International ECM Listings Rules, Requirements & Obligations in Netherlands

(The information in the section addresses a listing of equity shares in a commercial company (not an investment company) having its equity shares listed on Euronext Amsterdam.)

Euronext Amsterdam is the main market in the Netherlands and is regulated by the Authority for the Financial Markets (AFM).¹

Euronext Amsterdam is divided into three compartments based on market capitalisation:

Compartment A (€1 billion or higher)

Compartment B (€150 million – €1 billion)

Compartment C (€150 million or lower).

Issuers must comply with the minimum standards set by the Market Abuse Regulation (MAR), Transparency Directive (TD) and other Directives and Regulations.

Depositary receipts, options and warrants can also be listed on Euronext Amsterdam.

Public limited liability companies (naamloze vennootschap met beperkte aansprakelijkheid) (NV) and private limited liability companies (besloten vennootschap met beperkte aansprakelijkheid) (BV) incorporated in the Netherlands and any foreign company that has been duly incorporated in its place of incorporation or establishment and which is permitted under its local law to have its securities listed.

A prospectus prepared and approved in accordance with the Prospectus Regulation is required when an issuer:

• first applies for a class of securities to be admitted to listing on Euronext Amsterdam; or
• issues new shares in any rolling 12 month period which would exceed 20 per cent of its issued shares of the same class,

unless an exception to the obligation to prepare a prospectus applies.

No minimum assets or equity are required.

The issuer must have sufficient working capital for at least the 12 months following the IPO, or, if the working capital is not sufficient, explain in the prospectus how it proposes to provide the additional working capital needed.

A sufficient number of shares must be distributed to the public. A sufficient number of shares shall be deemed to have been distributed to the public if at least 25% of the subscribed capital represented by the class of shares concerned are in the hands of the public or such lower percentage determined by Euronext Amsterdam in view of the large number of shares concerned and the extent of their distribution to the public. This percentage shall not be lower than 5% of the subscribed capital represented by the class of shares concerned and must represent a value of at least €5 million.

Not required in the Netherlands.

The issuer must have published or filed audited annual financial statements or pro forma accounts, consolidated where applicable, for the preceding three financial years, drawn up in accordance with the accounting standards of the country where the issuer has its registered office.

If the fiscal year closed more than nine (9) months before the date of the admission to trading, the issuer must have published or filed half-yearly accounts.

The issuer shall ensure that the listed shares are capable of being traded in a fair, orderly and efficient manner and, in the case of transferable shares, are freely negotiable.

It is however permitted to limit the transferability of the shares, for example by restricting shareholders right to sell the shares in specific countries.

There are no specific rules as regards the independence from controlling shareholders, but all major shareholders must be disclosed in the prospectus.

There are no lock-in requirements, but sponsors or underwriters to the issue normally require contractual lock-ins from management and major shareholders in order to secure an orderly market for several months after an IPO.

An issuer must appoint a listing agent to assist and guide the relevant issuer in respect of an application for admission to listing and/or trading of its securities on Euronext Amsterdam for the first admission to trading of securities and for any subsequent admission to trading of securities requiring the approval of a prospectus.

A listing agent must be a “market member” of Euronext. A market member is an investment service provider that has been admitted to Euronext securities membership. The list of accredited market members can be found at:

https://connect2.euronext.com/trade/member-list

No market-maker is required, but an issuer must appoint a listing agent and needs to put in place adequate procedures for the clearing and settlement of transactions in respect of its shares.

Advertisements, presentations to potential investors and other means of promoting an IPO or secondary issue are generally permitted, subject to certain restrictions. Advertisements must be clearly recognisable as such, must refer to the prospectus, must be accurate and must not be misleading and must be consistent with the prospectus.

Concept advertisements can be sent to the AFM to be reviewed, but this is not mandatory.

Communications by any entity other than the issuer that invite or encourage any person to buy or subscribe for securities, or otherwise deal in any investment, can only be made by a properly authorised investment firm or if a specific exemption applies.

Euronext Amsterdam and the applicant shall jointly agree on a timetable in respect of the admission to trading.

Timing depends on the size and complexity of the company, and its state of preparedness for an IPO. Typically, the listing process will take at least three to four months.

Unless agreed otherwise by the applicant and Euronext Amsterdam, Euronext Amsterdam shall take a decision in respect of an application for admission to trading within a maximum period of thirty (30) trading days. This period starts on the date that Euronext Amsterdam has received all required documentation from the applicant.

The decision of Euronext Amsterdam to admit securities to trading shall remain valid for a maximum period of sixty (60) trading days, unless Euronext Amsterdam becomes aware that any information provided in connection with the application has changed during this period. Upon request of the applicant, this period can be extended by another sixty (60) trading days.

When a listed company issues new shares for cash, shareholders have pre-emption rights entitling them to participate in the new issue, unless such rights are excluded by a resolution of a general meeting. Holders of warrants to subscribe for new shares, and instruments that are convertible into shares, may also sometimes have contractual pre-emption rights.

Normally the general meeting resolves that, in any one year, up to 5% to 10% of the issuer’s share capital can be issued for cash non-pre-emptively (e.g. in a placing to new investors) and it is not uncommon that the general meeting further resolves that an additional 5% to 10% can be issued for cash non-pre-emptively in connection with an acquisition or specified capital investment. Any non-pre-emptive offer involving a greater percentage will usually need specific shareholder approval. Offers of shares that respect the pre-emption rights of existing shareholders (such as rights issues and open offers) can usually be affected, without the issuer needing to obtain specific shareholder approval.

Various Dutch listed companies have entered into option agreements with foundations which have been established for the purpose of protecting the continuity of the company. These foundations are usually granted an option to purchase a specified number of regular or preference shares when the foundation believes that there is a threat to the continuity of the company or the strategy of the company, for example in the event of a hostile takeover bid or unwanted influence from activist shareholders. Pre-emption rights of other shareholders regularly do not apply in this scenario.

An issuer incorporated outside the Netherlands must comply with the same eligibility requirements as a Dutch issuer.

The AFM may approve a prospectus for admission to trading on Euronext Amsterdam, drawn up in accordance with, and which is subject to, the national laws of a country which is not an EU Member State, provided that:

the information requirements imposed by such country are equivalent to the requirements under the Prospectus Regulation; and the AFM has concluded cooperation arrangements with the relevant supervisory authorities of such country.

If a company is incorporated outside the EEA, Euronext Amsterdam may require that the financial statements are restated in Dutch GAAP.

1. English or Dutch; and
2. the summary must be translated into English or Dutch.

https://www.afm.nl/en/professionals/doelgroepen/effectenuitgevende-ondernemingen

(Unless expressly stated, the information in the section addresses a commercial company (not an investment company) having its equity shares listed on Euronext Amsterdam.)

Regulated market.

Under the Dutch Civil Code (“DCC”), shareholders must approve decisions that will have a material impact on the identity or character of the company, including but not limited to:

Selling the company or almost the entire company to a third party;

Entering into or termination of a joint venture by the company or one of its subsidiaries insofar as such joint venture or the termination thereof is of material importance to the company;

Acquiring or disposing of a participating interest worth at least a one-third or more of the value of the assets of the company according to its balance sheet.

Other decisions that must be approved by shareholders are, among other things, mergers and demergers, the adoption of annual financial statements, issues of shares other than on a pre-emptive basis and amendments to the articles of association.

Material transactions with a related party (which in any event includes board members, supervisory board members and shareholders who represent at least 10% of the issued share capital of the company) that are not entered into in the ordinary course of business or at arm’s length are subject to the approval of the supervisory board or, if the company has not installed a supervisory board, the general meeting.

Further to that, the Dutch Corporate Governance Code provides that all material transactions with related parties require the approval of the supervisory board, irrespective of whether the transaction is entered into in the ordinary course of business and at arm’s length.

The Dutch Corporate Governance Code is applicable to all listed companies that have their statutory seat in the Netherlands. It contains best practice rules for the board, supervisory board and general meeting. The Code follows the comply-or-explain principle: when a company deviates from the Code, the board has to explain the reasoning behind that deviation.

An issuer must treat all shareholders who are in the same position equally.

It is almost always the case that each ordinary share carries one vote that can be exercised without restriction.

Under the DCC, shareholders in a listed company incorporated under Dutch law have the following basic rights:

• new shares that are issued for cash must be issued to existing shareholders in proportion to their holdings, unless such pre-emption rights are disapplied with the approval of a majority of at least two-thirds of the votes casted at the general meeting;
• if a listed company applies the large company regime (structuurregime), directors are appointed and dismissed by the supervisory board. The general meeting can remove the entire supervisory board by means of an ordinary resolution (which requires a simple majority of votes to approve it);
• most Dutch listed companies apply the mitigated large companies regime (verzwakt structuurregime) or do not apply the large companies regime at all. In this scenario, any director can be removed from the board by means of an ordinary shareholders’ resolution (which requires a simple majority of votes to approve it). The company’s articles of association can specify that directors can be removed with the sanction of a lesser percentage of shareholders, or of a particular investor, but this is rare for listed companies. Most listed company articles also allow shareholders to put forward a director and appoint that director to the board by ordinary resolution;
• shareholder(s) with 10% or more of the company’s paid up share capital (or less, if the articles of association of the company provide for a lower percentage) can force the directors to convene a shareholders’ meeting;
• shareholders with 3% or more of the company’s paid up share capital (or less, if the articles of association of the company provide for a lower percentage) may put a resolution at the next annual general meeting and require the company to circulate a statement to all the members to express their view on a particular resolution.

Any (legal) person who, alone or acting in concert, acquires or disposes of shares in the capital of an issuer, is obliged to notify the AFM without delay, if such person knows or should know that the percentage of the shares or voting rights on shares held by it reaches, exceeds or falls below the any of the following thresholds: 3%, 5%, 10%, 15% , 20%, 30%, 40%, 50%, 60%, 75%, 95%.

The issuer must notify the AFM without delay whenever its share capital or voting rights changes by 1% or more. The issuer must also inform the AFM quarterly of the total changes in its share capital or voting rights which the issuer is not obliged to notify under the 1% rule.

All issuers are subject to MAR and must disclose inside information as soon as possible. Issuers can delay disclosure to protect their legitimate interests (e.g. if it would jeopardise ongoing negotiations), provided the public is not misled and the information is kept confidential.

Issuers must publish their annual financial statements within four months from the end of the financial year. The annual financial statements comprise the audited annual accounts, a management report and several mandatory statements by the persons responsible for the financial statements. Many issuers choose to announce a preliminary statement of their annual financial results, containing the key figures but without most of the notes and additional information, that will later be included in the annual results.

Issuers must also publish half-yearly financial statements within three months from the end of the first half of the financial year. The half-yearly results comprise the half-yearly accounts (which do not have to be audited), a half-yearly management report and several statements by the persons responsible for the financial statements.

Some companies choose to also publish interim trading updates each quarter.

All issuers are subject to MAR, which restricts directors and certain senior employees (Persons discharging managerial responsibilities (PDMRs)) from dealing in the company’s shares during “close periods” prior to the announcement of half-yearly and annual results and at any time when there exists any unpublished price-sensitive information relating to the company (whether or not the director who is proposing to deal knows of the information himself). Any dealings by such persons must be notified to the company, which must in turn announce details to the market. Companies typically adopt a share dealing code which requires PDMRs and sometimes other employees to seek clearance from the company before dealing in the company's shares.

Prospectuses.

An offer document (biedingsbericht) in connection with a takeover is subject to the prior approval of the AFM.

The requirement for a mandatory offer under Dutch law is triggered when a person acquires interests in shares which take that person’s aggregate holding to 30% or more of the voting rights in a company, or when an aggregate holding which is already over 30% is increased. Interests held by parties who are "acting in concert" with a person are attributed to that person.

This applies to all Dutch public limited liability companies (naamloze vennootschap met beperkte aansprakelijkheid) whose shares are admitted for trading on a regulated market.

The issuer may request Euronext Amsterdam to delist the shares in writing and state the relevant grounds for removal. A request to delist the shares will only be approved if one of the following scenario’s applies:

• when a public offer is made for all shares that are admitted for trading on Euronext Amsterdam and this offer is declared unconditional, whereby the bidder has acquired 95% or more of the listed shares and the issuer has approved the delisting;
• when, other than by way of a public offer, one shareholder or multiple shareholders acting in concert have acquired 95% or more of the listed shares, the issuer has approved of the delisting and the minority shareholders are offered an “exit-plan”; or
• when the shares that are listed on Euronext Amsterdam are also listed on a different regulated and sufficiently liquid market for a period of at least twelve months that, in the opinion of Euronext Amsterdam, offers sufficient safeguards for the protection of investors and/or the proper functioning of the market.

The exit-plan as referred to above usually means that either the issuer or the majority shareholder(s) will purchase the remaining shares from the minority shareholders in accordance with the provisions of the DCC.

The rules on notifying major shareholdings do not apply to EEA issuers whose home Member State is another EEA state, unless the shares of such issuer are only admitted to trading on a regulated market in the Netherlands.

For non-EEA issuers whose home Member State is another EEA state and EEA issuers whose shares are only admitted to trading on Euronext Amsterdam, persons with an interest in the company’s shares must notify the company and the AFM of their holdings on the basis of the thresholds in the TD (5%, 10%, 15%, 20%, 25%, 30%, 50% and 75%), rather than the super-equivalent thresholds (3%, 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%, 75% and 95%).

¹ Euronext is the main market in the Netherlands. This guide does not include information on the other regulated markets with a license in the Netherlands, being Nxchange, ICE ENDEX, Cbo Europe B.V. and CME Amsterdam B.V.