NETHERLANDS Law and Practice Contributed by: Maarten de Boorder, Samuel Garcia Nelen, Jelmer Kalisvaart and Bas Vletter, Greenberg Traurig, LLP
related decision-making. Such a committee can be composed of supervisory directors only, or a mix of supervisory and management directors. Establishing a special committee can ensure a proper balancing of interests and a proper decision-making process and, furthermore, prevent (the appearance of) conflicts of interest within the boards as much as possible. A spe - cial committee closely monitors the transaction pro - cess, provides the boards with solicited and unsolic - ited advice and prepares the decision-making. 8.3 Business Judgement Rule In general, the management board has broad discre - tionary authority when determining the strategy of the company. The decision to support a takeover offer falls under the authority of the management board, under supervision of the supervisory board. The boards need to follow a due process, based on avail - able information and with an open mind, but have no overriding obligation to discuss or negotiate with the bidder. The opinion of shareholders can be a consid - eration, but cannot be decisive: it follows from case law that boards can rightfully choose a strategy that creates less shareholder value in the long term than the takeover offer would do in the short term. That authority of the boards is limited by provisions in law and the company’s articles of association. Breach of such provisions can be the subject of litigation. Business policy decisions are reviewed with caution by courts. Courts are generally reluctant to get into a comprehensive review of the substantive correct - ness of a resolution taken by the boards, provided that there was a careful and considerate decision-making In a business combination, directors generally obtain outside advice from lawyers, financial advisers (eg, investment bankers) and/or other consultants and advisers. In addition, in case of a public offer, the boards of the target company may also obtain one or more fairness opinions regarding the financial rea - sonableness of the proposed transaction. 8.5 Conflicts of Interest According to Dutch law, any member of a company’s management board or supervisory board must refrain process underlying such decision. 8.4 Independent Outside Advice
from taking part in the deliberation and decision-mak - ing process of the relevant board if that member has a personal direct or indirect conflict of interest towards the company. According to the Dutch Supreme Court, such conflict of interest exists if the director is deemed to be unable to serve the interests of the company and the business affiliated with it with the required level of integrity and objectivity. This means that a director’s personal interest that is compatible with the company’s interest does not necessarily lead to a conflict-of-interest situation. In any case, it would be advisable for a board member to notify any interest that potentially conflicts with the company’s interest to the management board and supervisory board. In addition, if there is indeed a conflict of interest, this should be disclosed in the public transaction documentation as well, so that the shareholders are aware of the existence and manage - ment of any conflicts. If a conflicted board member takes part in the delib - eration and decision-making process of the board, the resolution that is a result of that process can be subject to nullification. In addition, the relevant board member (and sometimes the entire board because of the collective liability principle) may be personally liable towards the company if the conflict-of-interest rules and regulations are not complied with. As a starting point, shareholders are free to vote as they wish, since the statutory provisions regard - ing conflict of interest do not apply to shareholders. However, according to the case law of the Enterprise Chamber, the decision-making process within the company as a whole must take place in compliance with the principles of reasonableness and fairness. This can, for example, result in a duty of care for a majority shareholder towards minority shareholders.
9. Defensive Measures 9.1 Hostile Tender Offers
Hostile tender offers are permitted in the Nether - lands, but they are rarely pursued. This is because it is (at least) complicated and, in some cases, virtually
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