Various amendments to the Financial Supervision Act (Wet op het financieel toezicht, the "FSA") were recently adopted by the First Chamber of the Dutch Parliament of the Amendment Act Financial Markets 2010 (Wijzigingswet financiële markten 2010, the "Amendment Act").
The Amendment Act contains a few substantive amendments to the FSA, and numerous technical amendments as well. Among the most significant changes are the following. Unless mentioned otherwise, all entered into force on 1 July 2011.
Currently, the FSA inter alia provides issuers of investment objects and issuers of participation rights in a collective investment scheme with the possibility to request for a major dispensation from the Authority for the Financial Markets (Autoriteit Financiële Markten, the "AFM") from all license requirements and only to remain subject to the continuous supervision rules. The Amendment Act extends dispensation with respect to these offers to continuous supervision, except that a major dispensation no longer applies for offerings of participations rights in undertakings for collective investment in transferable securities ("UCITS").
Voluntary supervisory regime
Certain foreign institutional investors are only allowed to invest in collective investment schemes that are under supervision of a competent authority. Pursuant to the Amendment Act, issuers of participation rights that are offered to qualified investors only will be offered the opportunity to voluntary submit to the supervisory regime for collective investment schemes. Opting for this regime will allow the aforementioned investors to invest in offerings that would otherwise not be available to them.
2.5 million exemption
Pursuant to Article 53 Exemption Regulation FSA (Vrijstellingsregeling Wft), offers of securities to the public and the admittance of securities to trading on a regulated market situated or operating in the Netherlands are exempted from the obligation to publish an approved prospectus if the total consideration of the offer, calculated over a period of twelve months, does not exceed EUR 2.5 million. Currently, the 2.5 million exemption has a significant scope as it applies per category and class of securities. For example a share and a bond are different categories of securities and bonds with different features, e.g. different terms or interest rates, are being considered as different classes of bonds.
The Financial Markets Amendment Regulation 2010 (Wijzigingsregeling Financiële Markten 2010) made several changes to this Article, which took effect when the Amendment Act entered into force. As a result of the amendments, the 2.5 million exemption (i) is clarified by stating that calculation of the offer takes place at the level of the European Economic Area and not on a country-by-country basis, (ii) will only apply to different categories of securities and no longer to different classes of securities, (iii) will have to include offers by group companies, and (iv) will have to be stated in advertising and documents announcing the offer or listing in a manner made consistent with the mandatory exemption notice as set out in the Amendment Act.
Adjustment of EUR 50,000 thresholds
The threshold for exemption from the licence requirements for investment objects and participation rights in a collective investment scheme will be raised from EUR 50,000 to EUR 100,000. Also the exemptions for offers addressed to investors who acquire securities in denominations of at least EUR 50,000 and offers with a subscription of at least EUR 50,000 will be raised to EUR 100,000. These thresholds are raised to prevent retail investors from investing in funds that are exempt from supervision and are based on and in accordance with directive (2010/73/EU) amending the Prospectus Directive (2003/71/EC) that entered into force on 31 December 2010. This amendment will enter into force on 1 January 2012.
Mandatory exemption notice
The mandatory exemption notice will be extended with effect from 1 January 2012. Issuers who are exempt from the obligation to publish a prospectus upon an offering will be required to notice such an exemption together with the offer or the publicity concerning the offer. This sign of which the format has been determined by the AFM must state that the offer of securities is made without an approved prospectus. The use of the exemption notice is not required if the offer is exclusively made to qualified investors (gekwalificeerde beleggers). Issuers of rights of participation in collective investment schemes (rechten van deelneming) or investment objects (beleggingsobjecten) are already required to mention that they are not under supervision, but will have to comply with the format of the notice as determined by the AFM.
The AFM has published rules concerning the format of the notice. The official publication on how to use the rules will follow later this year by amendment of the Further Regulations on the Supervision of the Conduct of Financial Enterprises (Nadere regeling gedrachtstoezicht financiële ondernemingen Wft). As of 1 January 2012 the text of the mandatory notice will be as follows:
In the event of an exempted investment:
"Attention! This investment falls outside AFM supervision. No license required for this activity."
In the event of an exemption from the prospectus publication:
"Attention! This investment falls outside AFM supervision. No prospectus required for this activity."
These mandatory notifications will be accompanied by a symbol consisting of a thinking person with a question mark.
Click here to view the full text of the Amendment Act (Dutch only).