Financial Markets Newsletter - November 2011

Author:Ms Francine Schlingmann, Joost Schutte and Marnix Somsen
Profession:De Brauw Blackstone Westbroek N.V.


Financial law changes effective 1 January 2012

Licence requirements for investment objects, securities and participation rights: the threshold for exemption from the licence requirement is raised from EUR 50,000 to EUR 100,000 per investment object, security or participation right. PMP: the threshold for qualifying as a professional market party is raised from EUR 50,000 to EUR 100,000. Wild West sign: offerors of securities that are exempt – pursuant to section 5:3 paragraph 1 FMSA – from the prohibition on offering securities to the public without an approved prospectus, must use a mandatory exemption notice (the mandatory texts and symbols can be found on the website of the AFM). No exemption notice is required for offers to qualified investors. Bill introducing special measures against financial undertakings ("Intervention Act")

The Dutch government believes it has insufficient tools to deal with problems in the financial sector. Bankruptcy is often the only available outcome. This is why the government is proposing to extend and strengthen its powers to intervene in financial undertakings. A bill to that effect was recently submitted to the Second Chamber of the Dutch parliament.

The bill introduces two categories of measures:

The first category relates to timely and efficient liquidation of failing banks or insurers. The bill gives the Dutch Central Bank (DNB) the power to draw up a plan behind the scenes for the transfer of deposits, other liabilities or assets, or shares to a private third party. This third party could be a bridge institution. DNB could also seek a court decision ordering a transfer scheme, emergency scheme or bankruptcy. A request to order a transfer scheme must be accompanied by the transfer plan. A request for an emergency scheme or bankruptcy may be filed without the plan. After the court order, the transfer plan is implemented by the transferor, the emergency administrator or the bankruptcy trustee. The second category of measures is intended to safeguard the stability of the financial system as a whole. To that end, the bill grants two special powers to the Minister of Finance: the power to intervene in the internal affairs of a financial institution and the power, where necessary, to take over ownership. These two powers may only be exercised in the exceptional situation that there is a serious and immediate risk to the stability of the financial system. To ensure and improve the effectiveness of the proposed measures, the government is also proposing to limit counterparties in exercising certain rights after one of the above measures has been put in place (i.e. rights arising from events of default or notification events).

Last, the bill contains provisions on the financing of the deposit guarantee system and an amendment of the Banking Act in connection with Emergency Liquidity Assistance.

Bill on funding of financial supervision

This bill provides how the costs of the AFM and DNB are financed. It will replace the funding system that has been in place since 2004. The proposed system is based on a fixed government contribution to the costs of financial supervisors. To control public spending, the contribution will no longer be linked to the...

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