THE HAGUE, 18/10/06 - The Christian democrats (CDA) and Labour (PvdA) in the Lower House want to rein in the power of shareholders. The parties, together forming a Lower House majority, want to force the government to ensure that companies can protect themselves against hostile takeovers.
The House was debating the translation into Dutch legislation of the EU's takeover directive. Earlier, CDA MP Jan de Vries and PvdA MP Kris Douma managed to get the cabinet to drop legislation to force companies to abolish existing protective constructions against hostile takeovers. VVD MP Stef Blok then made a proposal that would require companies to put anti-takeover constructions "on the agenda" during the annual shareholders meeting. Blok's proposal was adopted by the cabinet.
Justice Minister Ernst Hirsch Ballin now elaborates on the Blok proposal by saying putting it on the agenda does not mean a concrete proposal to actually change the company's articles of association has to be put to the shareholders. But that does not satisfy De Vries and Douma. They are considering a counter-proposal, before the bill is voted on next week.
CDA and PvdA appear to differ sharply from the VVD on the role of hedge funds, which are acquiring Dutch companies more often. At the moment, two private equity funds are trying to force industrial concern Stork to divest all its divisions except Aerospace. Stork is resisting this.
Blok believes these funds, sometimes dubbed asset-strippers, have a positive influence on the Dutch economy. They force directors companies to stay sharp, he believes. CDA and PvdA however fear that shareholders will demand too much in the way of short-term returns and pay too little attention to the interests of employees among others.
In the debate, it emerged that the disclosure threshold for shareholders will not be reduced. Economic Affairs Minister Joop Wijn (CDA) recently proposed requiring disclosure of shareholdings of 3 percent of a company. But during the debate, he failed to win the support of either Finance Minister Gerrit Zalm or MPs De Vries and Douma. The threshold will stay at 5 percent.
