On 17 June 2003, the Minister of Finance issued a decree by which the Exemption Regulation under the Securities Trade Supervision Act 1995 (Vrijstellingsregeling Wet Toezicht Effectenverkeer 1995) was amended.
On 17 June 2003, the Minister of Finance issued a decree by which the Exemption Regulation under the Securities Trade Supervision Act 1995 (Vrijstellingsregeling Wet Toezicht Effectenverkeer 1995) was amended. The amended Exemption Regulation provides, on the one hand, for important additional exemptions from (i) the prohibition against offering securities in or from the Netherlands beyond a restricted circle, and (ii) the ongoing reporting requirements for institutions that have issued securities in or from the Netherlands beyond a restricted circle. On the other hand, some minor changes have been introduced limiting the scope of the exemptions from the prohibition against offering or performing services as a securities broker or asset portfolio manager in or from the Netherlands without a licence. Given their limited scope, these will not be discussed in this memorandum.
The amendment of the Exemption Regulation brings a number of important changes with regard to the prohibition referred to under (i) above:
- It is now possible to benefit from an exemption if securities are offered from the Netherlands (i) to professional market parties, such as credit institutions and securities brokers, inside or outside the Netherlands, and (ii) to persons outside the Netherlands other than professional market parties.
- Under the professional market parties exemption, the offeror of securities is no longer required to submit a copy of the offering memorandum to the Netherlands Authority for the Financial Markets ("AFM") prior to the offer or its announcement. It is sufficient to include a selling restriction in the offering memorandum.
- The amount under the minimum denomination exemption has been raised from EUR 45,378.02 to EUR 50,000. Offers by which securities can only be obtained as a package with a value of at least EUR 50,000 will be exempted at a later stage.
Under the amended Exemption Regulation, the professional market parties exemption now includes an exemption from the continuous disclosure requirements of Section 5 of the Securities Trade Supervision Act 1995 ("WTE"). The same will apply to the EUR 50,000 minimum package exemption once it becomes effective.
As a consequence of these changes certain selling restrictions currently used in, for example, debt issuance programmes will need to be amended. These changes will also facilitate certain equity transactions, such as controlled auctions and participations by private equity funds.
Exemptions for Securities Offerings
Section 3 WTE prohibits the offering of securities upon their issue in or from the Netherlands if the offer is being made beyond a restricted circle of offerees. In addition, the offer may not be announced through advertisements or other documents. It is also prohibited to offer existing securities in the Netherlands beyond a restricted circle where the securities in question have not been made available in the Netherlands prior to the offering, or have been made available in the Netherlands within a restricted circle or only to professional market parties.
The prohibition of Section 3 WTE does not apply if (i) a prospectus satisfying detailed requirements is made available, (ii) the offered securities are admitted, or are likely to be admitted in the near future, to the official segment of the stock market of Euronext Amsterdam N.V., (iii) the offered securities consist of rights to participate in duly registered investment institutions, or (iv) an individual dispensation is obtained from the AFM. Furthermore, the Exemption Regulation provides for exemptions in respect of the following:
- Offers To Professional Market Parties (Section 2)
This exemption applies subject to the condition that the offer or the offering memorandum in which the offer is made, as well as advertisements and documents announcing the offer ("Offering Documentation") include a selling restriction stating that the offer is being made exclusively to professional market parties. This exemption has been amended so that the offeror is now no longer required to submit a copy of the offering memorandum to the AFM prior to the offer or its announcement.
- Offers To Persons Outside The Netherlands (Section 3)
An important change is that it is now possible for an offeror to benefit from an exemption if the securities are offered to persons resident or established outside the Netherlands in combination with an offer to professional market parties irrespective of their place of domicile. This is an important broadening of the Exemption Regulation and meets a need that had arisen in legal practice. This exemption remains subject to the condition that the offer and the Offering Documentation include a selling restriction stating that the offer is not, nor will be, directed to persons (other than professional market parties) who are resident or domiciled in the Netherlands and that it complies with the regulations applicable in the country where the offer is being made. A statement from the offeror to the effect that these regulations have been complied with should be submitted to the AFM prior to the offer and must be included in the Offering Documentation.
- Minimum Denomination (Section 4)
An offer of securities with a minimum denomination of EUR 50,000 or the equivalent in another currency is also exempted from the prohibition of Section 3 WTE. The minimum denomination has been raised from EUR 45,379.02 to EUR 50,000 to bring it in conformity with the draft Prospectus Directive and to set it at a round figure.
- Minimum Package Value (Section 4a)
A new exemption based on the current Prospectus Directive will apply in the case of an offer of securities which can only be obtained as a package with a value of at least EUR 50,000. An important difference between this and the minimum denomination exemption is that the denomination of the securities is not relevant. This exemption is relevant, for example, to situations in which a package of securities is offered as part of an acquisition or auction sale. The exemption is subject to the condition that the offer and the Offering Documentation include a selling restriction stating that the offer is made exclusively as a package with a value of at least EUR 50,000. It should be noted that this exemption will come into effect at a later stage, together with the intended amendment of article 3 WTE, which needs to be amended to prohibit the resale/offering of packages of securities in smaller units without a prospectus having duly been made available.
The following exemptions remain unchanged:
- No Consideration (Section 5)
An offer of securities for no charge.
- Euro-Securities (Section 6)
An offer or announced offer of Euro-securities for which no general advertising campaign or door-to-door sales campaign is to be conducted. The definition of Euro-securities is slightly changed to bring it in conformity with the current Prospectus Directive. Although no policy change by the AFM has been intended, the new definition may materially affect the usefulness of this exemption.
- Certain Debt Securities Issued By Credit Institutions (Section 7)
An offer or announced offer relating to debt certificates, commercial paper, entries in debt registers and similar rights issued by duly registered credit institutions and having an original term of no longer than one year.
- Participation Rights (Section 8)
An offer or announced offer relating to shareholding rights or units in an investment institution which is exempt from Section 4(1) of the Supervision of Investment Institutions Act.
- Securities Issued By Governmental Bodies Within The EU (Section 9)
An offer or announced offer relating to securities issued by an EU Member State, by a public body within the territory of an EU Member State or by an international public institution in which one or more EU Member States are members.
Exemptions from the continuous reporting requirements (Section 5 WTE)
Section 5 WTE stipulates that institutions which have issued securities in or from the Netherlands beyond a restricted circle should ensure that information regarding their financial position and any new facts pertaining to them which may have a material impact on the price of the securities is made generally available from time to time. This requirement does not apply if the securities have been admitted to the official segment of the stock market of Euronext Amsterdam N.V.
Under the amended Exemption Regulation, the continuous disclosure requirements do not apply if the offer of securities itself has been exempted pursuant to Sections 2, 3, 4, 4a, 8 or 9. The two most important changes are the addition of the professional market parties exemption and the EUR 50,000 minimum package exemption. As noted above, the latter exemption will be applicable at a later stage.
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