250-day cooling-off period for listed companies

Publication date: 30 March 2021
Management Boards of listed companies get a new tool to protect the company against unwanted shareholder activism or an impending (hostile) takeover. The possibility of invoking a 250-day cooling-off period is introduced. What does this cooling-off period entail exactly?

bedenktijd-weblijst.25f50d-1.jpg

Statutory cooling-off period

On 23 March 2021, the Dutch Senate approved the legislative proposal that provides the Management Boards of listed companies with the opportunity to invoke a cooling-off period. On the basis of this, it will be possible for listed companies to invoke a cooling-off period of a maximum of 250 days from 1 May 2021 onwards. The Management Board can invoke this cooling-off period in two situations:

  1. Request by shareholders: If one or more shareholders request consideration of a proposal to dismiss, suspend or appoint a member of the Management or Supervisory Board, or a proposal of amendment of the articles of association related to this.
  2. Takeover bid: if a public offer for shares in the capital of the company has been announced or made, without agreement on the bid having been reached with the company.

If one of these situations arises and the Management Board is of the opinion that the request or bid is substantially in violation of the interest of the company and its affiliated enterprise, the Board can invoke the cooling-off period.

The Management Board must take a motivated decision for this. If the listed company has a Supervisory Board (SB), this management decision must be approved by the SB.

Background

In an unwanted takeover bid the careful balancing of interests of the company may come under pressure. The same applies if activist, short-term oriented shareholders interfere with the company policy. These shareholders can use the authority for dismissal, suspension or appointment of directors or supervisory directors and an amendment of the articles of association to this end as leverage to get the Board change course.

The statutory cooling-off period is meant to counter the risk that short-term interests may prevail or that not all consequences have thoroughly been thought through. The cooling-off period provides the Management Board of listed companies with more scope to map out interests of the company and its stakeholders (such as employees and shareholders).

Duration of cooling-off period

The maximum period of the cooling-off period is 250 days, from (1) the latest day by which the request by shareholders for the next General Meeting of Shareholders (GMS) must be received or (2) the day on which the public bid was made. The maximum duration of 250 days applies regardless of when the cooling-off period is invoked by the Board.

The Management Board may at all times terminate the cooling-off period early. This termination decision also requires approval of the SB. The cooling-off period ends in any case on the day after the public bid has been honoured.

Shareholders with an interest of at least 3% can request the Enterprise Chamber of the Amsterdam Court of Appeal to terminate the cooling-off period.

Consequences of cooling-off period

The cooling-off period means that the authority of the GMS to appoint, suspend or dismiss a director or supervisory director and to amend the articles of association in this context is suspended.

During the cooling-off period, the Management Board must gather all information that is necessary for a careful policy determination. In doing so, the Management Board must in any case consult the shareholders with an interest of 3% or more and the works council. If they agree to it, the position of the consulted shareholders and the SB will be put on the website of the company.

No later than one week after the end of the cooling-off period, the Management Board has to publish a report about the policy pursued and the course of events since the invocation of the cooling-off period. This report has to be published on the website of the company as well. The report also has to be discussed during the next GMS.

More information?

Do you want to learn more about the statutory cooling-off period for listed companies? Or do you have any other questions about corporate law? Please contact us:

    Share on social media

    • Corporate law

    Is a management agreement an employment contract or a contract for services?

    26 August 2021

    Do the new rules of the Supreme Court for the assessment of employment contracts also have consequence for management agreements? Case law has not decided yet. This can be seen from the judgments of the Arnhem-Leeuwarden Court of Appeal and the District Court of Midden-Nederland about the management agreement of the CFO of Volksbank.

    read on
    • Corporate law

    Good governance: The advisory capacity of directors and members of the supervisory board

    28 June 2021

    Directors and members of the supervisory board support shareholders in an advisory capacity. From 1 July 2021 this also applies to directors and supervisory board members of associations, foundations and cooperatives. What are the consequences if the shareholders make decisions disregarding this advisory role?

    read on
    • Works Council
    • Corporate law

    Management and Supervision of Legal Entities Act: What are the changes?

    23 June 2021

    On 10 November 2020, the Dutch Senate adopted the bill on the management and supervision of legal entities. This affects all associations and foundations, but, above all, nonprofit organizations. As an officer of a sports club, are you now more likely to be liable? Do you have to meet additional requirements when you are a member of the supervisory board of a school?

    read on
    • Works Council
    • Employment law and dismissal

    Works council

    4 May 2021

    Is there already a works council in your company? Are you a member of your company’s works council? What are the advantages of having a works council in your company? Jan Dop and Priscilla C.X. de Leede explain the role of the works council and give an overview of the works council’s most important rights.

    read on
    • Expats
    • Administrative law and the environment

    The Netherlands: Gateway to Europe

    3 May 2021

    The Netherlands likes to present itself as “the gateway to Europe.” And not without reason: excellent travel connections (Schiphol Amsterdam Airport and Rotterdam Seaport) and a highly educated population speaking several languages.

    read on
    • Corporate law

    Do you have to amend your articles of association due to the new Management and Supervision of Legal Entities Act?

    15 April 2021

    The Management and Supervision of Legal Entities Act will enter into force on 1 July 2021. How does this affect the articles of association of your foundation, association or cooperative association?

    read on
    • Expats
    • Employment law and dismissal

    Watch our webinar “COVID-19: Reorganization, Job Loss & Stay”

    30 March 2021

    We have hosted a special webinar “COVID-19: Reorganization, Job Loss & Stay” in cooperation with IN Amsterdam on 23 March. During the webinar, we discussed issues that employers and international employees face due to the impact of the coronavirus. Watch the video today!

    read on
    • Fashion and luxury
    • Contracts

    Distribution & Agency in the Netherlands

    25 February 2021

    The expert lawyers of Russell Advocaten contributed the chapter on the Netherlands to the Lexology Guide Distribution & Agency. Lexology is the most comprehensive source of international legal updates, analysis and insights for law firms and in-house counsel.

    read on