April 15, 2015

The amendments to the Dutch civil code which came into force as from October 2012 do appear to have effect. The changes had the aim to make the legislation applicable to the Dutch limited liability companies (BV’s) more flexible. The effect now seems to become visible in practice.

Several large corporates decided to move their seat to the Netherlands. The decisive factor to choose this jurisdiction are flexibility of the legislation and the possibility to create protection walls against hostile take overs. Examples thereof are car producer Fiat Chrysler, web shop CNOVA, pharmaceutical company Mylan and telecom operator Altice.

Under Dutch law it is possible to issue additional shares without losing the control at the shareholders meeting. Altice split it shares into A and B shares whereby the A shares give more voting power than the B shares. Thereby the initial shareholder managed to keep full control over its company. Although the flexible legislation attracts companies some stakeholders also emphasize its negative effects. Hereby the lack of checks and balances resulting from this construction are criticized. Pharmaceutical company Mylan moved to the Netherlands because of the unique combination of protection against hostile take overs and a corporate governance which provides the possibility of appointment of directors for a long period.