Minister Opstelten recently informed the Dutch Senate, which is currently discussing the Bill, that payment arrangements in which additional costs are charged, will be subject to the Dutch Financial Supervision Act (Wft). This will require an AFM permit. The article in Het Financieele Dagblad also reported an appeal from the Confederation of Netherlands Industries and Employers VNO-NCW and other parties, urging the Cabinet to modify the bill.

We will continue to monitor the developments and report on them in our next newsletter.

The Supreme Court was ruling on whether the rule of law from the Nefalit/Karamus judgment may also be applied to investment issues. That judgment involved an employee that died as a result of lung cancer. Being exposed to asbestos might have been the cause of death, but this was not certain. It follows from the judgment that in the event of uncertainty, the obligation to pay compensation may be proportionately divided between the employer and the employee on the basis of an estimate.

The Supreme Court has now unequivocally ruled that the rule of law from Nefalit/Karamus must be applied with restraint. Moreover, additional argumentation requirements apply when the court decides to apply that rule of law.

In the present case, it was established that the chance that the investor would have abided by a warning was not particularly large. This was one of the reasons why the Supreme Court ruled that the investor should bear the burden of proof.

In practice, this judgment means that in some cases it will be more difficult for prejudiced investors to provide the requisite proof. In case of doubt, the court may allow the balance to weigh in the investor’s favour. Subsequently, the court can make a correction based on the doctrine of ‘own fault’, and as yet take the uncertainty with regard to causation into account.

The right to speak of a works council of an N.V. applies with regard to proposed resolutions to: (i) determine the remuneration policy, (ii) approve major board resolutions, and (iii) appoint, suspend and dismiss management board and supervisory board members. The works council of an N.V. that is subject to the ‘large companies regime’ also has the right to speak on any proposed nomination of the supervisory board for the appointment of a member of the supervisory board.

This right to speak of the works council of an N.V. is twofold. It has: (i) the right to determine a position and (ii) the right to explain this position in the general meeting. The works council’s position must be sent to the shareholders along with the convocation. The intention is to broaden support for resolutions through the ensuing dialogue in the general meeting.

However, whether this objective will be achieved is doubtful: there are no sanctions if the works council is not given the opportunity to exercise its right to speak. In addition, the works council is not required to exercise its right to speak. Moreover, the general meeting of shareholders is not required to respond to the viewpoints presented by the works council. Accordingly, any dialogue on intended resolutions as referred to above will depend on the good will of both the N.V.’s works council and the general meeting of shareholders. For that matter, clear arrangements will need to be made with the works council on how to deal with confidential - and possibly price-sensitive - information both before and during the general meeting of shareholders.

The decision (in Dutch) of 16 March 2011 addressed a dispute on whether the municipality should have taken the earlier contribution made by the competent authority to the development of the school building into account when calculating the capacity of the existing building. The Council of State ruled that a reasonable interpretation of the Housing Regulations entails that an own contribution to (earlier) new construction in order to achieve a more expensive facility that is not, as such, necessary, does not in itself require a proportionate capacity adjustment if extra capacity proves necessary later. According to the decision, if that were the case, the private means raised by the competent authority would financially benefit the municipal government.

That was the end of the good news for the school. Because the case involved extra quality rather than self-financed extra capacity, the municipality was not required to take the earlier own contribution into account. As a result, the extra capacity to be constructed may be of a lesser quality.

Laseur: “The first finding is a pleasant confirmation for the schools. However, the outcome gives rise to questions with regard to the construction of multifunctional accommodations that are partly privately funded.” Multifunctional use has already led to discussions before, for example about the amount of the compensation payable to the municipality in the event of vacancy and about the municipality’s rights if the building is let.

The Dutch Competition Act currently provides that companies collectively holding less than 5% of the market, with revenues totalling no more than € 40 million, may make mutual price arrangements without violating the prohibition on arrangements that restrict competition (the ‘bagatelle provision’). A legislative initiative, sent to the Dutch House of Representatives in early March, proposed that the market share criterion be increased to 10% and that the revenues limit be cancelled.

The initiators are looking to introduce this expansion as of 1 July 2011, as it is primarily similar to a 2008 legislative proposal that was adopted by both the Dutch House of Representatives and the Dutch Senate. The previous Minister of Economic Affairs refused to implement the legislation, however, on account of a perceived conflict with European competition rules. The new bill therefore stipulates that the provision may not conflict with European rules. In practice, this will mean that the bagatelle provision may only be invoked for arrangements that do not potentially affect trade between the Member States. The bagatelle provision does not exempt arrangements with a possible cross-border effect from the European prohibition on arrangements that restrict competition.

“Kassa”, a TV consumer show of the broadcasting association “ Vara”, devoted extensive attention to the direct marketing practices of energy companies in January 2010. In the same period, the Dutch Competition Authority and the Consumer Authority opened a digital reporting desk for door-to-door practices after receiving various signals of possible irregularities with such practices by energy companies. This caused an investigation by both the Dutch Competition Authority and the Consumer Authority. The Dutch Competition Authority’s investigation revealed that violations by Greenchoice and Energie:direct were quite serious, as many consumers did not understand that they were signing for a contract with a different energy supplier. In addition, consumers were not always properly informed of important conditions in the contract, such as the term of the contract and cancellation options. The Dutch Consumer Authority will be concluding its investigation in the near future.

Enforcement may become more strict in this area once the proposed merger of the Dutch Competition Authority, the Independent Post and Telecommunications Authority and the Consumer Authority takes effect on 1 January 2012.

The new directive replaces two previous consumer directives. Major changes include the information sellers are required to provide and the consumer’s right of withdrawal with regard to online purchases. As a result, it will be easier for consumer to make cross-border purchases. One of the most important changes for consumers is the extension of the withdrawal period: while consumers currently have a period of seven work days to withdraw their order free of charge, this period will be extended to fourteen calendar days. Another important change is that consumers cannot be required to pay costs of which they were not notified in advance.

Schippers is expanding what is known as the ‘B segment’ - in which insurance providers and hospitals can negotiate the prices of hospital care activities - from the existing 35% to 70%. The rates for the remaining 30% of the activities will still be fixed by the government. This will apply, for example, with regard to highly specialised care, and emergency services in thinly populated areas. In order to prevent this further limitation on the budget system from putting hospitals into a difficult financial position, Schippers is proposing a transition period of two years (2012 - 2013) during which hospitals will receive compensation should the transition from budget to performance funding cause excessive fluctuations in their revenues. The gradual abolishment over the period 2012 - 2015 of the existing post-calculation system will stimulate healthcare insurers to focus their procurement more strongly on price, quality and volume. Under the current post-calculation system, hospitals are penalised in the subsequent budget year for any overspending or compensated for production below budget.

The Minister’s plans are expected to stimulate competition between hospitals by giving hospitals more cause to stimulate production and improve efficiency. Cooperation can enhance this, and will be warmly welcomed by the Dutch Competition Authority providing it does not limit the competition the new rates rules aim to stimulate. The parties involved are responsible for ensuring that this is not the case.

Based on the legislative proposal, government bodies will be authorised to investigate the past history of natural and legal persons before entering into property transactions. For example, in case of undefinable financial structures or unclear control structures, the government body can conduct an investigation through the national Bibob Bureau.

This bureau will submit advice to the government body, which will include a review of whether entering into the property transaction could facilitate a criminal act or whether criminal acts can be reasonably expected as a result. With this amendment to the Bibob Act, the government hopes to avoid unwanted assistance to property crimes.

The report is to be submitted to the Standing Committee for Security and Justice on 14 April 2011.

The law requires that reasons be provided in support of the reappointment of supervisory board members in public or private companies. This requirement is intended to ensure that a supervisory board member’s past performance is considered during the reappointment process. The fact that tacit extension of the appointment period is not possible follows from the requirements of a periodic assessment and reasons for reappointment.

With regard to foundations, associations, cooperatives and mutual insurance societies, there are no statutory requirements for reappointment. For such legal entities, the appointment period should be evident from the articles of association or bye-laws, in the event these provide for the establishment of a supervisory body. In absence of any arrangements for reappointment, the supervisors will often no longer be considered members of the supervisory body after this period has expired. For example, merely continuing the supervisor’s registration in the Trade Register is insufficient.

For all legal entities, it is therefore advisable to closely monitor the rotation schedule, to put appointment and reappointment resolutions on the agenda in good time and to review the performance of the supervisors in good time as well, providing sound reasons in support of a proposed reappointment. Van Doorne’s Notarial Practice can assist you in drafting appropriate provisions and clauses for the articles of association or bye-laws.

Currently, transfer tax is due in principle in the event of a legal merger or demerger of a pension fund if this involves the acquisition of real property. The law provides an exception for mergers and demergers, but this does not apply to foundations unless they qualify as a public benefit organisation (“algemeen nut beogende instelling” or ANBI). The Dutch Tax and Customs Administration website currently lists only two pension funds that qualify for ANBI status and reports the revocation of that status for a third fund, possibly due to the stricter regulations. Transfer tax will therefore probably be an issue in many mergers or demergers.

According to the Pensioenfederatie, the levy of transfer tax will be an obstacle for pension funds that consider a merger. The State Secretary has now agreed to consider broadening the exemption. According to the State Secretary, the decision to restrict the exemption to legal entities with capital divided into shares that conduct a business was made at the time because the original owner retains entitlement to the business after the merger through its shareholding. In that case, there is no taxable transfer to a third party. With foundations that entitlement is less clear, making it more difficult to distinguish between an internal merger and a taxable transfer.

Broadening the merger exemption for pension funds only would be contrary to European state aid regulations. Consequently, the State Secretary will study whether existing business facilities can be rendered more neutral in terms of their legal form. The relevant decision making will take place during the next budget cycle.

In the Post Register, consumers can identify business types or sectors from which they do not want to receive any more addressed advertising. Once registered, the relevant advertising is blocked for a period of three years. The National Deceased Register was established so that descendants can register the contact data of deceased persons. As a result, addressed advertising will no longer be sent to the deceased. The data of the deceased are registered in the National Deceased Register for a period of ten years.

Consumers who still receive unrequested addressed advertising after registering can contact the relevant company. If the company fails to respond or if the consumer does not agree with the response, the consumer can turn to the Advertising Code Committee.

The PPP, i.e. Public Private Partnership, has been frequently used in the integrated contract form of D(esign)- B(uild)-F(inance)-M(aintain)-O(perate) since 1999. Successfully so: as compared to traditional methods, to date the DBFM(O) projects have brought added value totalling some 10 to 15 percent (approx. € 700 million). The State will therefore continue to use DBFMO contracts as much as possible.

It has stimulated the use of DBFMO contracts by lower governments (municipalities and provinces) and by healthcare and educational institutions for many years, but has not been very successful. Sadly, this means that the potential added value of PPPs is not being utilised. The State is now pulling the plug. This is in keeping with the coalition government’s motto: ‘It’s either your responsibility, or not’.

Yet, the PPP also offers lower governments and healthcare and educational institutions lots of opportunities to achieve added value: more quality for the same price, or the same quality for a lower price. In today’s reality, with significant spending cutbacks on all levels of government, especially the latter can be quite beneficial. The lower governments can draw directly on the experience gained with the projects already developed, resulting in significantly lower transaction costs for both the public and the private partners. Den Helder’s municipal council recently ordered preparations for tendering a DBFM(O) contract for the construction of the new city hall. This project can demonstrate the added value of PPPs, even for lower governments. Hopefully the project will inspire other government bodies to follow its lead.

Under certain circumstances, Dutch resident companies can be treated as a single taxpayer for corporate income tax purposes by forming what is known as a ‘fiscal unity’. The advantages provided by a fiscal unity include that assets with hidden reserves can be transferred within the fiscal unity without corporate income tax being levied. This makes it possible to implement reorganisations within a fiscal unity without taxation.

However, in order to prevent a fiscal unity from being used to transfer assets to a company within the fiscal unity and to subsequently sell that company free of tax, the fiscal unity regime contains a sanction that requires taxation of the hidden reserves of the transferred assets at the time the company is sold and the fiscal unity is terminated. The State Secretary’s decision entails that such sanction may be deferred in a number of situations (e.g. in the event of a legal merger), if the company that was sold becomes part of a new fiscal unity.