Netherlands – EA Cooling-Off in Takeovers

Netherlands – EA Cooling-Off in Takeovers

On 7 December 2018, NLD EA issued bill on cooling-off in hostile takeovers.

  • Bill to allow board of a Dutch listed company to invoke 250 day cooling off period.
  • Background
  • Follows political debate over several hostile takeover attempts, e.g. Akzo-Nobel.
  • Government response was published in letter dated May. 20, 2017, with 4 options.
  • Shareholders may pressure management to change strategy, e.g. firm demerger.
  • Cooling-off period of maximum of 250 days gives more time and peace to decide.
  • In cases of demands for directors dismissal, or if hostile takeover bid announced.
  • Board would use the period to explore alternatives, in dialogue with stakeholders.
  • Measure stems from coalition agreement, has been agreed by council of ministers.
  • Details
  • Bill is to amend book 2 of the civil code, inserting art 114b and amending art 129.
  • Subject to certain necessary exceptions, during the cooling-off, reflection, period, a director, or supervisory director, can not be appointed, suspended, terminated.
  • Shareholders remain entitled to request dismissal of a director is put on agenda.
  • To prevent reflection period from being used improperly, bill contains guarantees.
  • If wish to make use of cooling-off period, need approval of the supervisory board.
  • Board may decide to terminate cooling-off period if it considers it is that it has a sufficient view of the effects on stakeholders and consideration of these interests.
  • The supervisory board must agree to any early termination of cooling-off period.
  • Shareholders with interest of at least 3% may ask court to end cooling-off period.
  • Bill also makes explicit, primacy of the management with respect to the strategy.
  • Effectiveness
  • Consultation open for comments to 7 February 2019.