This newsflash discusses the implementation in the Netherlands of the Acquisitions Directive (the Directive on acquisitions and holdings in the financial sector).

  • The Acquisitions Directive has entered into force. The directive changes the rules for credit institutions and investment firms, for example in relation to the criteria for approving acquisitions and increase of holdings in the financial sector.
  • These rules entered into force in the Netherlands on 7 May 2011 as a result of an amendment to the Financial Supervision Act (Wft).

The Acquisitions Directive

The approval procedure that existed before 7 May 2011 for assessing shareholders in certain financial institutions was the result of various EU directives such as the Banking Directive (2006/48/EC), the MiFID (2004/39/EC) and a number of EU directives relating to insurers. The Acquisitions Directive 2007/44/EC (also referred to as the 'Antonveneta Directive') has radically changed the existing European regulatory framework.  

The Acquisitions Directive provides that the assessment of ‘holdings in the financial sector’ should be carried out by reference to a ‘limited set of clear assessment criteria of strictly prudential nature’ within 'a framework of a clear and transparent procedure'. Owing to the principle of maximum harmonisation the member states themselves are not permitted to adopt stricter rules. This means, for example, that assessment criteria of a political nature, such as the undesirability of foreign influences, may no longer play a role in assessing an application for approval (the procedure is known in the Netherlands as applying for a ‘declaration of no objection’ (verklaring van geen bezwaar)).  

Implementation in the Netherlands

The Acquisitions Directive had to be transposed into national legislation by the member states by 21 March 2009 at the latest. Its implementation by the Netherlands on 7 May 2011 was therefore overdue. Even before the entry into force DNB made allowance for the changed rules when assessing approval applications.

The changed rules

The main changes to the Financial Supervision Act as a consequence of the Acquisitions Directive are described below (click here for link for the Dutch text of the implementing legislation as published in the Bulletin of Acts and Decrees).  

  • The period within which the Dutch Central Bank (DNB) should assess an application for approval has been reduced. DNB must confirm receipt of an application, together with all accompanying documents, within two business days and then decide on the application within sixty business days. DNB may request the applicant for extra information during the first fifty business days after sending the confirmation of receipt. If DNB does request extra information, it may extend the period for decision once by twenty or thirty business days, depending on the type of applicant. If DNB does not decide within the applicable period, it will be deemed to have granted approval by operation of law.
  • There are fewer thresholds. The upper limits are 20%, 33%, 50% and 100%. Within these limits it is no longer necessary to apply for approval of an increase in a qualifying holding. The bandwidth approval continues to exist and may be applied for in order to avoid the necessity of reapplying for approval when the above limits are exceeded.  
  • Approval for a holding in one of the five largest banks having its registered office in the Netherlands will no longer be issued by the Minister of Finance but by DNB. However, DNB will still provide information to the Minister of Finance if the holding for which approval is requested ‘has or could have major consequences for the organisation or proper functioning of the financial system’. This will be the case if the approval concerns one of the five largest banks.
  • The grounds for refusing to approve a holding in a bank are strictly limited to criteria of a prudential nature, namely that:
    • the suitability of the applicant is not beyond doubt or the suitability of the persons who will be able, as a result of the qualifying holding, to direct (or help direct) the day-to-day business of the relevant financial institution in which the holding is to be taken is not beyond doubt;
    • the persons who will be able, as a result of the qualifying holding, to direct (or help direct) the day-to-day business of the relevant financial institution in which the holding is to be taken lack the requisite expertise;
    • the financial soundness of the applicant for approval is not guaranteed;
    • the ability of the financial institution to comply on an ongoing basis with the applicable prudential rules will be compromised by the qualifying holding;
    • there are reasonable grounds to suspect that, in connection with the proposed acquisition, money laundering or terrorist financing within the meaning of the Money Laundering and Terrorist Financing (Prevention) Act (Wet ter voorkoming van witwassen en financieren van terrorisme) is being or has been committed or attempted, or that the proposed acquisition could increase the risk thereof; or
    • incomplete or incorrect information has been provided by the applicant.
  • Under the new rules application for approval of qualifying holdings by Dutch banks in a credit institution, investment firm or insurance undertaking situated in another member state need be made only to the supervisor in that member state and no longer to DNB as well.
  • There is an exception for credit institutions or investment firms that act as underwriter or placement agent and after providing underwriting services are left holding a package of shares of 10% or more in the issuing institution. No approval is necessary for such a holding provided that (i) the voting rights carried by the shares are not exercised, and (ii) the holding is transferred within a year.