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Investors forced to reveal intentions on Dutch stocks

NETHERLANDS - Shareholders will in future have to announce when they hold 3% of shares in a Dutch listed company, instead of the current 5%, and disclose why they are holding them, the Netherlands government has revealed.

The Dutch Cabinet will in future require shareholders with more than 3% of a listed company to reveal their intentions while holding the shares - suggesting companies will have to disclose whether they hold them merely for revenue generation or whether they intend to use their positions as shareholder activists and exert pressure on a company's activities.

At the same time, the Cabinet is also threatening to focus more intensely on the activities of hedge funds and private equity in the future.

These remarks came in a reaction to the advice given by the so-called Commission Frijns, a corporate governance monitoring commission lead by former ABP Investments chief executive Jean Frijns.

Under these new rules, the management of a company will know at an early stage who its most important stakeholders are, argues the cabinet.

It also says it agrees with the commission no fundamental legislative changes are necessary, though added "additional rules of play" would create a more level playing-field for the various stakeholders.

Other advice from the Commission Frijns which the cabinet will follow is shareholders should be required to hold a stake of 1% before being able to put topics on companies' annual general meeting's agenda.

Moreover, "the cabinet will internationally discuss the negative consequences of ‘securities lending' and participating in the European developments regarding securities lending," said Wouter Bos, the Dutch Minister of Finance.

Dutch securities services bank KAS Bank argued earlier this week pension funds will incur financial losses if legislation preventing the use of voting rights on loaned securities is implemented.

Bos added the cabinet will also conduct research into hedge funds and private equity to get a "clearer image" of these types of investor.

Elsewhere, the European Commission has announced it has formally adopted the shareholder rights directive.

Charlie McCreevy commented: "These new rules will mean that shareholders, no matter where they are located in the EU, can have their say about the way companies are run and can hold management accountable."

The directive will increase shareholders' access to information, but also the ability to exercise their rights.

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