The council of the Amsterdam Exchanges NV Association is proposing to amend its take-over rules. The suggested amendments to Appendix X of Amsterdam Exchanges NV Listing and Issuing Rules are being discussed with the Association of Securities Issuing Institutions (VEUO).
In Holland the tradition has been to offer for sale on the Amsterdam Exchanges NV non-voting or "A" shares and the majority of Dutch shareholdings have been of this nature.
The new proposals will secure benefits for companies targeted for takeover as a result of the acquisition, by an aggressor, of a minority equity holding with significant voting rights. The proposals will also offer protection against disenfranchisement for all shareholders and will ensure that the interests of minority, non-voting, shareholders are protected.
These new proposals :
Provide authority to the management of a company to suspend, temporarily, the voting rights of an aggressor shareholder at the point when the aggressors voting rights exceed 25%. Provide for a protection of minority shareholders in that initiators of a bid must extend their offer to all outstanding shareholders on the same terms when they have acquired 50% or over of the share capital or the voting rights of the target company. Provide for arbitration from an independent panel in cases when an offeror has held two-thirds of the share capital or the voting rights for over a year but is still being resisted by the management of the target company. Provide, when there is no existing or anticipated take-over activity, for the introduction of voting rights to non-voting "A" shareholders.The VEUO executive is considering these proposals.
Background
Historically many Dutch companies have anti-takeover measures built in to their legal structure. These arrangements have included:
"Joint ownership" structures in which the shares in the holding company are held by a management company; the shareholders in the listed company thus having only indirect control. The ability of being able to issue a number of 25% partly paid preference shares at par to "foundations", which have a majority vote. The existence of priority shares conferring special rights such as the appointment of key directors or supervisory board members, or to convene general meetings. The restriction of any shareholders voting rights to 1% of the issued capital, irrespective of the actual number of shares owned. Restricting the right of a 51% majority shareholder to pass certain resolutions which, in the company's articles, are stated to require 66 2/3%, 75% or even 90% majority. The "large company regime", involving employee shareholders, which can influence the appointment of supervisory board members and grant them additional powers. Such measures can limit the power of a dissident majority shareholder at a general meeting. The introduction of other "poison pills", triggering Crown jewel options, golden parachutes, dilutive options, or agreements that are financially detrimental to the company.
Action By The Stock Exchange
In 1989 the Stock Exchange introduced regulations to govern the use of anti-takeover measures. These rules, which were redrafted in 1992 (Appendix X) restricted companies from building up a battery of protective practises, neutralised certain effects of some applications, and limited companies to only two defensive measures. These regulations apply to all new listings and to listed companies which change existing measures, alter articles of association, or apply to list new shares or depository receipts.
The present regulations will expire on April 1st 1995 but will continue if these proposed new regulations are not adopted. These new Stock Exchange proposals will, it is believed, have the approval and support of The Minister of Finance. If the new arrangements are not to his satisfaction legislation could be introduced by him to limit the use of anti-takeover measures.
For further information please contact:
Joost Maas Tel:+ 31 20.5234567
Paddy Manning Tel: + 44 (0)171 4364101
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.
