Bill on reflection period for listed companies goes to House of Representatives

The board of directors of a Dutch listed company will be given a reflection period of up to 250 days to enable a proper response to a hostile takeover bid. This reflection period can also be utilised if certain shareholders put pressure on the board of directors to change its strategy, for instance by urging a scission of the company. Management board members and supervisory board members cannot be suspended or dismissed on the initiative of the shareholder at a shareholder meeting during the reflection period.

The board of directors of a Dutch listed company will be given a reflection period of up to 250 days to enable a proper response to a hostile takeover bid. This reflection period can also be utilised if certain shareholders put pressure on the board of directors to change its strategy, for instance by urging a scission of the company. Management board members and supervisory board members cannot be suspended or dismissed on the initiative of the shareholder at a shareholder meeting during the reflection period.
 
These measures are contained in a bill submitted today to the House of Representatives by Minister for Legal Protection Dekker, acting jointly with Minister of Finance Hoekstra and Minister of Economic Affairs and Climate Policy Wiebes. The measure is a result of the coalition agreement.
 
The reflection period gives a company’s board of directors more time and opportunity to carefully weigh the interests of the company and of all stakeholders (including shareholders, creditors and employees). This also contributes to the value of the company in the long term. In the case of a hostile takeover, the board of directors can use the time to explore alternatives, for instance by establishing – in consultation with the stakeholders – whether it would be better to divest a business, to remain independent or to seek a friendly bidder. 
 
A board of directors that wishes to use the reflection period must obtain approval for this from the supervisory board. Shareholders with an interest of at least 3% may submit a request to the Enterprise Section of the Amsterdam Court of Appeals for termination of the reflection period.