Pursuant to the Investments, Mergers and Acquisitions (Security) Assessment Act (“Vifo Act”), companies must report certain investments, mergers and acquisitions to the Minister of Economic Affairs and Climate Policy (“Minister”). This can also be done retroactively and the Minister can order the company to notify the takeover. Recently, the District Court of Rotterdam rendered a judgment, which was also covered in the FD, in which the Minister was rebuffed for the time being. This article discusses that ruling.
The purpose of the Vifo Act is to protect Dutch vital companies and companies with (highly) sensitive technologies against takeovers by foreign parties. If an acquisition falls under the Vifo Act – if the acquisition poses a risk to national security and related interests – the acquisition must be notified and approval by the Investment Assessment Office (“BTI”) must be awaited. As long as the BTI has not given its approval, the takeover may not go ahead. The takeover can even be prohibited in extreme cases. Parties (buyer, seller and the company) must take this law into account and can limit the consequences by means of preventive agreements.
For more information about the Vifo Act, please refer to this article.
Summary of the judgment of the District Court of Rotterdam
On April 25, 2024, the District Court of Rotterdam rendered its judgment. The situation is (in short) as follows. Anteryon (the company) specialises in (micro-)optical products. The company was acquired by a Chinese party in 2019. Two years later, the new owner got a new majority shareholder. The Minister has become aware of this acquisition through public sources. According to the Minister, there are indications that this acquisition may pose a risk to national security.
The Minister therefore found that the acquisition fell within the scope of the Vifo Act, partly because the company had not provided sufficient clarity about the most recent acquisition, and ordered the company to (still) submit a notification. Anteryon disagreed. The company then applied to the District Court of Rotterdam and sought a preliminary injunction.
The Court does not agree with the Minister. According to the Court, the company rightly points out that the reasonable presumption as referred to in the ISBD does not relate to the question of whether the acquisition falls within the scope of the ISB. This question must be answered before the submission of a report is ordered and can therefore not be ‘postponed’ to the phase after the report has been made. The Minister must therefore provide as complete a picture as possible of the acquisition that has already been carried out and that he is investigating, before ordering a notification, and on that basis decide whether it falls within the scope of the Vifo Act. If there are still ambiguities, the Minister must ask further questions and request information. The Minister did not do that in this case. In the proceedings, the company explained and provided additional information on the basis of which the Court concluded that the (recent) acquisition does not fall under the Vifo Act (control was apparently already transferred at the time of the earlier acquisition). The Minister was therefore not authorised to order the report.
Because it concerned preliminary injunction proceedings, the District Court of Rotterdam suspended the Minister’s decision as a provisional measure. For the time being, therefore, the Minister will be rebuffed. A final judgment will then have to be made in the main proceedings.
The full judgment can be found here.
Conclusion
The case shows that the Minister keeps a close eye on takeovers and applies the Vifo Act. Whether that is justified in all cases – as does not seem to be the case in this matter – is the question. Although the ruling is provisional in nature, it shows that the court must assess whether a takeover falls under the Vifo Act. If not, there is no obligation to report at all.
For further information, please contact:
Sjef Bartels, Partner
Labré, Amsterdam
e: ln.erbal@sletrab.fejs
t: +31 20 3052030
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