Recent developments in the field of investment screening in the Netherlands
In the light of the coronavirus pandemic and its economic effects, the Dutch government aims to speed up the introduction of a broad investment screening mechanism. On 2 June 2020, the Minister of Economic Affairs and Climate Policy (Minister) informed parliament that such an investment screening mechanism will have partly retroactive effect as of 2 June 2020. A sector-specific investment test for the telecom sector has already been adopted on 19 May 2020. Furthermore, a draft bill on the introduction of a statutory reconsideration period has been published on 18 December 2019, which would give the Board of Directors of listed companies the possibility to invoke a 250-day waiting period in case of a hostile takeover offer. We provide you with a brief update below.
Broad investment screening mechanism
By implementing a broad investment screening mechanism, the Dutch government aims to mitigate national security risks that could arise from certain takeovers and investments by foreign parties. The screening mechanism will consist of a notification obligation and of a risk analysis (for investments subject to this screening mechanism), which mainly concerns risks of (i) strategic dependencies, (ii) damage to the continuity of vital services and processes or (iii) damage to the integrity and exclusivity of knowledge and information linked to vital processes and high-quality sensitive technology. The legislative proposal was due for the end of 2020, but members of the parliament (including three out of the four governing parties) have requested to speed up this process, because of the potential economic implications the corona crisis could have. On 2 June 2020, the Minister informed parliament that he intends to give the legislative proposal partly retroactive effect as of 2 June 2020. The investment screening mechanism will have retroactive effect for investments in (i) providers of critical processes and infrastructures and (ii) high-quality sensitive technologies. With respect to the second category the Minister indicates that the multilateral frameworks for export control on strategic goods (goods for military or dual-use applications) will be used as starting point. The Minister expects that the retroactive effect will have a deterrent effect. The legislative proposal is due for the fourth quarter of this year.
Law undue influence telecommunication
Communication services, internet hubs, datacenters, hosting services and other parts of the telecommunication infrastructure and services could be of vital national interest. The act on undue influence empowers the Minister to prohibit the acquisition or holding of a controlling interest in a telecommunications party if the acquisition or holding of such control would lead to a threat to the public interest. In order to keep an eye on relevant takeovers in the telecommunications sector, a notification obligation is in place. Upon receipt of a notification of a proposed acquisition of controlling interest, the Minister will start an investigation. The purpose of this investigation is to determine whether there are grounds for a ban. The Minister shall decide within eight week. The Minister may extend this period with six months. In addition, the Minister will actively monitor control relationships in the telecommunications sector.
Statutory reconsideration period
A draft bill for the introduction of a statutory reconsideration period has been published. The aim of this proposal is to give the Board of Directors of a listed company more time to take stock of and weigh the interests of the company and its stakeholders, in case of a hostile takeover offer. The reconsideration period can also be invoked in case of a proposal by a shareholder to appoint, suspend or dismiss a board member or member of the supervisory board or a proposal for an amendment to an statutory clause related to such event. The Supervisory Board would have to agree to the invocation of the cooling-off period. The effect of invoking the cooling-off period is that the authority of the general meeting to suspend or dismiss a member of the management board or supervisory board is suspended for a maximum of 250 days.
Please do not hesitate to contact Marc Wiggers or Boyd Wolffers or your trusted Loyens & Loeff adviser if you have any questions on investment screening in the Netherlands.
Boyd WolffersAssociate Attorney at law, Tax adviser
Boyd Wolffers, attorney-at-law and tax advisor, is a member of the competition and regulatory practice group in our Amsterdam office. He is an expert in European (tax) law and competition law (cartel prohibition, merger control, abuse of dominance and (fiscal) state aid law).T: +31 20 578 55 90 M: +31 6 10 90 14 79 E: firstname.lastname@example.org