NETHERLANDS Trends and Developments Contributed by: Gianluca Kreuze, Ruben den Hollander, Anne van Geen and Sanne van Esterik, Loyens & Loeff
cial interests, such as entitlements to exit bonus- es or management participation incentives. In their decision-making, the board should con- sider the potential effects of these, and demon- strate that they do not conflict with the interests of the target company. In addition, as the larg- est childcare company in the Netherlands, Estro was heavily reliant on childcare subsidies from the government. The company’s interests were therefore also influenced by the public interest in the continuity and accessibility of high-quality and affordable childcare, which needed to be considered in the board’s decision-making pro- cess. Supervisory board members must ensure that directors who are involved in a higher duty of care observe that duty of care in all preparation, decision-making and execution during an acqui- sition. When recommendations are made by experts, the supervisory board should urge the management board to act upon them. Private equity delegates appointed as board observers in the supervisory board should be aware that an enhanced duty of care may also apply to them due to conflicting interests from involvement in the preparation or execution of an LBO. Environmental, Social and Governance (ESG) A final notable trend in the Dutch acquisition finance market is the growing emphasis on sustainability and green finance. Investors are increasingly prioritising ESG considerations when making investment decisions, leading to a surge in demand for green bonds and sus- tainability-linked loans. Dutch lenders, mainly European banks, have responded by increasing their issuance of green bonds and incorporat- ing ESG criteria into their financing strategies. They are therefore less likely to have to deal with regulatory supervision and potential sanctions,
particularly given increased ECB attention to incorporating green criteria into lending policies. Several market initiatives have been introduced to standardise terms and provisions for loan products with a focus on green or sustainability considerations. For example, the Loan Market Association has developed principles and guid- ance for two commonly used types of loans: (i) the green loan (made available to exclusively finance green projects); and (ii) the sustainability- linked loan (which incentivises borrowers meet- ing sustainability performance targets). Act on the Abolition of Pledge Prohibitions It is important that it be possible to pledge col- lateral for encumbrance with a valid Dutch law security right. Traditionally (and currently widely used in practice) parties (being the creditor and the debtor of a receivable) can agree on clauses in their contracts prohibiting the transfer and/ or pledging of receivables, known as transfer, assignment or pledgeability restrictions. Such restrictions may limit companies (especially small and medium enterprises (SMEs)) in using receivables as collateral for financing, which in turn reduces their access to credit. The Dutch parliament recently approved the Act on the abolition of pledge prohibitions ( Wet opheffing verpandingsverboden ) which is aimed at stimulating credit provision, particularly for SMEs, by removing restrictions on the transfer- ability and pledging of commercial receivables. With the introduction of this law, it will no longer be possible to contractually limit or exclude the transferability or pledging of certain commercial receivables arising from business activities. If parties do agree on such restrictions, they will be considered null and void – existing restric- tions will also become null and void after three months following the date on which the new law
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