NETHERLANDS Law and Practice Contributed by: Friederike Henke, Ingrid Cools, Philip ter Burg, IJsbrand Uljée, Suzan van de Kam and Epke Spijkerman, BUREN
supply security. If parties fail to notify the Ministry, a transaction is voidable. Drinking water companies are by law required to be directly or indirectly held by Dutch public persons. Financial Supervisions Act Certain changes of control in companies and institu - tions that are subject to the Financial Supervisions Act are to be reported to the Authority for Financial Markets ( Autoriteit Financiële Markten ) or the Dutch Central Bank ( De Nederlandsche Bank ). Dutch Implementation of Screening Mechanisms: Security Test Act On 1 June 2023, the Investments, Mergers and Acqui - sitions Security Test Act ( Wet Veiligheidstoets invest- eringen , fusies en overnames ) (Security Test Act, also referred to as Vifo-Act) entered into force. The Secu - rity Test Act requires a change of control in certain Dutch companies to be notified to and approved by the Bureau for Investment Screening ( Bureau Toetsing Investeringen – BTI). Companies that are active in the Netherlands in supplying vital infrastructure or under - takings, or that are active in sensitive technology, as well as companies that operate business campuses, fall under the scope of the Security Test Act. The term “control” refers to the ability to exercise decisive influence on a target company, either through shareholding or on a de facto basis once the invest - ment has taken place. Thresholds apply depending on the type of target company involved. Upon receipt of the notification, the BTI will examine whether the transaction can lead to a risk to national security, par - ticularly the continuity of vital processes, the preven - tion of undesirable strategic dependencies and the integrity and exclusivity of knowledge and information. In principle, the approval time is within eight weeks of receipt of the notification. If a formal assessment is required, the BTI has an additional eight weeks for further investigation. Each phase can be extended separately. Pending BTI approval of the transaction, a standstill obligation applies to the parties involved. Based on Article 6 (1) of the EU FDI Screening Reg - ulation, the European Commission will have to be
informed about the transaction and both the European Commission and other EU member states may ask questions about a transaction. 2.2 Procedure to Obtain Approval and Sanctions for Non-Compliance On the basis of current legislation, a transaction is voidable if parties to a foreign investment in the elec - tricity, gas, or telecommunications sector fail to notify the Ministry. Failure to comply with the notification obligations under the Security Test Act may lead to a direct sus - pension of all voting rights of the investor, pursuant to the transaction. The company will be obliged to make all efforts to co-operate. Furthermore, the BTI may require the parties to make a certain notification within three months of the trans - action becoming known. In the meantime, the rights of the investor will be suspended. The BTI may also impose an administrative fine, with the maximum being 10% of the turnover. If the transaction has taken place without the approval of the BTI, the Security Test Act stipulates that the acquisition shall be declared null and void. 2.3 Commitments Required From Foreign Investors Foreign investors are required to fulfil the notification requirements described in 2.1 Approval of Foreign Investments . 2.4 Right to Appeal This section is not applicable in the Netherlands. 3. Corporate Vehicles 3.1 Most Common Forms of Legal Entity The legal entities most commonly used in the Neth - erlands are the private company with limited liability ( besloten vennootschap met beperkte aansprakelijk- heid – BV) or the public limited company ( naamloze vennootschap – NV), both of which have legal person - ality, and the (limited or general) partnership ( person-
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