Last week, the Dutch Investors’ Association (Vereniging van Effectenbezitters or VEB) and the European Investors Association announced the filing of a request with the attorney-general at the Public Prosecutor’s Office (advocaat-generaal bij het ressortsparket) in connection with the planned acquisition by Mylan N.V. of Meda AB.
This publication provides answers to the most frequently asked questions in regard to the steps the VEB has taken to obtain clarity on the rights of Mylan’s shareholders in connection with the transaction.
As made clear from the start of the discussion between VEB and European Investors, and Mylan concerning the acquisition, the involvement of VEB and European Investors concerns the relevance of this deal for the Dutch financial market and its potential future impact on shareholders’ rights. In case of significant takeovers, such as the Meda-transaction, VEB and European Investors consider the existing unclarity of the thresholds for mandatory shareholders’ approval as problematic. Mylan’s approach shows, for instance, that in case of sizeable deals with a large debt component this unclarity can be used for dodging shareholder’s voting rights.
VEB and European Investors decided that a strictly worded paper with the answers to the FAQ better serves the interest of all parties concerned. We therefore cancel the previously announced conference call.
With the matter now referred to the attorney-general, the VEB will wait for a response from the attorney-general. Following receipt, VEB will clarify its position.
When did VEB approach the attorney-general?
VEB submitted its request on 6 April 2016. This request is solely subject to civil law.
What is the (legal) basis of the request to the attorney-general?
The attorney-general can in the public interest file an application for the institution of inquiry proceedings with the enterprise chamber of the Amsterdam court of appeal.
The law does not provide for a clear definition of ‘public interest’.
In its request to the attorney-general, VEB defined the condition ‘public interest’ as follows: the Mylan case may set an undesirable precedent potentially leading to the erosion of shareholders’ rights. The approach as described can also affect the international credibility and reputation of the Netherlands and its investment climate.
How will the attorney-general proceed?
VEB was informed that the attorney-general asked Mylan’s counsel for its view on the matter. Presumably during the next weeks the attorney-general will decide whether he will lodge an application for inquiry proceedings with the enterprise chamber.
If the attorney-general decides to pursue inquiry proceedings, how will the proceedings continue?
Provided that the enterprise chamber confirms that a public interest is at stake, the proceedings continue in the same fashion as inquiry proceedings initiated by shareholders. This means that the enterprise chamber will first establish “if there appear well-founded reasons to doubt the correctness of the policy or the correctness of the course of affairs”. If confirmed, the enterprise chamber will appoint one or more investigators who will determine the course of events that gave rise to the inquiry proceedings. Following finalization of the investigative report, this will be lodged with the enterprise chamber.
Should misconduct be established by the investigative report, further legal action can be taken.
Third parties, such as the VEB, may also be admitted in the enterprise chamber proceedings.
What if the attorney general sees no reason to apply for inquiry proceedings?
VEB will continue to bring this matter further. This includes bringing the unclarity of mandatory shareholders’ approval to the attention of the legislator. As to next steps, announcements will only be made when appropriate.
Please note that this information only serves as explanation to previous announcements by VEB and European Investors. This information can by no means be regarded as legal advice, nor can any right be derived from this information. In order to get legal advice on this matter VEB and European Investors recommend you to contact a lawyer.