4.2.4 Who are shareholders?

Documentgegevens:

Mr. W.J.L. Calkoen, datum 16-02-2012

Datum: 16-02-2012
Auteur: Mr. W.J.L. Calkoen
JCDI: JCDI:ADS594910:1
Vakgebied(en): Ondernemingsrecht (V)

Share-ownership typically remained fragmented from the 1900s up to the 1980s, longer than in Britain. Then Dutch pension funds and financial institutions started to buy shares of Dutch listed companies on a greater scale. Some of the big banks had 5% shareholdings in each other, but did not try to influence the corporate governance or strategy of their investments.

In 1995, listed shares in the 25 largest Netherlands' companies were held as follows:

—: 19% by Netherlands private individual shareholders
—: 19% by Netherlands companies (cross participations)
—: 24% by Netherlands institutional investors
—: 37% by foreign investors
—: 1% by the Dutch government.

In 2005, the picture had changed. The percentage of shares held in the top 25 listed companies by foreigners had doubled from 37% to 75%. The percentage of Dutch private investors had been reduced to a mere 5%, cross participations by Dutch companies to 9%, institutional investors (10%) and the government (1%), bringing the total shares in Dutch hands to 25% only.1

In 2006, the percentages held in different countries of the total of listed AEX companies were:

—: 21% in the Netherlands (total individual, companies and pension funds)
—: 25% in the US/Canada
—: 21% in the UK and Ireland
—: 26% in the continent of Europe
—: 7% in other places.2

Foreigners held 79% of all listed Dutch companies. Only two years later, in 2008, the percentage of foreign held shares in all companies listed on the Amsterdam Stock Exchange had risen to 85%.3

Such big shifts had several causes. In 1999 the Euro giro system was introduced, which meant that Dutch investors were advised and facilitated to invest all over Europe. Dutch pension funds were only allowed to invest in foreign shares after 1996. In 2001 the Netherlands suffered from the Ahold and World Online scandals with a depressing effect on the Dutch stock market. Foreigners started buying when they perceived that Dutch shares were undervalued. No other European stock market has such a high percentage of foreign held shares as the Amsterdam Stock Exchange.

Among these foreigners US and UK activists in particular elicited discussions with Dutch boards, initiatives to which Dutch directors had not been accustomed. The Dutch Association of Investors ("VEB") plays an important role in these discussions. The VEB has started litigation on corporate governance matters, such as in the ABN AMRO case.4 Foreigners did not restrict themselves to initiatory discussions with boards of Dutch companies. Dutch pension funds, organized in an association, called Eumedion, usually combine their comments at shareholders meetings.5 US shareholder activists started action against both ABN AMRO in 2007 and Stork in 2006,6 which ended up in litigation in the Enterprise Chamber. Hedge funds and the UK pension fund Hermes have started Enterprise Chamber proceedings against ASMI in 2010.7

In the same period many boards of Dutch listed companies attracted foreign board members. As mentioned before, by 2006 more than a third of the total of management and supervisory board members of Dutch listed companies were foreigners.8 This has changed the atmosphere of the Dutch board dynamics sub stantially.9

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Voetnoten

Voetnoten

Abma (2006/B), pp. 11-12.

Monitoring Committee Corporate Governance Code of 3 August 2006, p. 10.

Abma Report for 1995 and 2005 and SER (2008), p. 33 for 2002 and 2007.

See for description of the ABN AMRO case, note 174.

When Eumedion — the Dutch Association of Pension Fund Investors — writes to give its views it sometimes also writes in the name of CaIPERS, which in June 2008 had EUR 1.2 billion invested in the Netherlands, e.g. the letter of 28-09-2009 of Eumedion.

See for description of the ABN AMRO case, note 174, the whole merger development and necessity for ABN AMRO to make strategic moves had been triggered by a 'dear chairman letter' of the US investor TCI. The Stork case is described in 4.4.2.2 where structure regime companies are described.

ASMI, HR 9/7/2010, NJ 2010, 544, see note 154 in 4.1.5.

Fennema and Heemskerk (2008), p. 186. This is stil the case in 2010. On all AEX companies there are 101 Dutch supervisory directors and 64 foreign supervisory directors, see the Monitoring Committee Report of 2010, p. 44.

Prof. J.A. van Manen, in his thesis of 1999, Monitor in het belang van de vennootschap. Een analyse van de functie van commissarissen ('Van Manen (1999)'), has quoted various opinions of Dutch supervisory directors among which we find the view that foreign board members help to change the tendency amongst Dutch directors to protect each other, p. 292. I have allo been informed by a supervisory board member of a major Dutch listed company that the foreign members of that supervisory board asked the board to consider a change to a one-tier board system.