Shareholders activism’ refers to the active use by minority shareholders of the legal, strategic and publicity means available to them in order to try to promote their interests in listed companies. Hedge funds, for example, can try to influence the agenda of a listed company even with a relatively small equity interest, in order to ensure that a merger or a demerger takes place, for instance. Due to absenteeism in particular, the phenomenon that most shareholders do not actively exercise their shareholders’ rights (e.g. the right of control), one can achieve a lot even with an equity interest of less than 5%.
Shareholders’ activism cases we have handled include:
- assisting activist investors and hedge funds in creating more equity value with listed companies such as ABN AMRO, TNT, Philips and ASMI;
- assisting minority shareholders in bidding wars in order to realise optimal shareholder value, during and after the bidding process, as well as during buy-out procedures (Corporate Express, ABN AMRO) and legal mergers (ABN AMRO/Fortis).
A company has many stakeholders, each with their own, sometimes conflicting, interests. We have assisted different stakeholders with disputes resulting from such conflicting interests. Minority shareholders hold a unique position. Their rights have been laid down in the Dutch Civil Code and their obligations in the Dutch Financial Supervision Act (Wft) and similar regulations. Application of these rights and obligations has, up to now, only rarely found its expression in relatively scarce Dutch and European case-law.
Shareholders’ rights in the Netherlands have been restricted since the financial crisis in 2008, whereas European Law showed a tendency to extend shareholders’ rights, such as meeting rights. In 2015 our office wrote a critical article on the narrow interpretation by the Dutch lower courts of the European Shareholder Rights Directive (Vrijheid van meningsuiting – over de Europeesrechtelijke verplichting om aandeelhouders aan het woord te laten’).
Minority shareholders naturally do not have final control within a company, whereas the management board can operate in relative freedom. Day-to-day management, policy and, in principle, strategic decisions of the company and its business are almost exclusively in the hands of the management board. However, minority shareholders’ interests need to be acknowledged and their right to put items on the agenda is, therefore, crucial. In practice, however, it has proved difficult to truly exercise this right (‘De strijd over het agenderingsrecht tussen Boskalis en Fugro’).
We assist hedge funds and other minority shareholders in creating higher shareholder value in Dutch listed companies: in close consultation with our client, by demanding attention and creating support for relevant subjects in the media and if necessary by litigating before the Enterprise Division. We always act strategically instead of focussing on power.
Shareholders’ activism requires specialised knowledge on matters such as derivatives, disclosure of price-sensitive information by a listed company and issues concerning market abuse. Our attorneys also specialise in these shareholder activism related areas.