In its recent Mediaset ruling, the Amsterdam Court of Appeal rendered an unprecedented judgment in which the implementation Dutch loyalty share scheme was successfully challenged. How will this impact the future of loyalty share schemes in the Netherlands?
Over the past few years, the Netherlands has seen a growing use of share loyalty schemes, incentivizing long-term shareholdership through additional dividend or voting rights. Ever since the DSM ruling in 2007, such schemes are generally assumed to be allowed under Dutch law provided that, in theory at least, all shareholders could access such scheme. The Mediaset case marks the first time a Dutch share loyalty scheme was successfully challenged in court. While this ruling does not prevent or prohibit the implementation of share loyalty schemes in Dutch companies, we expect that the rational of such schemes will be exposed to higher levels of (court) scrutiny in the future. If carefully structured, however, this should not have a significant impact on the use of share loyalty schemes in the Netherlands. As such, we expect that Dutch market practice will develop in such a way that Dutch companies seeking to implement a loyalty share scheme will more explicitly set out the rationale for implementing that scheme and how this scheme supports the interest of the company.
Want to learn more? A trend report in which we share our thoughts on how this development may impact share loyalty structures in the Netherlands, is freely available below.