On 28 October 2007, the Decree on Public Takeovers (Besluit Openbare Biedingen, the "Decree") entered into force, implementing the EU Directive on Takeover Bids. The amendments to the rules on public offers were incorporated in chapter 5.5 of the Financial Markets Supervision Act, and in the legislation based on this Act, including the Decree, the Exemption Decree Public Takeover Bids (Vrijstellingsbesluit Overnamebiedingen Wft, the "Exemption Decree") and the Exemption Decree of the Financial Markets Supervision Act (Vrijstellingsregeling Wft), together constituting the "Public Offer Rules". A comprehensive overview of these Public Offer Rules is included in our Legal Alert of 23 October 2007.
On 2 September 2009, the Minister of Finance published the results of a market consultation on the contemplated introduction of a market supervisor (marktmeester) and announced further amendments to the Public Offer Rules. The amendments were meant to increase transparency and streamline the public offer process, and to improve the rules regarding a mandatory offer. The resulting amendments are set forth in decrees of 9 March and 29 March 2012 and will now enter into force on 1 July 2012. 
All public offers announced after 1 July 2012 will be subject to the new Public Offer Rules. Public offers announced prior to 1 July 2012 as well as competing offers regarding such offers, even if launched at a later stage, will continue to be governed by the prior Public Offer Rules.
In this Legal Alert, we summarise the amendments that apply as of 1 July 2012. We do not address the amendments suggested by market parties during the consultation phase that were eventually rejected by the legislature.
Amendments to the Decree
"Put up or shut up" arrangement
One of the most important amendments is the introduction of the "put up or shut up" provision, based on the principle in the EC Directive on Takeover Bids that a target company should not be unduly obstructed by a public offer for its shares. In preparing this amendment, Dutch legislators were inspired by the public offer rules in the United Kingdom, but did not follow the most recent amendment made to the UK Takeover Code.
The objective of this provision is to prevent a listed company from being the object of rumour and speculation regarding a potential public offer for its shares. At the request of the potential target company, the Netherlands Authority for the Financial Markets (the "AFM") can impose disclosure obligations on an entity or person – the potential bidder – that has published information that suggests that it is considering the preparation of a public offer. Following the AFM's instructions, the potential bidder must 'put up or shut up', i.e. announce a public offer for the target company or indicate that it does not intend to launch a public offer. The AFM has the discretionary authority to instruct disclosure when it receives a request from the target company. The standard the AFM should use in determining if the disclosure obligation should be imposed is whether the target company is suffering negative consequences (such as obstruction of the operation of its business or certain developments in the price of its listed shares) as a result of the potential bidder's failure to provide certainty as to whether or not a public offer will be launched.
If a request from a target company is granted, the AFM will order the potential bidder to make a public announcement within 6 weeks, stating its real intentions. This could result in the potential offeror (a) announcing a public offer or (b) announcing that it does not have the intention to announce or launch a public offer. Upon receiving instructions from the AFM to make a "put up or shut up" announcement, the potential bidder must also without delay issue a press release announcing those instructions and the associated time periods.
If the potential bidder 'puts up', the announcement will serve as the public announcement that triggers the commencement of the time periods set out in the Public Offer Rules. If the potential bidder publicly announces that it does not have the intention to launch a public offer, it, and the parties that act in concert with it, will be prohibited from announcing or launching a public offer for the target company involved during the 6 months following the public announcement ('shut up').
If the potential bidder is instructed by the AFM to put up or shut up within a 6-week period and does not comply with these instructions, it, and any parties acting in concert with it, will be prohibited from announcing or launching a public offer for the target company for a period of 9 months.
If a third party launches a public offer during this 6-month period or 9-month period, the prohibitions set out above will no longer apply. However, during the 6-month and 9-month period, the potential bidder, and any parties acting in concert with it, are not permitted to build up a stake that affords them control – in the sense of the provisions on mandatory offers – over the target company, even if a third party launches an offer. If the potential bidder and the parties acting in concert with it nevertheless build up a stake of 30% or more in the target company, the Enterprise Chamber will order the relevant party to divest the interest that leads to control over the target company.
Announcing a public offer
The Public Offer Rules currently provide for the triggering of certain time periods after the 'announcement' (aankondiging) of a public offer. In negotiated situations, the announcement is made by the bidder and the target company jointly and publicly confirms the agreement they have reached on the public offer and its conditions.
An announcement is also deemed to have been made if the potential bidder discloses certain specific information in respect of the contemplated offer, such as the name of the target company together with an indication of the offer price or an anticipated timeline for the offer. This is generally understood as a hostile offer announcement.
Market consultation has indicated that there was a need in the market for a form of public announcement which would not trigger any regulatory time periods but rather delay commencement of any such time periods. In particular in situations where leaks occur as a result of which disclosure becomes mandatory, while the bidder and the target company are still in negotiations but have not reached agreement yet. In the new Public Offer Rules, this is formulated as an exception to the automatic commencement of the time periods upon announcement of the offer. These time periods are triggered by the announcement unless the target company publicly states that it is in negotiations with the potential bidder. This can also be done in the form of a joint press release by the potential bidder and the target company.
To increase transparency – also in respect of a potential bidder's interest in the target company – the Public Offer Rules now include a disclosure obligation for both the potential bidder and for the target company in respect of (i) all transactions they undertake in the target company's shares (so no exception for on-the-market transactions) and (ii) all agreements entered into by them relating to the target company's shares, after the initial announcement of the public offer. This includes sale and purchase agreements, securities lending, repo's, contracts for difference and total equity return swaps.
Increases in the offer price
Under the prior Public Offer Rules, the bidder can only increase the offer price once. This has been the object of discussion since this provision was introduced. The general opinion in the market, which has been also demonstrated in precedents such as Staples' offer for Corporate Express, was that this does not take into account, nor is it conducive to a reasonably competitive bidding process that is in the best interest of the target company and its shareholders. Moreover, this rule can be circumvented easily and also does not find a basis in the EU Directive on Takeover Bids.
The provision is amended in the new Public Offer Rules so as to allow a bidder to increase the offer price without limitation, as long as the associated requirements regarding "certainty of funds", public disclosures and time periods are met. In particular, shareholders will be afforded a period of at least 7 business days to respond to an increased offer price, based on the (additional) documentation that the bidder is required to publish. Shareholders who have already tendered their shares for the initial offer price have the right to withdraw their acceptance of the offer in certain circumstances. If they choose not to invoke the withdrawal rights within this 7 business day period, their shares will automatically be deemed tendered under the increased offer as well.
Statutory time periods in the public offer process
The notice period for general meetings of shareholders of public limited companies (naamloze vennootschappen or N.V.s) as set forth in the Dutch Civil Code was recently extended to 42 days. The extended notice period was not aligned with the time periods set out in the Public Offer Rules, in particular the minimum tender period of 4 weeks. Market parties have called for an amendment of the Dutch Civil Code to bring the notice period in line with what is common in other European countries, and this may happen in the near future. Pending this possible amendment however, the minimum tender period in a public offer has now been extended to 8 weeks in the new Public Offer Rules, in order to align it with the notice period set forth in the Dutch civil Code.
To further streamline the offer process, other changes have been made to the time periods that dictate the timeline of a public offer. These include the introduction of a maximum period of 3 business days after the publication of the offer memorandum to commence the offer period.
Apart from the changes described above, there are several other changes of note.
For example, the new Public Offer Rules provide that when a mandatory offer is announced, a voluntary offer for the same category of shares will terminate, and the conditions attached to the offer will lapse, by operation of law. If the 'best price' that must be offered in a mandatory offer is higher than the price offered in the voluntary offer, the bidder must adjust the offer price accordingly. If shareholders have already registered their shares in the voluntary offer, they are granted 'withdrawal rights', similar to those in case of an increase in the offer price.
Furthermore, the Annex to the Decree, containing the requirements for the information that needs to be disclosed in the offer memorandum, has been clarified. The requirement to disclose any professional advice received has been amended so as to exclude advice rendered by parties that can invoke privilege (usually legal advisors).
Also, the accountants' statement regarding the financial data for the preceding 3 years has been made obligatory in all situations, while an exemption can be made for obtaining a review statement from an accountant in cases where a bidder is unable to obtain the review statement, e.g. in case of a hostile offer.
Changes in relation to the mandatory offer
Shareholder approval ('whitewash')
The Exemption Decree provides for a number of exemptions to the obligation to launch a mandatory offer that is imposed on a party when it obtains direct or indirect control over an N.V. Control is deemed to exist under the Financial Markets Supervision Act when a party, individually or acting in concert with others, is able to exercise at least 30% of the voting rights in an N.V.
One of these exemptions is generally referred to as the "whitewash" and entails that a party which acquires control will be exempted from the obligation to launch a mandatory offer if the general meeting of shareholders approves the acquisition of the controlling stake within a period of 3 months before control is obtained. Under the prior Public Offer Rules, such an approval requires a 95% majority; under the new Public Offer Rules this has been reduced to a 90% majority. It was found that requiring a 95% majority was prohibitive to being able to make effective use of this exemption in practice, as was demonstrated in the Schuitema offer. Although a lower percentage was suggested in the consultation phase, the threshold was finally set at 90% to maintain a sufficient level of protection for minority shareholders.
The new Public Offer Rules introduce an exemption for underwriters that acquire control over an N.V. within the definition of "control" set out above. To qualify for this exemption, the underwriter must underwrite financial instruments when they are offered on a firm commitment basis, and in a professional capacity. The exemption only applies for a period of one year, and only if the underwriter does not exercise the voting rights attached to the shares acquired as a result of the underwriting.
Obtaining 'irrevocable' undertakings from major shareholders in which they commit to tender their shares in a public offer has been part of the public offer practice in the Netherlands for a long time. Usually major shareholders, when giving an irrevocable undertaking, also commit to vote on certain resolutions at the shareholders meeting of the target in a certain way that is supportive to the offer. It was questionable, however, whether the irrevocable undertaking and in particular the voting commitments should not be qualified as a form of 'acting in concert' which could trigger the obligation to launch a mandatory offer rule. To end this debate, the legislature has now exempted the irrevocable undertaking from the mandatory offer rule, but also added a number of conditions:
- the shareholder's irrevocable undertaking to offer its shares in the public offer must be irrevocable and unconditional,
- the undertaking must be limited in time and expire when the offer is declared unconditional, and
- the shareholder may only undertake to exercise its voting rights in the target's general meeting in respect of resolutions that are
- explicitly set forth in the agreement,
- subject to the offer being declared unconditional, and
- directly related to the public offer (or, where a negative vote is required, relate to any frustrating action by the target).
Acting in concert prior to 29 October 2007
Under the prior Public Offer Rules, a person that had control on 28 October 2007 is "grandfathered", i.e. exempted from the obligation to launch a mandatory offer, even if its stake in the company has increased after 28 October 2007.
In the new Public Offer Rules, the exemption has been extended to also cover those persons, who acquire control as a result of acceding to a consortium of persons acting in concert, grandfathered under the exemption. This exemption will only apply if:
- some or all of the other persons that belong to the consortium have had uninterrupted control since 28 October 2007 and these persons have, alone or acting in concert, directly or indirectly, been able to exercise a majority of the voting rights held by the consortium,
- the acceding persons cannot unilaterally determine how the voting rights will be exercised by the consortium, and
- the acceding persons do not have the intention to increase their control after acceding to the consortium to such an extent that they would be able to unilaterally determine how the voting rights will be exercised.
The rationale behind this extension of the exemption is that a change in the composition of the consortium does not fundamentally change the position of the minority shareholders – whose protection against a controlling shareholder is the starting point of the mandatory offer – as the boundaries set by the exemption ensure that they are not actually confronted with a new controlling shareholder. In other words, at the time of acquiring their stake, the minority shareholder already knew or could have known that there was a controlling consortium, so a change to that consortium does not actually affect its position.
 Bulletin of Acts and Decrees (Staatsblad) Stb. 2012, 196, Stb. 2012, 197 and Stb. 2012, 242.
 A more elaborate article in which the changes in the Dutch Public Offer Rules are explained in detail will be published shortly in the Dutch legal journal Ondernemingsrecht. This article will also be made available via our website on our publications page.
 This change differs from the current rules in the UK, where – in the amendment of the Takeover Code of September 19, 2011 – the mechanism by which the target company requests that the Takeover Panel instructs the potential bidder to put up or shut up was abandoned and replaced by a disclosure obligation on the part of the potential bidder that is triggered automatically by a public announcement that includes the name of the potential target.
 The prohibition to announce or launch a public offer for this period of 6 months is also incorporated in other provisions in the Public Offer Rules, pertaining to situations where the potential bidder has complied with the Public Offer Rules but basically has, in the course of the bidding process, decided that it will no longer launch a public offer or declared its offer unconditional. These amendments are all meant to serve the same purpose as the introduction of the "put up or shut up" provision, i.e. to create (or restore) peace for the target company.
 Such disclosure would be obligatory as a result of the bidder or the target company no longer being able to delay the publication of inside information or price-sensitive information under the existing exemptions in the Financial Markets Supervision Act.