Law and policy
Policies and procedures
In general, what are your government’s policies and procedures regarding the supervision and review of foreign investments?
The foreign investment review (FIR) laws currently in place in the Netherlands are relatively liberal, and only apply to certain sectors (eg, energy and telecommunications). The notification requirement arising from these FIR rules generally applies regardless of the nationality of the acquirer (ie, there is no exemption for investors based in, eg, the Netherlands or the European Union (EU)). We are not aware of cases where the Dutch State has prohibited or imposed far-reaching remedies based on the FIR law. However, the Dutch State has intervened in attempted acquisitions of Dutch companies using illegal leverage (eg, political opposition, or direct investment by the Dutch state itself).
On 17 May 2022, the Dutch legislature adopted the Dutch Comprehensive National Investment Act (NSI Act), which covers investments in critical infrastructure and critical technologies in the Netherlands. The NSI Act will come into effect in the first quarter of 2023 and will introduce a new FIR framework in addition to the current one set out in the legislation affecting the sector. The notification requirement from the NSI Act will apply regardless of the recipient’s nationality as well.
What are the main laws that directly or indirectly regulate acquisitions and investments by foreigners and investors on the basis of national interest?
The NSI Act will come into effect in the first quarter of 2023. Having said that, there is currently no comprehensive, comprehensive framework for FIR in the Netherlands; The current FIR laws in the Netherlands only apply to certain sectors. Leaving aside the general EU and Dutch merger control laws, which are not discussed in the answers to this chapter, the main laws currently in force in the Netherlands that contain FIR-related provisions are:
- the Dutch Electricity Act 1998 (the Electricity Act);
- the Dutch Electricity Act (Electricity Act);
- the Dutch Financial Management Act (Financial Management Act);
- Dutch Gambling Act (Gambling Act);
- Dutch Health Market Regulation Act (Health Care Act);
- the Dutch Mining Act (the Mining Act); again
- the Dutch Telecommunications Act, as amended by the Dutch Unsolicited Telecommunications Act (Telecommunications Act).
Scope of application
Explain the scope of application of these rules, including what types of investments or transactions are covered. Are small interests held? Are there certain sectors in which the authorities have the power to monitor and prevent foreign investment or sectors in which special inspections are discussed?
The scope of application of these rules is as follows:
- Electricity law: any change of control (as defined in the Dutch Competition Act (Competition Act)) in a generating facility with a nominal electrical capacity of more than 250 mw, or in an agreement operating a generating facility with a nominal electrical capacity of more than 250 mw. 250 mw. Minor interests that do not confer – positive or negative – control, and do not result in a change of control are not captured.
- Gas Act: any regulatory change (as defined in the Competition Act) in the field of liquefied natural gas (LNG), or an LNG company. Minority interests that do not result in a change of control are not captured.
- Financial Supervisory Act: any acquisition or increase in the relevant holding of a particular target in such a way that the upper limit (as mentioned in the Financial Supervisory Act) is reached or exceeded. Simply put, a qualifying holding is any direct or indirect interest of at least 10 percent of the issued capital. Suitable targets include, for example, a bank, an investment company and an insurance company with their registered office in the Netherlands. Therefore, small interests above a certain percentage (as defined in the Financial Supervisory Act) are caught.
- Gambling Act: any change in the ownership and control structure of the holder of a permit to organize remote games of chance (under the Gambling Act), a party to which it belongs, or its ultimate beneficial owner.
- Health Care Law: a health care provider (as defined in the Health Care Law) that usually has 50 or more people providing health care is part of a concentration (as defined in the Competition Law). A health care provider in this regard is a profession that provides care, or a service as defined by or under the law governing health care (ie, the Dutch Health Insurance Act, the Dutch Long-Term Care Act, and the Dutch BIG Act). Minority interests that do not result in a change of control are not captured.
- Mining Law: any change in the direct or indirect control of a concession holder under the Mining Law, where such change affects (1) one or more of the voting rights at a meeting of shareholders, or (2) the appointment, suspension or dismissal of one or more directors, non-directors, or partners . Small interests that meet the last requirement are held.
- Telecommunications Act: any change in the prevailing regulation of a telecommunications group, where that regulation results in a significant impact on the telecommunications sector. The dominant control is explained in detail. Minority interests comprising at least 30 percent of the votes at the general meeting of the legal entity are held.
- The NSI Act (will enter into force in the first quarter of 2023): certain acquisition activities in relation to a target company established in the Netherlands that can be an important supplier, or an active activity in the field of critical technologies. The NSI Act defines key suppliers (eg, in the field of heat transport, nuclear power, air transport, banking, financial market infrastructure, renewable energy, gas storage), and port location. Sensitive technologies include (1) dual-use products (ie, goods that can be used for both civil and military purposes) that are subject to export authorization under Regulation (EC) No. 428/2009 and (2) military goods as referred to in the Dutch Strategic Goods Implementation Regulation 2012. Regulatory changes (as defined in the Competition Act) are taken into account. However, in the case of an active target commitment in the field of critical technology, the acquisition or increase of a large impact – below the regulatory level – by the acquirer is equally relevant. The NSI Act stipulates that such acquisition or expansion may occur in different ways. For example, where a person can cast 10 percent of the votes of the general meeting on the target job. Therefore, certain minority interests that do not trigger a change of control are captured.
How is a foreign investor or foreign investment defined in the applicable law?
The Dutch Implementing Act to Regulation (EU) 2019/452 (EU FIR Regulation) refers to the EU FIR Regulation on the definition of foreign direct investment (FDI). The Dutch Implementing Act does not contain a definition of foreign investor, or foreign investment.
In the EU FIR regulation, foreign investor means ‘a natural person of a third country (ie, non-EU) or an undertaking of a third country (ie, non-EU), who intends to make or make (FDI)’ . FDI means:
investment of any kind by a foreign investor that aims to establish or maintain permanent and direct links between the foreign investor and the entrepreneur to whom capital is made available for the continuation of economic activity (in the EU ) Member State, including investments that allow successful participation in managing or controlling a company that performs an economic activity.
The Electricity Act, the Electricity Act, the Financial Supervision Act, the Gambling Act, the Health Care Act, the Mining Act, the Telecommunications Act and the NSI Act (not yet in force) do not contain relevant definitions in this regard, and any notification requirements arising from them apply regardless. nationality. For completeness, the Communications Act, and the NSI Act contain similar references to the EU FIR Regulation.
Special rules for SOEs and SWFs
Are there special rules for investments by foreign state-owned enterprises (SOEs) and sovereign wealth funds (SWFs)? How is SOE or SWF defined?
Currently, there are no special FIR rules in the Netherlands for investments made by SOEs and SWFs.
To conclude, on 5 May 2021, the European Commission (EC) adopted a proposal for a Regulation on foreign subsidies that distort the EU market.
What officials or authorities have the power to review mergers or acquisitions on grounds of national interest?
The competent authorities are listed below:
- Electricity Act, Electricity Act, Telecommunications Act and NSI Act (not yet in force): Dutch Minister for Economic Affairs and Climate (Minister). However, in practice, the Dutch Investment Review Office (BTI), under the Dutch Ministry of Economic Affairs and Climate (Ministry), acts as a coordinator of these actions.
- Financial Supervisory Act: The Dutch Central Bank (DNB) in most cases, and in some cases the European Central Bank.
- Gambling Law: Dutch Gambling Authority (KSA).
- Healthcare Law: The Dutch Healthcare Authority (NZA) (although a legislative proposal is pending in the Netherlands to transfer this task to the Dutch Competition Authority (ACM)).
- Mining Law: A notice needs to be sent before Energie Beheer Nederland BV, a company wholly owned by the Dutch state, and whose shares are regulated by the Ministry (EBN). EBN advises the Minister on the implementation of the Mining Act.
Apart from the laws and policies mentioned above, how much discretion do the authorities have to approve or reject transactions for reasons of national interest?
It may seem that some perspective is given to some open-ended terms set out in Dutch law.
For example, under the Electricity Act and the Electricity Act, transactions may be prohibited or conditionally approved based on considerations of public safety, security of supply or security of delivery.