The Bureau for Investment Screening (Bureau Toetsing Investeringen, "BTI") recently published guidelines to provide clarification regarding the scope of the Investments, Mergers and Acquisitions Security Test Act (Wet veiligheidstoets, investeringen, fusies en overnames, also referred to as "Vifo Act"). The Vifo Act applies to Corporate M&A activities of companies that are active as vital providers of (highly) sensitive technology, operators of corporate campuses, or vital infrastructure providers in The Netherlands. The BTI is responsible for the substantive screening of these investment activities.
The BTI guidelines relate to the following topics:
The BTI guideline 'Internal restructurings' focuses on whether an internal restructuring of a company could fall under the scope of the Vifo Act. This is particularly relevant if the ultimate control of a group company changes after a transaction.
Definition of internal restructuring
In principle, the change of control or the acquisition of
significant influence by a shareholder will be considered as an
internal restructuring that falls under the scope of the Vifo Act.
However, if an internal restructuring only results in the transfer
of the company's (legal) corporate seat from one country to
another, then this will not be qualified as a transaction subject
to the Vifo Act as long as the (indirect) ultimate shareholders of
the company remain unchanged.
Different factors
The BTI guideline provides a list of different factors that could
have impact on the above definition of internal restructuring.
Sole shareholding
In the event that there is an internal restructuring which results
in one ultimate sole shareholder that remains unchanged, then this
will not be considered as a transaction subject to the Vifo Act. If
not all the shares in the subsidiary are immediately held by a
single parent company acting as sole shareholder and the subsidiary
has other (minority) shareholders in the meantime, this transaction
will fall under the scope of the Vifo Act. Although the
restructuring takes place in multiple steps and the parent company
eventually acquires the remaining shares to become the sole
shareholder, the reporting obligation towards the BTI still remains
in full force.
Temporary management
If an internal restructuring takes place involving temporary
management in the form of trust office, notary or custodian of the
company, then this will be viewed as an investment transaction
which requires BTI notification. This also applies if the
transaction takes place in a short period of time, e.g. over the
course of one weekend.
Entry of new shareholder
In case that an internal restructuring takes place in relation to a
target company (group) active in highly sensitive technology and
the ultimate beneficial owner remains unchanged and participates
through an intermediate holding company, this will be deemed
notifiable to the BTI and subject to the Vifo Act.
Investment funds
A shareholder's interest in an investment company may be
transferred from one investment fund to another managed by the same
manager, but only after notifying the BTI in accordance with the
Vifo Act. This is due to the possibility that an investment fund
could possibly be funded by a variety of capital providers acting
more than solely 'passive' investors.
Conclusion
The guideline provides M&A practice with valuable practical
insights on the definition of 'Internal restructurings'.
Please note that the guideline may be amended and updated by BTI
from time to time based on changing insights, developments in the
market / technology or as a result of amended regulations.
28 March 2024
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
