As this is the last Netherlands Update in 2011, we have highlighted three major changes to Dutch financial law that will take effect on 1 January 2012. These changes were also mentioned in the May and June issues.

  • Professional Market Parties: the threshold for qualifying as a professional market party is raised from EUR 50,000 to EUR 100,000.
  • Wild West Sign: offerors of securities that are exempt ⦣8364;" under Section 5:3 paragraph 1 FMSA ⦣8364;" from the prohibition on offering securities to the public without an approved prospectus, must use a mandatory exemption notice. The mandatory texts and symbols can be found on the website of the AFM. No exemption notice is required for offers to qualified investors. 
  • Licence requirements for investment objects, securities and participation rights in investment funds: the threshold for exemption from the licence requirement is raised from EUR 50,000 to EUR 100,000 per investment object, security or participation right.

 Government proposes ban on bonuses at state-aided financial institutions

The government wants to introduce legislation prohibiting financial institutions supported by public funds from paying out variable remuneration (bonuses) to their directors. Under the proposal, the other fixed elements of directors' remuneration would be frozen. Percentage-based increases of those elements would be permitted provided that the increases apply equally to all other employees of the institution.

These proposals concern both new and existing cases of state funding. For existing cases, transitional provisions are proposed that take into account to what extent the new rules were foreseeable by the institution and its directors. The transitional provisions do not apply to any new aid required before the rules take effect.

 Proposed notification requirements for cash-settled instruments

The pending Bill on notification of certain cash-settled instruments introduces notification requirements for holders of financial instruments where the increase in value of the instruments is partly dependent on the increase in value of the underlying shares or related dividends. Examples are contracts for difference and total equity return swaps.

In Parliament, the question arose whether the Dutch rules on mandatory public offers also extend to the cash-settled instruments referred to in the Bill. These rules provide that a mandatory public offer must be made if at least 30% of the voting rights at the AGM can be exercised (see also our article below on expected changes to the mandatory offer rules).

The Minister of Finance indicated that the financial instruments referred to in the Bill concern potential voting rights, which do not fall within the scope of the mandatory public offer rules. The Minister did, however, say that potential voting rights will be incorporated into the transparency provisions of the FMSA Decree on Public Offers. Under the planned amendments, the bidder and target company will both have to periodically notify their stakes in certain cash-settled instruments.

 Public-to-private transactions in the Netherlands - legislative changes expected per 1 January 2012

  • A target can request the Netherlands Financial Markets Authority to require a bidder to "put up or shut up" for 6 months
  • No mandatory offer needs to be made if a bidder has acquired more than 50% - formerly 30% - of the voting rights in a previous voluntary public offer
  • 90% - formerly 95% - or more of the independent votes at the general meeting of shareholders can exempt a bidder from making a mandatory offer
  • Underwriting banks will have one year to divest an unintended stake in a listed company following the underwriting of a share issue

Voting arrangements in irrevocable undertakings of a target's shareholders will, in principle, not be considered "acting in concert" if the objective of the voting arrangements is to ensure the success of the public offer

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.