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26 June 2019 / news

Developments around public administration (probity screening) act

The Public Administration (Probity Screening) Act (Wet bevordering integriteitsbeoordelingen door het openbaar bestuur / Wet Bibob) (Act) gives administrative authorities and legal entities with a public service role the power to perform a screening for reliability and integrity on (legal) persons with whom they do business to ensure they do not (indirectly) facilitate criminal organisations and activities.

It is an important principle that the powers conferred by the Act must be used prudently and with restraint. Nevertheless, the Act also has consequences for bona fide business partners of public authorities, given that they may be required to provide information, for example, and also because of the time investment to complete a probity assessment. These consequences are, for instance, felt by (legal) persons in the construction sector when applying for a permit, entering into a property transaction or tendering for a public contract. A new legislative proposal seeks to (further) extend the scope of the Act.

Extension of scope

Firstly, integrity assessments under the Act will no longer be limited to certain sectors. In the future, such assessments can be carried out for all government contracts.

An important change of specific relevance to the real estate practice is that the authority to grant approval for the transfer of rights of leasehold will be extended. While public authorities were already able to demand for approval to be required for any transfer of a right of leasehold, the powers available under the Act could not yet be used when exercising this approval request. The extension of the scope of the Act changes this.

Practical implications

The minister does not expect that the legislative proposal will result in any significant, unwanted practical consequences. He does not foresee any major changes in the processing time to effect the transfer of a right of leasehold, based on the expectation that an integrity assessment can be completed within the term of two months that is generally already needed to obtain the approval. Naturally, it remains to be seen how this will work out in practice.

Experience shows that even as things stand, it can take considerable time to complete an integrity assessment. This applies in particular in the case of more complex / large (corporate) structures and/or when foreign entities are involved. Particularly where changes have (recently) been made in the corporate structure which might prompt questions from the relevant administrative authority in the context of the integrity assessment, it is advisable to anticipate on this during preparations in order to be able to limit the risk of delays during the real estate transaction.

It is not yet known when the extension will officially take effect.

Contact

If you have any further questions on this issue or would like to receive more information, please contact Loesje Hoeke, Jan de Heer or your trusted adviser at the Loyens & Loeff Real Estate Team.



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