of the issue is not fixed. Euronext Amsterdam may as a condition to admission to listing require that the relevant corporate bonds be rated by a rating agency or require that a guarantee for the principal amount and interest be issued by a parent company or by a third party.
In order for units in an investment institution or other securities to be admitted to listing, a number of additional listing requirements relating to market capitalisation and adequate public distribution need to be met.
If a company wishes to obtain a listing for securities on Euronext Amsterdam, it must enter into a listing agreement. By entering into the listing agreement the company agrees to be bound by and to comply with the rules in the Euronext Rule Book (as amended from time to time).
In order to obtain a listing for securities on Euronext Amsterdam, a listing agent is required to be involved. The listing agent needs to make a written statement to Euronext Amsterdam declaring that it shall guide and council the issuer throughout a period of no less than six months following the listing. The listing agent needs to be a member of Euronext that is authorised by Euronext to perform the following tasks:
The listing agent needs to have at his disposal sufficient and experienced human resources to ensure the proper fulfilment of his abovementioned obligations. The obligations of the listing agent are laid down in an agreement signed by the issuer. A copy of this agreement must be provided to Euronext Amsterdam.
The prohibition under the FSA to offer securities to the public or to have securities admitted to trading on a regulated market is not applicable, if a prospectus that has been approved by the AFM or by a supervisory authority in another member state is generally available with regard to such offering or admission.
The prospectus must comply with the rules of the Directive (as implemented in the Netherlands in the FSA and further regulations pursuant to the FSA).
The prospectus shall contain all information which, according to the particular nature of the issuer and of the securities offered to the public or admitted to trading on a regulated market, is necessary for the purposes of making an informed assessment of the assets and liabilities, financial position, profit and losses, prospects of the issuer and of any guarantor and of the rights attaching to such securities, including the information referred to in articles 3 up to and including 23 of the Commission Regulation (809/2004/EC) of 29 April 2004 implementing the Directive (the ‘Prospectus Regulation’).
In relation to securities of a specific category, the Prospectus Regulation provides for schedules and building blocks listing the information which must be included in the prospectus. Article 21 and Annex XVIII of the Prospectus Regulation provide for mandatory combinations of schedules and building blocks for specific types of securities. The AFM may require, in a specific case, the inclusion of additional information if necessary for the purposes referred to above.
Information contained in the prospectus shall not conflict with any other information contained therein or other information available to the AFM and shall be presented in an easily analysable and comprehensible form.
If information to be included in a prospectus is inappropriate to the issuer’s sphere of activity or to the legal form of the issuer or to the securities to which the prospectus relates, the prospectus shall contain information, if available, equivalent to the required information.
The prospectus should contain a summary. The summary shall in a brief manner convey the essential characteristics and risks associated with the issuer, any guarantor and the securities, in the language in which the prospectus was originally prepared. The summary will contain a warning that:
The prospectus may consist of either one document or three separate documents. If the prospectus consists of three separate documents, these will include:
Once approved, a registration document may be used for new transactions without re-approval. The issuer only needs to submit the securities note and a summary for each new offering of securities to the public or admission to trading on a regulated market. If a material change or a recent development has occurred which could affect the assessment of investors, the securities note shall contain the information to be included in the registration document and update the registration document.
If the final offer price or exchange ratio and the volume of securities to be offered to the public are not included in the prospectus, the prospectus must indicate the criteria and/or conditions in accordance with which the offer price or exchange ratio and volume of securities to be offered will be determined or, in the case there is no final offer price, the maximum price. If the prospectus does not include the above information on the price and volume of the offered securities, this information must be filed with the AFM and made generally available to the public.
As a general rule, the prospectus must be drafted either in Dutch or in a language deemed customary in international financial circles if the prospectus is to be approved by the AFM. If the prospectus is approved by a supervisory authority in another member state, the AFM may require that the summary is translated into Dutch.
The AFM may authorise the omission from the prospectus of certain information, if:
If following the approval of a prospectus and prior to the offering of securities to the public or admission to trading on a regulated market a significant new development relating to the information contained in the prospectus occurs or a material error or inaccuracy in the prospectus which could affect the assessment of the securities is identified, a document supplemental to the prospectus will be required. This document supplemental to the prospectus must be approved by the AFM and made generally available to the public. Investors who have already agreed to purchase or subscribe to the securities (prior to publication of the supplement) shall be entitled to withdraw their acceptance within a given period of time.
As explained in 3.1 above, units in an open-end investment institution do not qualify as securities within the meaning of the Directive. Consequently, managers of open-end investment institutions or open-end investment companies which do not have a manager, need not publish a prospectus as described above. However, licensed managers of investment institutions or investment companies which do not have a manager must, inter alia, satisfy the rules laid down by further regulations pursuant to the FSA in respect of information to be supplied to the public. This means that (i) each manager must have available a prospectus within the meaning of the FSA about any investment institution, which it manages, and (ii) investment companies which do not have a separate manager must have a prospectus available within the meaning of the FSA about the investment company.
Such prospectus must contain the information which is necessary for the investors to come to an informed judgement about the investment institutions or investment companies and the costs and risks in connection with it. Apart from this general rule, the rules set by or pursuant to the FSA provide in detail (among other things, in a Schedule) the issues which need to be included in the prospectus.
6. ONGOING COMPLIANCE REQUIREMENTS – DUTY TO DISCLOSE INFORMATION
FSA
An issuer of securities which issued securities that have been admitted to trading on a regulated market that is located or that operates in the Netherlands shall at least annually make a document generally available which shall contain or refer to (a) the financial information drawn up and made generally available by the issuer in the 12 months preceding the publication of the annual accounts with due observance of certain directives and (b) the other information made generally available by the issuer in the 12 months preceding the publication of the annual accounts pursuant to statutory regulations of any state on the supervision of the securities trade.
If the issuer includes information by reference in the document, it shall indicate where and in what manner that information may be obtained.
The issuer shall file the document with the AFM after the publication of the annual accounts.
The obligation to make a document available shall not apply to issuers of which only non-equity securities with a nominal value per unit of at least €50,000 have been offered.
The FSA furthermore provides for certain rules on information to be made available periodically for financial institutions, eg investment institutions or investment firms.
Euronext rules
The Euronext rules also provide, inter alia, for certain rules on information to be made available periodically. However, the obligations to provide information periodically under the Euronext rules have been reduced as a result of the implementation of the Market Abuse Directive (2003/6/EC). It is expected that the obligations to provide information periodically under the Euronext rules will be further reduced as a result of the implementation of the Transparency Directive (2004/109/EC) and the Markets in Financial Instruments Directive (2004/39/EC).
The FSA provides for a duty for an issuer of securities or other financial instruments which issued securities or other financial instruments that have been admitted with its permission to trading on a regulated market that is located or that operates in the Netherlands, or for which the admission of those securities or other financial instruments to trading on such a market has been requested, to make public as soon as possible information that is concrete and that directly concerns the legal entity, company or institution to which the securities or other financial instruments pertain or to the trade in those securities or other financial instruments, which information has not been publicly disclosed and whose public disclosure might have a significant influence on the price of the securities or other financial instruments or on the price of securities or other financial instruments derived from those securities or other financial instruments (and as regards securities or other financial instruments whose value partly depends on the value of commodities, information investors in those securities or other financial instruments may expect to be disclosed based on market practices that are customary on the regulated market where those securities or other financial instruments are traded).
The information is to be made public by means of a press release and to be placed on the website of the issuer. The AFM is to be informed of the information simultaneously.
An issuer as referred to above may only delay the disclosure of the information if:
The rules set by or pursuant to the FSA and/or the Euronext rules furthermore provide that certain events need to be made public (eg changes in the rights attaching to the securities or facts or events which are likely to have a material adverse effect on the price) of the securities.
The rules on insider trading are incorporated in the FSA. Persons with inside information are prohibited from carrying out transactions or causing transactions to be carried out (1) in or from the Netherlands or a state that is not a member state, in securities or other financial instruments that are admitted or are likely to be admitted in the near future to a regulated market in the Netherlands or a market in financial instruments, other than a regulated market the holder of which has obtained a recognition; (2) in or from the Netherlands in securities or other financial instruments that are admitted or are likely to be admitted in the near future to a regulated market in another member state or a securities exchange authorised by the government in a state that is not a member state; (3) in or from the Netherlands or a state that is not a member state in securities or other financial instruments which value is at least in part determined by the former financial instruments; (4) in or from a member state in securities or other financial instruments that are admitted to a market in financial instruments other than a regulated market the holder of which has obtained a recognition.
Inside information is an awareness of information that is concrete and that directly or indirectly concerns the legal entity, company or institution to which the securities or other financial instruments pertain or to the trade in those securities or other financial instruments, which information has not been publicly disclosed and which public disclosure might have a significant influence on the price of the securities or other financial instruments or on the price of securities or other financial instruments derived from those securities or other financial instruments (and as regards securities or other financial instruments which value partly depends on the value of commodities, information investors in those securities or other financial instruments may expect to be disclosed based on market practices that are customary on the regulated market where those securities or other financial instruments are traded).
The FSA makes a distinction between ‘primary insiders’ (for example directors and members of the supervisory board and persons with a qualifying shareholding) and ‘secondary insiders’. For primary insiders it is irrelevant whether they should reasonably suspect that they possess inside information. For secondary insiders it has to be proven that they know or should reasonably suspect that their knowledge qualifies as inside information within the meaning of the FSA.
The FSA provides for certain exceptions and the possibility of exemptions to the prohibition on insider trading, including exceptions in respect of repurchases of own shares under a repurchase programme and price stabilisation immediately following an initial public offering.
The FSA furthermore provides for a prohibition on passing on inside information or recommending transactions to third parties.
The FSA contains a prohibition on market manipulation. It is prohibited to:
The FSA provides for certain exceptions and the possibility of exemptions to the prohibition on market manipulation, including exceptions in respect of repurchases of own shares under a repurchase programme and price stabilisation immediately following an initial public offering.
The Dutch Criminal Code also contains a more general provision that prohibits any person from and penalises unlawfully forcing the price of merchandise, securities or valuable paper to rise or fall by disseminating untruthful information.
The FSA furthermore provides for notification obligations or reporting duties for certain insiders, an obligation to draw up rules governing the holding of and transactions in its own securities by its directors, members of its supervisory board and its employees, an obligation to keep a list of insiders, and an obligation for investment firms and others responsible for carrying out transactions to report transactions where there is a suspicion that the client is acting with inside information or that the client is acting in violation of the rules on market manipulation.
The FSA prohibits the offer of a unit in an investment institution in the Netherlands without the manager of the investment institution having obtained a licence from the AFM to manage investment institutions or if it is an investment company which has no separate manager, without the investment company having obtained a licence from the AFM.
The prohibition does not apply in respect of:
• offers to fewer than 100 individuals or legal entities (other than qualifying investors); or
• offers to only qualifying investors;
• offering units in an investment undertaking established in a state to be designated by theMinister of Finance in which the supervision on the investment institutions provides sufficient safeguards with regard to the interests which the FSA seeks to protect, subject to some further requirements; or
• an investment institution which is ‘registered’ as a UCITS (ie a holder of a so-called European passport); a notification procedure is applicable.
If an investment institution wants to benefit from the qualifying investors exception, the offer, each advertisement and each document announcing an offer of the units in the investment institution must contain a statement to the effect that the offer is or shall be solely addressed to qualifying investors.
If the investment institution relies on the exception for offers to less than 100 individuals, the offer, each offer advertisement and each document announcing an offer of the units in the investment institution must contain a statement to the effect that the investment institution does not require a licence pursuant to the FSA and that the investment institution is not supervised pursuant to Part 3 (Prudential Supervision of Financial Undertakings) and Part 4 (Conduct of Business Supervision of Financial Undertakings) of the FSA.
The Exemption Regulation FSA provides for certain exemptions, including but not limited to an exemption for offers of units for a total consideration of or at a denomination of at least €50,000 per investor.
If an investment institution wants to benefit from one of the exemptions, it will have to incorporate in its marketing material and other documents in which units in an investment institution are offered, that it will not have to obtain a licence for the offering of the units in the investment institution and that it is not under the supervision of the AFM.
If no exemption or exception applies, the manager of the investment institution, or if it is an investment company which does not have a manager, the investment company, will have to apply for a licence. A licence will be granted by the AFM if the manager or the investment company satisfies certain rules, including but not limited to rules in respect of:
Dispensation from certain licence requirements may be granted if the manager or investment company shows that it is not reasonably possible to meet such requirements and also shows that the aims which the FSA seeks to accomplish have been adequately achieved in other ways.
A licence may be made subject to certain restrictions and stipulations.
A licensed manager of an investment institution or a licensed investment company must on a continuing basis comply with certain rules, including but not limited to the rules described in 8.4 above. Persons who are excluded from the prohibition, still may have to comply with the conduct rules or part of them, such as rules that serve to ensure that the institution acts in the interests of its clients and the proper operation of the securities markets, etc.
Pursuant to the FSA it is prohibited to provide investment services in the Netherlands without having obtained a licence from the AFM. Providing investment services includes, among other things, investment services provided by securities brokers and portfolio managers. Providing investment services as securities broker includes intermediation and market making activities. Providing investment services as portfolio manager limits the scope of the prohibition to provide investment services in the Netherlands without having obtained a licence from the AFM to individual portfolio management on a contractual basis. Collective portfolio management is covered by the prohibition referred to in 8.1 above.
The FSA provides for certain exceptions to the prohibition, including but not limited to exceptions for, in short, certain insurers, investment institutions, credit institutions and financial institutions. Most of the exceptions are subject to certain conditions.
The Exemption Regulation FSA provides for certain exemptions for the prohibition, including but not limited to exemptions for, in short, certain brokerage or portfolio management services, private venture capital companies (regarding shares in their own subscribed capital), investment firms and foundations. Most of the exemptions are subject to certain conditions.
A licence will be granted by the AFM if the applicant satisfies certain rules laid down by the FSA, including but not limited to rules in respect of:
Dispensation from certain licence requirements may be granted if the investment firm shows that it is not reasonably possible to meet such requirements and also shows that the aims which the FSA seeks to accomplish have been adequately achieved in other ways
A licence may be made subject to certain restrictions and stipulations.
9.5 Continuing requirements
A licensed investment firm must on a continuing basis comply with certain rules, including but not limited to the rules described in 9.4 above. Investment firms which are excluded from the prohibition (eg investment firms that are subject to supervision of a supervisory authority of another member state), still may have to comply with the conduct rules or part of them, such as rules that serve to ensure that the investment firm acts in the interests of its clients and the proper operation of the securities markets, etc.
10. NOTIFICATION OBLIGATIONS/DECLARATIONS OF NO OBJECTION FOR QUALIFYING SHAREHOLDINGS
10.1 The Disclosure of Unusual Transactions Act
Pursuant to the Disclosure of Unusual Transactions Act, financial institutions and other institutions which offer financial and other services listed in this act as part of their profession or business are required to report any unusual transactions to the disclosure office.
10.2 The External Financial Relations Act 1994
A company can be appointed by the DNB as a reporter (rapporteur) under the External Financial Relations Act 1994. If appointed it will be obliged to comply with certain notification and registration requirements in connection with any possible payments to or from non-residents. Certain financial institutions are required to notify the DNB in order for the DNB to assess whether the financial institution should be appointed as a reporter.
10.3 The disclosure of voting rights and capital interest in issuers of shares which have been admitted to trading on a regulated market
The FSA provides for certain disclosure duties, inter alia, for issuers of shares or certificates of shares which have been admitted to trading on a regulated market and for holders of shares or voting rights, including (1) a disclosure duty for issuers of shares or certificates of shares which have been admitted to trading on a regulated market in respect of changes in the issued capital or in the number or nature of voting rights on the shares in its capital, (2) a disclosure duty for a legal or natural person holding shares or voting rights in respect of achieving, exceeding or falling below certain levels of capital interest and/or voting rights in a listed company, (3) a disclosure duty for a legal or natural person that acquires or disposes of shares with special voting rights and (4) a disclosure duty for a legal or natural person that has a substantial interest (five per cent or more in shares or voting rights).
For managing directors and members of the supervisory board there are additional disclosure requirements.
10.4 Insider trading
The FSA provides for rules relating to insider trading and market manipulation (see 6 above), including notification obligations or reporting duties for certain insiders.
10.5 Declaration of no objection for qualifying shareholdings
The holding or acquisition of, or increase in a ‘qualifying shareholding’ (ten per cent capital interest or voting rights) in a bank established in the Netherlands, a manager of an investment institution established in the Netherlands, an investment firm established in the Netherlands or an insurance company established in the Netherlands and the exercise of any control connected with a qualifying shareholding shall be prohibited, unless a declaration of no objection has been obtained from the DNB.
Pursuant to the FSA it is furthermore prohibited for a bank established in the Netherlands,
(1) to acquire or increase a qualifying shareholding in a bank, an investment firm, a financial institution or an insurance company, if at the time of such acquisition or increase the balance sheet total of that bank, investment firm, financial institution or insurance company represents more than one per cent of the consolidated balance sheet total of the bank, or (2) to acquire or increase a qualifying shareholding in an undertaking other than referred to under (1), if the amount paid for such acquisition or increase together with the amounts of previous acquisitions and increases of that qualifying shareholding amount to more than one per cent of the consolidated own funds of the bank, unless a declaration of no objection has been obtained from the DNB.
11. PUBLIC TAKEOVER BIDS
11.1 General
A public offer within the meaning of the FSA is an offer made by means of a public announcement for securities or units in an investment institution admitted to trading on a regulated market or an invitation to make an offer for such securities or units, by means of which the bidder has the intention of acquiring these securities.
11.2 Prohibition
Subject to the exceptions and exemptions described below, the FSA prohibits a public offer for securities or units in an investment institution admitted to trading on a regulated market in the Netherlands.
Furthermore, public offers are subject to workers’ participation rules, such as the rules laid down in the Works Council Act and/or the SER Merger Code 2000. The workers’ participation rules will not be discussed further.
11.3 Non-applicability – exceptions
The prohibition on making a public offer does not apply if an offer document (biedingsbericht) in respect of the public offer is generally available satisfying the requirements set by further regulations pursuant to the FSA, provided that reference is made to it in all announcements concerning the public offer.
11.4 Non-applicability – exemptions/dispensations
Exemptions may be granted by ministerial regulation and the AFM may grant, upon request, a dispensation from the prohibition on making a public offer.
11.5 Requirements of offer documents
The FSA and further regulations pursuant to the FSA concerning public takeover bids set out in detail the issues or information which need to be included in the offer document in case of a firm offer, a partial offer or tender offer, eg information in respect of the bidder, the offer, the target and reasons for and intentions of the bidder.
The offer can be made subject to certain conditions, provided that the fulfilment of such conditions may not be dependent on the will of the bidder.
11.6 Rules of conduct
The FSA and further regulations pursuant to the FSA provide for certain rules of conduct which, subject to possible dispensations, have to be complied with by the bidder, the target company and their executive directors, supervisory directors and other officers. The rules include, among others, rules on how and when to make public announcements, to give notices to the AFM and/or the target (of transactions by the bidder or insiders or other information), to make the offer document, other documents and information available and on the tender period and on how and when declaring the offer unconditional. For example:
11.7 Implementation of the EU Directive on takeover bids (2004/25/EC)
A new act to implement the EU Directive on takeover bids (2004/25/EC) (the ‘Takeover Directive’) has been submitted to parliament and new public offer rules to be laid down in further regulations are currently being drafted. The Takeover Directive was to be implemented on 20 May 2006 at the latest, a deadline which was not met by the Netherlands. It is intended that the new rules will be ultimately contained in the FSA and in further regulations pursuant to the FSA. It is expected that the new rules will come into force in the second half of 2007.
The main changes upon implementation of the Takeover Directive in the FSA and in a separate governmental decree under the FSA will be as follows:
In anticipation of the new rules, some of the amended public offer rules included in the takeover bill discussed above have in fact been implemented by means of a temporary government regulation since 20 May 2006. The most important rule being the possibility of having an offer document approved by the AFM and to use it as a passport offer document throughout the EU.
12. SANCTIONS
12.1 Criminal sanctions
Violation of the rules set by or pursuant to the FSA is – in most cases – an economic offence. Violation of the rules, if committed intentionally, is a serious offence or, if committed unintentionally, a minor offence. Violation of insider trading rules and market manipulation rules is – in all cases – a serious offence. Offenders can face monetary penalties and/or imprisonment if convicted of an economic offence. In case of a legal person, persons giving instructions and de facto directors can be prosecuted as offenders. In addition, the court may order an offender to pay to the state an amount equal to the benefit which the offender obtained as a result of its offence.
12.2 Administrative sanctions
In case of a violation of the rules set by or pursuant to the FSA, the AFM or the DNB can – in most cases – impose an administrative fine or an order for periodic penalty payments. The amount of an administrative fine depends, in case of a legal person, on the equity capital or, in case of a natural person on the capital of the individual in question and will be established by reference to a certain table.
The right to impose an administrative fine lapses if the public prosecutor has commenced criminal proceedings against the offender for the same offence. The opposite also applies: the right to prosecute lapses if the AFM or the DNB has already imposed an administrative fine for an offence.
Depending on the circumstances, the AFM or the DNB can also take the following measures:
Furthermore, under the FSA all decisions whereby the AFM or the DNB imposes a fine and all decisions whereby the AFM or the DNB imposes an order for periodic penalty payments and the periodic penalty payment is forfeited, will be disclosed, unless disclosure of such decision is contrary to the purpose of the supervision carried out by the AFM or the DNB.
The system of fines under the financial legislation is expected to be amended approximately a year after the entry into force of the FSA. The amendment is expected to result in more flexibility and higher fines.
12.3 Civil-law consequences
The FSA provides that legal acts that are performed in violation of the rules set by or pursuant to the FSA are not void or voidable for that reason, unless otherwise provided for in the FSA. However, transactions (eg agreements on brokerage or portfolio management or the issuing of securities) in violation of the rules set by or pursuant to the FSA may be void or voidable on the basis of deceit or error. Furthermore, issuers of securities or investment firms or any other person could be held liable on the basis of tort.
12.4 Consequences of breaches of Euronext rules
In case of non-compliance with the listing rules, Euronext Amsterdam can take measures with regard to the listing. The measures include suspension and cancellation of the listing.
13. PENDING LEGISLATION
13.1 General
The securities laws and regulations are continuously subject to change. In this chapter some (but not all) of the pending legislation is described in broad outline.
As mentioned and worked out in more detail in 11.7 above, a new act to implement the Takeover Directive has been submitted to parliament and new public offer rules to be laid down in a governmental decree are currently being drafted. It is expected that the new rules will come into force in the second half of 2007.
13.3 Implementation of the Markets in Financial Instruments Directive (2004/39/EC)
A legislative proposal for the implementation of the Markets in Financial Instruments Directive (2004/39/EC) is currently being drafted. The new rules will relate to organisational requirements, conduct rules and transaction reporting and will be applicable to, inter alia, investment firms and regulated markets. It is intended that the new rules will be ultimately contained in the FSA and further regulations pursuant to the FSA. It is expected that the new rules will come into force in the beginning of 2008.
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