Financial law in the Netherlands / edited by Marcel C.A. van den Nieuwenhuijzen.
2010
KKM940 .F56 2010 (Map It)
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Title
Financial law in the Netherlands / edited by Marcel C.A. van den Nieuwenhuijzen.
Published
Alphen aan den Rijn, The Netherlands : Kluwer Law International, [2010]
Distributed
Frederick, MD : Sold and distributed in North, Central, and South America by Aspen Publishers
Copyright
©2010
Call Number
KKM940 .F56 2010
Former Call Number
Neth 640 F49 2010
ISBN
9789041128577 (hardback : acid-free paper)
9041128573 (hardback : acid-free paper)
9041128573 (hardback : acid-free paper)
Description
xxxv, 536 pages : illustrations ; 25 cm
System Control No.
(OCoLC)688562061
Bibliography, etc. Note
Includes bibliographical references and index.
Record Appears in
Added Author
Table of Contents
About the Authors
v
List of Abbreviations
xxxi
English-Dutch List of Legislation
xxxiii
Preface
xxxvii
ch. 1
Introduction to Financial Law in the Netherlands / M.C.A. van den Nieuwenhuijzen
1
1.1.
Introduction to the Book
1
1.2.
Summary of the Book
2
1.3.
Introduction to Banking
6
1.3.1.
Introduction
6
1.3.1.1.
What Is a Loan Agreement?
6
1.3.1.2.
Why Borrow and Lend?
6
1.3.2.
Types of Loan
7
1.3.2.1.
Overdraft
7
1.3.2.2.
Term Loan
7
1.3.2.3.
Revolving Loan
7
1.3.2.4.
Bridging Loan
8
1.3.3.
Bilateral, Club and Syndicated Loans
8
1.3.3.1.
Bilateral Loan
8
1.3.3.2.
Club Loan
8
1.3.3.3.
Syndicated Loan
9
1.3.4.
Sub-participation
9
1.3.4.1.
Funded Participation
9
1.3.4.2.
Risk Participation
9
1.3.4.3.
Credit Default Swaps
10
1.3.5.
Secured and Guaranteed Loans
10
1.3.6.
Banking Documentation and the LMA
11
1.4.
Introduction to Project Finance
11
1.4.1.
Introduction
11
1.4.2.
Basics
12
1.4.3.
Sponsors
12
1.4.4.
Project Borrowers
13
1.4.5.
Governments
14
1.4.6.
Lenders
15
ch. 2
Types of Securities and the Statutory Framework Applicable to Securities / L.J. Silverentand
19
2.1.
Introduction
19
2.2.
Types of Securities
20
2.2.1.
General
20
2.2.2.
Equity Securities
20
2.2.3.
Debt Securities
21
2.2.4.
Hybrid Securities
21
2.2.5.
Derivatives
21
2.2.6.
Statutory Framework
23
2.3.
Historical Perspective
23
2.3.1.
Sectoral Model
23
2.3.2.
Twin Peaks Model
23
2.3.3.
Changes in Legislation
24
2.4.
European Influences
25
2.4.1.
Introduction
25
2.4.2.
Financial Services Action Plan
25
2.4.3.
Lamfalussy Process
26
2.4.4.
Directives Related to the Securities Market
26
2.4.4.1.
General
26
2.4.4.2.
Prospectus Directive
27
2.4.4.3.
MiFID
28
2.5.
Offering of Securities
29
2.5.1.
General
29
2.5.2.
Definition of Securities
29
2.5.3.
Investment Institutions
30
2.5.4.
Exceptions/Exemptions
31
2.5.4.1.
General
31
2.5.4.2.
One Person
31
2.5.4.3.
Money Market Instruments
31
2.5.4.4.
Qualified Investors
32
2.5.4.5.
Less than 100
33
2.5.4.6.
50,000-Exceptions
33
2.5.4.7.
Other Exceptions and Combinations of Exceptions
33
2.6.
Investment Institutions
34
2.6.1.
General
34
2.6.2.
Multiple Prohibitions
34
2.6.3.
Definition of Investment Institution
35
2.6.4.
Exceptions/Exemptions
35
2.6.4.1.
General
35
2.6.4.2.
Qualified Investors
35
2.6.4.3.
Less than 100
35
2.6.4.4.
50,000-Exemptions
36
2.6.4.5.
Designated State-Exception
37
2.7.
Debt Instruments
37
2.7.1.
General
37
2.7.2.
Multiple Prohibitions
38
2.7.3.
Restricted Circle
38
2.7.4.
Professional Market Parties
38
2.7.5.
Issuance of Notes in Accordance with Part 5.1 FSA
39
2.7.6.
Group Exception
40
2.8.
Provision of Investment Services and Performance of Investment Activities
40
2.8.1.
General
40
2.8.2.
Investment Services/Investment Activities
41
2.8.3.
Definition of Financial Instruments
42
2.8.4.
Exceptions/Exemptions
44
2.8.4.1.
General
44
2.8.4.2.
European Passport
44
2.8.4.3.
Designated States-Exception
44
2.9.
Conclusion
45
ch. 3
Primary and Secondary Offerings of Securities / J.H. Horsmeier
47
Introduction
47
Primary Markets
47
3.1.
Prospectus
47
3.1.1.
History
47
3.1.2.
Requirements
48
3.1.3.
Offer to the Public
48
3.1.4.
Admission to Trading on a Regulated Market
49
3.1.5.
Securities
50
3.2.
Contents of a Prospectus
50
3.2.1.
Prospectus Regulation
51
3.2.2.
Base Prospectuses
53
3.2.3.
Incorporation by Reference
54
3.2.4.
Supplement
54
3.3.
Prospectus Approval
55
3.3.1.
Authority of the AFM
56
3.3.2.
Timetable
57
3.3.3.
Publication
58
3.4.
Advertising
59
3.5.
Exemptions from Prospectus Requirements
60
3.5.1.
General Exemptions
60
3.5.2.
Offer to the Public in the Netherlands
61
3.5.3.
Admission to Trading on a Regulated Market in the Netherlands
62
3.6.
European Passport
63
3.6.1.
Passporting from the Netherlands
64
3.6.2.
Passporting into the Netherlands
65
Secondary Markets
66
3.7.
Offering Securities in the Secondary Market
66
3.7.1.
Section 54(1) Exemption Regulation
66
3.7.2.
Section 54(2) Exemption Regulation
68
3.7.3.
Section 54(3) Exemption Regulation
68
Proposed Changes to the Prospectus Directive
68
3.8.
Changes Proposed by the European Commission
68
3.8.1.
Summary
69
3.8.2.
Rights Issues
70
3.8.3.
Home Member State
70
3.8.4.
Retail Cascade Offers
70
3.8.5.
Other
71
Finally
71
3.9.
Conclusion
71
ch. 4
The Regulation of Investment Firms in the Netherlands / W.J. Horsten
73
4.1.
Introduction
73
4.2.
Investment Firms: Providing Investment Services and Performing Investment Activities
74
4.2.1.
Providing Investment Services
74
4.2.2.
Performing Investment Activities
75
4.3.
Financial Instruments
75
4.4.
Authorisation as an Investment Firm
76
4.4.1.
Exemptions from Licence Requirement
76
4.4.2.
Licence Requirements
78
4.4.2.1.
Competence
79
4.4.2.2.
Trustworthiness
79
4.4.2.3.
Policy Regarding Integrity in the Conduct of Business
79
4.4.2.4.
Minimum Number of Persons that Determine the Day-to-Day Policy and the Place from Which They Conduct Their Activities
80
4.4.2.5.
Control Structure
80
4.4.2.6.
Manner in Which the Conduct of Business is Organised
80
4.4.2.7.
Adequate Measures for the Protection of the Rights of Clients
82
4.4.2.8.
Adequate Policy Regarding the Prevention of Conflicts of Interest
83
4.4.2.9.
Minimum Own Funds
83
4.4.2.10.
Solvency
83
4.4.2.11.
Qualifying Holdings in Investment Firms
84
4.4.2.12.
Exemptions and Dispensation
84
4.4.3.
Granting and Withdrawal of Licence
85
4.4.4.
Ancillary Services
86
4.5.
Certain Organisational and Operational (Conduct of Business) Requirements
86
4.5.1.
Client Classification
86
4.5.1.1.
Professional Clients
87
4.5.1.2.
Eligible Counterparties
87
4.5.1.3.
Non-professional Clients
87
4.5.1.4.
Consequences of Classification; Eligible Counterparties
88
4.5.1.5.
Classifying Large Undertakings as Eligible Counterparty
88
4.5.1.6.
Opt-Up or Opt-Down
88
4.5.2.
Provision of Information
90
4.5.3.
KYC and Advising or Individual Portfolio Management: Suitability
91
4.5.4.
KYC and Execution Only: Appropriateness
92
4.5.5.
Further Duty of Care
93
4.5.6.
Client File
94
4.5.7.
Best Execution
95
4.5.8.
Client Order Handling
97
4.5.9.
Inducements
98
4.5.10.
Dispensation
98
ch. 5
Clearing and Settlement in the Netherlands / B.J.A. Zebregs
99
5.1.
General
99
5.1.1.
Introduction
99
5.1.2.
Consolidation of Infrastructure
100
5.1.2.1.
Consolidation of Systems
100
5.1.3.
A New Competitive Landscape
101
5.2.
Clearnet
103
5.2.1.
Main Functions Clearnet
103
5.2.1.1.
Clearing Member Structure
104
5.2.1.2.
The Clearing Process
105
5.2.2.
Contractual Documentation
108
5.2.2.1.
Applicable Law
108
5.2.3.
General and Individual Clearing Members
109
5.2.3.1.
Licence and Notification Requirements
110
5.2.3.2.
Licence Criteria
111
5.2.4.
Admission of Securities
112
5.2.5.
Collateral and Margins
113
5.2.5.1.
Guarantee Fund
115
5.2.6.
Net Fails and Events of Default
115
5.2.7.
Supervision of Clearnet
116
5.2.8.
Finality
117
5.3.
Euroclear Nederland
118
5.3.1.
Main Functions
118
5.3.2.
Contractual Documentation
120
5.3.2.1.
Applicable Law
121
5.3.3.
Admitted Institutions
121
5.3.4.
Admission of Securities
123
5.3.4.1.
Restrictions
124
5.3.4.2.
Admission Procedure
125
5.3.5.
Deposits and Withdrawals
127
5.3.5.1.
The Master Deed
128
5.3.6.
Settlement on the ESES Platform
129
5.3.6.1.
Securities Leg and CSD of Reference
129
5.3.6.2.
Cash Leg and the Integrated Model
130
5.3.6.3.
Target2 Securities
132
5.3.7.
International Network
133
5.3.8.
Supervisory Regime Euroclear Nederland
133
5.3.9.
Finality
134
ch. 6
Custody of Securities and Book-Entry Transfer of Rights Regarding Securities / B.F.L.M. Schim
135
6.1.
Introduction
135
6.2.
Background of Securities Custody Structures
136
6.2.1.
Immobilisation and Dematerialisation of Securities
136
6.2.2.
Protecting Investors from Intermediary Risk
137
6.2.3.
Book-Entry Transfers of (Rights Regarding) Securities
138
6.2.4.
Structure of Book-Entry Securities Systems
138
6.3.
Regulatory Framework for Custody of Securities in the Netherlands
139
6.3.1.
General
139
6.3.2.
Sections 6:14 et seq. of the Further Regulation
140
6.4.
The Securities Giro Transfer Act
141
6.4.1.
Scope of Applicability
141
6.4.1.1.
Financial Instruments Eligible for Designation as Securities
142
6.4.1.2.
Institutions Eligible for Admission as an Admitted Institution
143
6.4.1.3.
Practical Complications in Respect of the Limited Scope of Applicability of the SGTA; Proposed Amendments to the SGTA
143
6.4.2.
Structure of the SGTA
145
6.4.3.
The Co-ownership Regime
145
6.4.3.1.
Sections 12 and 38 SGTA
145
6.4.3.2.
Elements of a Collective Deposit and a Giro Deposit
147
6.4.3.3.
Short Overview of the Rights of a Co-owner in a Collective Deposit
148
6.4.4.
Issues of Securities for Inclusion in a Collective Deposit
149
6.4.4.1.
Proposed Amendment to the SGTA
151
6.4.5.
Withdrawal of Securities
151
6.4.5.1.
The Notion of Withdrawal of Securities
151
6.4.5.2.
Withdrawal of securities in the Case of a Shortfall of Securities
152
6.4.5.3.
Making Withdrawal of Securities Impossible
153
6.4.6.
The Book-Entry Delivery of a Co-ownership Interest
154
6.4.6.1.
Sections 16, 17 and 41 SGTA: General Remarks
154
6.4.6.2.
Legal Nature of a Book-Entry ̀Delivery'
155
6.4.7.
Recourse against a Co-ownership Interest in a Collective Deposit
158
6.4.7.1.
Pledge
158
6.4.7.2.
Attachment
160
6.4.8.
Dematerialisation of Securities
161
6.4.8.1.
Global Certificates
161
6.4.8.2.
Registered Securities
162
6.4.8.3.
Proposed Amendments to the SGTA
162
6.4.9.
Shareholder Rights
163
6.4.9.1.
Who Is the Shareholder?
164
6.4.9.2.
Exercising Shareholder Rights
165
6.5.
Special Securities Custody Entities
166
6.5.1.
Practical Importance of Special Securities Custody Entities
166
6.5.2.
Legal Framework and Main Features of Special Securities Custody Entities
167
6.5.3.
Some Practical Complications with Respect to Special Securities Custody Entities
168
6.6.
The Conflict of Laws
168
6.6.1.
Introduction
168
6.6.2.
Section 16 Conflict of laws (Property) Act: PRIMA
169
ch. 7
Listing and Delisting / T.M. Stevens
171
7.1.
The Euronext Amsterdam Securities Market
172
7.1.1.
NYSE Euronext Regulatory Structure
172
7.1.2.
Euronext Amsterdam Stock Exchange Regulation
173
7.1.3.
Types of Markets Operated by Euronext Amsterdam
175
7.1.4.
Types of Securities that Can Be Listed on Euronext Amsterdam
176
7.2.
Admission to Listing on Euronext
177
7.2.1.
Introductions and Follow-On Admissions
177
7.2.2.
Listing Agent
178
7.2.3.
Listing Agreement
179
7.2.4.
Admission Procedure
180
7.2.5.
Contents of Admission Request
181
7.3.
Introductions
182
7.3.1.
General Admission Requirements
182
7.3.2.
Additional Requirements for Shares, Depositary Receipts for Shares and Equity Securities
184
7.3.3.
Additional Listing Requirements for Corporate Bonds
185
7.3.4.
Additional Listing Requirements for Securities Issued by Investment Funds and Investment Companies
185
7.3.5.
Additional Listing Requirements for Other Securities
186
7.4.
Conditional Admission (Ìf-and-When-Issued/Delivered')
186
7.5.
Follow-On Admissions
187
7.6.
Admission to Listing on Alternext Amsterdam
189
7.6.1.
Admission Criteria
189
7.6.2.
Admission Procedure
190
7.7.
Suspension of Listing
191
7.8.
Delisting
191
7.8.1.
Delisting at the Initiative of Euronext
192
7.8.2.
Delisting at the Initiative of the Issuer
192
ch. 8
Takeover Bids and Anti-takeover Devices in the Netherlands / P.A. van der Schee
195
8.1.
Netherlands Regulatory Framework on Takeover Bids: Introduction
195
8.1.1.
The Regulatory History of Public Takeovers
195
8.1.2.
From S̀elf Regulation' to Statutory Rules
196
8.1.3.
The Takeover Directive and Its Implementation in Netherlands Law
196
8.1.4.
The Scope of Netherlands Regulation on Public Takeovers
197
8.1.5.
Public Oversight by the AFM and Its Means for Enforcement: General
198
8.1.6.
AFM Oversight on Public Takeover Bids
199
8.1.7.
The Role of the Judiciary (Enterprise Chamber of the Amsterdam Court of Appeal)
200
8.2.
Typology of Offers: Mandatory Bids, Competing Bids, Friendly and Unfriendly Bids
201
8.2.1.
Definitions and Different Categories of ̀Public Offer'
201
8.2.2.
Mandatory Bid (Section 5, 13th Directive; Sections 5:70-5:73, 5:80a and 5:80b FSA; Section 24-26 Decree and Section 2 Exemption Decree Takeover Bids FSA (Vrijstellingsbesluit overnamebiedingen Wft)
202
8.2.3.
Exemptions from Mandatory Bid (Sections 5:71(1) and (2), 5:72(3), 5:81(2) FSA and Section 2 Exemption Decree Takeover Bids FSA
203
8.2.4.
Competing Bids
203
8.3.
Disclosure and Other Rules Preceding a Public Offer
204
8.3.1.
Preparation
204
8.3.2.
Building a S̀tarting Position'; Disclosure of Holdings and Acquisitions
204
8.3.3.
General Rules on Disclosure of Price Sensitive Information Remain Applicable in Pre-bid Period; Put Up or Shut Up
206
8.4.
Public Announcement of a Bid
206
8.4.1.
When Does a First Announcement of a Public Bid Have to Be Made?
206
8.4.2.
Announcement Request for AFM Approval (within Twelve Weeks of the First Announcement)
207
8.4.3.
Disclosure Rules on Transactions in Target's Securities after First Announcement
207
8.4.4.
Certain Funds
207
8.5.
Offering Circular and Offer Itself
208
8.6.
Approval by the AFM
208
8.7.
Definitive Offer
208
8.8.
The Response of the Target and Meeting of Shareholders to Discuss the Offer; Position Statement
209
8.9.
Acceptance and Execution
209
8.10.
Final Execution
209
8.11.
Extension of Bid and Statutory Squeeze Out in the Case of >95%
210
8.12.
Alternative Squeeze Out Mechanisms (<95%)
210
8.13.
Sell-Out Rights (To Protect Remaining Small Minority)
211
8.14.
Contested Takeovers and Anti-takeover Mechanisms
211
8.14.1.
A Contested Takeover and Anti-takeover Devices: Corporate Law and Securities Regulation
211
8.14.2.
Protective Devices
213
8.14.3.
Takeover of ̀Managerial Control'
214
8.14.4.
Activating Anti-takeover Devices: The AFM and Court Actions (Enterprise Chamber)
214
8.14.5.
The ̀RNA Rules' of the Supreme Court: Proportionality and Limitations in Time
215
ch. 9
Investment Funds / M.C.A. van den Nieuwenhuijzen
217
9.1.
Introduction
217
9.2.
Investment Fund Developments
217
9.3.
Basics of an Investment Fund
220
9.3.1.
Collective Investment
220
9.3.2.
The Activities of an Investment Fund Must Qualify as Ìnvesting'
221
9.3.3.
Open-End and Closed-End Investment Funds
222
9.3.4.
Types of Fund Vehicles
224
9.3.5.
Types of Funds
225
9.3.5.1.
Buy-out Fund
225
9.3.5.2.
Venture Capital Fund
226
9.3.5.3.
Hedge Fund
226
9.3.5.4.
Fund of Funds
226
9.3.5.5.
Master-Feeder
226
9.3.5.6.
Retail Fund
227
9.3.5.7.
Exchange Traded Fund
227
9.4.
The Dutch Regulatory Framework for an Investment Fund
227
9.4.1.
Non-UCITS
227
9.4.1.1.
The Scope of Section 2:65 FSA
227
9.4.1.2.
Exceptions to, Exemptions and Dispensations from Section 2:65 FSA
228
9.4.1.3.
Dispensation
229
9.4.2.
UCITS
229
9.4.2.1.
Offering units in a Dutch UCITS to investors in the Netherlands
230
9.4.2.2.
Offering units in a non-Dutch UCITS to investors in the Netherlands
230
9.4.3.
Adequate Supervision Funds
230
9.5.
Future developments
231
9.5.1.
Proposed EU Directive for Managers of Alternative Investment Funds
231
9.5.2.
Voluntary Supervisory Regime for Investment Funds
235
9.5.3.
Wild West Sign (wildwestbordje)
236
9.6.
Fund Governance
236
9.6.1.
Committee Winter
236
9.6.2.
DUFAS Fund Governance Principles
237
9.6.3.
The Dutch Corporate Governance Code
237
ch. 10
Derivatives / M.S. Lotay
239
10.1.
Introduction
239
10.2.
What Is a Derivative?
240
10.3.
Derivatives and Jargon
241
10.4.
What Do Derivatives Do?
242
10.4.1.
Risk Management and ̀Hedging'
242
10.4.2.
Speculation and Investment
243
10.4.3.
Transactional Efficiency
244
10.4.4.
Exposures to Different Markets and Assets
244
10.4.5.
Price Discovery
245
10.4.6.
Economic and Social Growth
245
10.5.
The Derivative ̀Building Blocks'
246
10.6.
Forwards
246
10.6.1.
Introduction
246
10.6.2.
Commodity Forward: Worked Example
248
10.6.3.
Currency Forward: Worked Example
251
10.7.
Futures
253
10.7.1.
Introduction
253
10.7.2.
History
253
10.7.3.
Exchange Traded and Over-the-Counter Derivatives
254
10.7.4.
Margin
255
10.8.
Options
256
10.8.1.
Introduction
256
10.8.2.
Call Option and Put Option
256
10.8.3.
Option Styles
257
10.8.4.
Commodity Option: Worked Example
257
10.9.
Swaps
260
10.9.1.
Introduction
260
10.9.2.
Interest Rate Swap: Worked Example
260
10.9.3.
Comparative Advantage
263
10.9.4.
Counterparty Risk
263
10.9.5.
Interest Rate Caps, Floors and Collars
264
10.10.
Derivatives, Leverage and Exposure Mitigation
266
10.11.
Case Study: IBM and World Bank Swap
267
10.11.1.
Introduction
267
10.11.2.
IBM and the World Bank: Funding Problems
267
10.11.3.
Comparative Advantages
268
10.11.4.
The Result
270
10.11.5.
Conclusion
270
10.12.
Case Study: The Fall of Barings Bank
271
10.12.1.
Introduction
271
10.12.2.
Directional Play and Straddling
271
10.12.3.
The Failure to Hedge
273
10.12.4.
Bad Situation Made Worse
273
10.12.5.
Conclusion
275
10.13.
Derivatives Market and Controversy
276
10.14.
Credit Derivatives
277
10.14.1.
Introduction
277
10.14.2.
Credit Derivatives Terminology
278
10.14.3.
What Are Credit Derivatives?
278
10.14.4.
Credit Derivatives as ̀Derivatives'
280
10.14.5.
Credit Events
281
10.14.6.
Factors that Influence the Cost of Protection; the ̀Risk Premium'
282
10.14.7.
No Legal Transfer of Reference Obligation and Flexibility
282
10.14.8.
Business Objectives
283
10.14.9.
Credit Risk Transfer
283
10.14.10.
Regulatory Capital Efficiency
285
10.14.11.
Investment and Speculation
286
10.14.12.
Who Uses Credit Derivatives and Why?
287
10.14.12.1.
Banks
287
10.14.12.2.
Companies
289
10.14.12.3.
Investors
289
10.14.12.4.
Credit Derivatives Documentation
289
10.14.13.
Credit Derivative Products
290
10.14.13.1.
Credit Default Swaps
290
10.14.13.1.1.
Fixed Amount and Floating Rate Payer Calculation Amount
291
10.14.13.1.2.
Settlement Method
291
10.14.13.1.3.
Physical Settlement
291
10.14.13.1.4.
Cash Settlement
292
10.14.13.1.5.
Back-to-Back Hedging
293
10.14.13.1.6.
Protection Period and Maturity
294
10.14.13.1.7.
Basket CDS
294
10.14.13.1.8.
Credit Risk Transfer Not Eliminated
295
10.14.13.2.
Credit Linked Notes
295
10.14.13.3.
Securitisation through CLNs
297
10.14.13.4.
Total Return Swaps
299
10.14.14.
The Credit Derivatives Market and Controversy
300
10.15.
Summary
302
ch. 11
Repos and Securities Lending / W.A.K. Rank
303
11.1.
Introduction
303
11.2.
Documentation
308
11.2.1.
General
308
11.2.2.
GMRA
308
11.2.3.
GMSLA
310
11.3.
Validity and Enforceability under Dutch Law
311
11.3.1.
General
311
11.3.2.
Recharacterisation
312
11.3.2.1.
GMRA: Transfer of Purchased Securities
312
11.3.2.2.
GMRA: Transfer of Margin Securities
318
11.3.2.3.
GMSLA: Transfer of Loaned and of Margin Securities
318
11.3.2.4.
Limitation of Recharacterisation Risk
319
11.3.3.
Close-Out Netting Provisions
319
11.3.3.1.
No Insolvency Proceedings Have Occurred
320
11.3.3.2.
Insolvency Proceedings Have Occurred
320
11.3.3.2.1.
Insolvency Proceedings within the Scope of the Banks Insolvency Act
320
11.3.3.2.2.
Other Insolvency Proceedings Outside the Scope of the Banks Insolvency Act
322
11.3.3.3.
Early Termination
323
11.3.3.4.
Set-Off
325
11.3.3.5.
Currency
325
11.3.3.6.
Fixation
326
11.3.3.7.
Fraudulent Conveyance (Àctio Pauliana')
326
11.3.3.8.
Freeze
328
11.3.3.9.
Interest
329
11.3.4.
Choice of Law and Jurisdiction
329
11.3.5.
Attachments
330
11.4.
Regulatory Issues
332
11.5.
Conclusion
333
ch. 12
Securitisation / P.N.J. van Welzen
335
12.1.
Introduction
335
12.2.
Transaction Structures
336
12.2.1.
True Sale Transaction
336
12.2.2.
Secured Loan Transaction
337
12.2.3.
Synthetic Transaction
337
12.2.4.
Funding of Transactions
338
12.2.4.1.
Type of Securities
338
12.2.4.2.
Conduit Transactions
339
12.2.4.3.
Term Transactions
341
12.2.4.4.
Information about Transactions
343
12.3.
Dutch Special Purpose Vehicles
344
12.3.1.
Orphan versus Originator SPV
344
12.3.2.
Management
345
12.3.3.
Bankruptcy Remoteness
346
12.3.4.
Regulatory Position
347
12.3.4.1.
Dutch Banking Regulations
347
12.3.4.2.
Prospectus Requirements
348
12.3.4.3.
Consumer Credit Regulations
349
12.3.4.4.
Data Protection and Confidentiality Regulations
349
12.3.4.5.
Certain Mandatory Reporting Requirements
350
12.3.4.6.
Licensing Issues
350
12.4.
True Sale Transaction
351
12.4.1.
Legal Structure
351
12.4.1.1.
General
351
12.4.1.2.
Transfer Techniques
352
12.4.2.
Transfer Restrictions
353
12.4.3.
Security
354
12.4.4.
Selected Legal Issues
356
12.4.4.1.
Impact of Insolvency on Assignment
356
12.4.4.2.
Set-Off and Deduction
357
12.4.4.3.
Interest Rate Reset
358
12.5.
Secured Loan Transaction
359
12.5.1.
Legal Structure
359
12.5.1.1.
General
359
12.5.1.2.
Whole Business Securitisation
361
12.5.1.3.
Secured Loan Transactions in the Netherlands
361
12.5.2.
Security
364
12.5.3.
Selected Legal Issues
365
12.5.3.1.
Voidable Preference (Pauliana)
365
12.5.3.2.
Cool-Off Period (Afkoelingsperiode)
365
12.5.3.3.
Future Receivables
366
12.5.3.4.
Miscellaneous
367
12.6.
Synthetic Transaction
368
12.6.1.
Legal Structure
368
12.6.2.
Credit Default Swap
369
12.6.3.
Selected Legal Issues
371
12.6.3.1.
Re-characterisation Risk
371
12.6.3.2.
Conflict of Interests
373
12.6.3.3.
Confidentiality
375
12.7.
Credit Enhancement
377
12.7.1.
General
377
12.7.2.
Subordination
377
12.7.3.
Overcollaterisation
378
12.7.4.
Reserves
379
12.7.5.
External Support to SPV
380
12.7.6.
External Support to the SPV Creditors
380
12.8.
Transaction Security
381
12.8.1.
Legal Structure
381
12.8.2.
Security Types
382
12.8.3.
Security Trustee
383
12.8.4.
Selected Legal Issues
384
12.8.4.1.
Enforcement of Security
384
12.8.4.2.
Impact of Insolvency on Security
385
ch. 13
Covered Bonds / J.C. Westermann
387
13.1.
Introduction
387
13.1.1.
Covered Bonds in a Nutshell
387
13.1.2.
History
388
13.1.3.
Credit Crunch
388
13.1.4.
Regulated versus Contractual Covered Bonds
389
13.1.5.
Covered Bonds versus Securitisation
390
13.2.
How Covered Bonds Work
391
13.2.1.
Segregated Structure
391
13.2.2.
Guarantee Support Agreement
393
13.2.3.
Guarantee
395
13.2.4.
Cover Assets
396
13.2.5.
Asset and Liability Management
397
13.3.
Specific Covered Bond Regulations
398
13.3.1.
Section 22(4) UCITS Directive
398
13.3.2.
Consultation Process
399
13.3.3.
Regulatory Framework
399
13.3.4.
Regulated Covered Bonds
401
13.3.5.
UCITS- & CRD-Compliance
402
13.3.6.
Registration by DNB
404
13.3.7.
Ongoing Administration and Reporting Obligations
405
13.3.8.
Deregistration
406
13.4.
Some Benefits of Regulated Covered Bonds
406
13.4.1.
ECB Monetary Policy Operations
406
13.4.2.
Regulatory
407
ch. 14
Caretaking Duties and Investment Firms / S.B. van Baalen
411
14.1.
Introduction
411
14.2.
Some General Remarks on Private Law Caretaking Duties
412
14.2.1.
Contractual Basis for Caretaking Duties
412
14.2.2.
Fiduciary Relationship
413
14.2.3.
General Benchmark
415
14.3.
Some General Remarks on Public Law Caretaking Duties
416
14.3.1.
Financial Supervision Act (Wet op het financieel toezicht)
416
14.3.2.
The Investment Firm
417
14.3.3.
Counterparties
420
14.4.
Pre-contractual Information and Documentation
422
14.4.1.
Market Information and Advertisement
422
14.4.2.
Pre-contractual Duties to Disclose Information
424
14.4.3.
Know Your Customer
426
14.4.4.
Client Registration and Documentation
428
14.5.
Ongoing Caretaking Duties
429
14.5.1.
Ongoing Duties to Disclose
429
14.5.2.
Suitability
430
14.5.3.
Best Execution
432
14.5.4.
Provisions and Churning
435
14.5.5.
Caretaking Duties, Third Parties and Tied Agents
435
14.6.
Breach of Caretaking Duties
436
14.6.1.
Legal Grounds
436
14.6.2.
Remedies
438
14.6.3.
Contributory Negligence
440
ch. 15
Prospectus Liability in the Netherlands: Consequences of the Unfair Commercial Practice Rules (Wet Oneerlijke Handelspraktijken, Wet OHP) / A.C.W. Pijls
443
15.1.
Introduction
443
15.2.
Prospectus Liability Procedure
445
15.3.
Legal Obligation to Publish a Prospectus
446
15.4.
Book Building
448
15.5.
Legal Basis of Prospectus Liability
449
15.5.1.
Contractual Liability
449
15.5.2.
General Liability in Tort
449
15.5.3.
Specific Liability in Tort Claims
450
15.6.
The Unfair Commercial Practices Rules
452
15.6.1.
General Description
452
15.6.2.
Which Parties in the IPO Process Qualify as Traders?
454
15.6.3.
Information Published and Distributed Outside the Prospectus
457
15.6.4.
When Is a Commercial Practice Unfair?
459
15.6.5.
Burden of Proof
461
15.7.
The Element ̀Misleading'
464
15.7.1.
Double Standards
464
15.7.2.
Private Law Misleading Norm
466
15.7.3.
Relationship between the Misleading Element ant the Other Elements of Liability in Tort
468
15.8.
Fault
470
15.9.
Causation and Damages
471
15.9.1.
Introduction
471
15.9.2.
Two Actionable Claims
472
15.9.3.
First Claim
473
15.9.4.
Second Claim
475
15.9.5.
Three Possibilities to Substantiate the Second Claim
477
15.9.6.
Own Fault Doctrine
480
15.9.7.
European Perspective towards causation requirement
480
15.10.
Disclaimers
481
15.11.
Private International Law and Prospectus Liability Claims
482
15.12.
Concluding Remarks
484
ch. 16
Litigation and Securities Law / M. van Eersel
487
16.1.
Introduction
487
16.1.1.
Securities Litigation in the Netherlands
487
16.1.2.
Definition: Terminology
488
16.1.3.
Market Players: Potential Litigators
489
16.1.4.
Legal Areas
490
16.2.
Private Law
491
16.2.1.
Dutch Private Law Framework
491
16.2.2.
Matter in Dispute
491
16.2.2.1.
The Provision of Information by Issuers, Investment Institutions and Public Takeover Bidders
491
16.2.2.2.
Duty of Care of Investment Firms
494
16.2.2.3.
Unfair Commercial Practices
498
16.2.3.
Types of Procedure
499
16.2.3.1.
Individual Proceedings
499
16.2.3.1.1.
Civil Court Judge
499
16.2.3.1.2.
Enterprise Chamber
502
16.2.3.1.3.
Alternative Dispute Resolution
502
16.2.3.1.3.1.
Financial Services Complaints Tribunal (KIFID)
503
16.2.3.1.3.2.
Arbitration Committee
504
16.2.3.2.
Collective Proceedings
504
16.3.
Administrative Law
506
16.3.1.
Dutch Regulatory Law Framework
506
16.3.1.1.
FSA
506
16.3.1.2.
GALA
506
16.3.1.3.
Matter in Dispute
507
16.3.2.
Armamentarium of the AFM
507
16.3.2.1.
Supervision
507
16.3.2.2.
Enforcement
508
16.3.3.
Legal Protection: Regulatory or Administrative Proceedings
509
16.4.
Private Law and Administrative Law in Concert: Dangerous Liaisons
512
16.4.1.
Effect of Violations of the FSA in Relationships Governed by Private Law
512
16.4.2.
Disclosure of Voting Rights, Capital, Major Holdings and Capital Interest in Issuers
513
16.4.3.
Other Conflicts
513
16.5.
Criminal Law
514
16.6.
Administrative Law and Criminal Law in Concert: Dangerous Liaisons (ii)
516
16.6.1.
Punitive Sanctions in Administrative Proceedings
516
16.6.1.1.
Principle of Proportionality
517
16.6.1.2.
Rights of Defence
517
16.6.1.3.
Requisite of Guilt
517
16.6.1.4.
Principle of Legality
518
16.6.2.
Publication of Administrative Fines
518
16.6.3.
Una Via
518
16.7.
Disciplinary Proceedings
519
16.8.
Concluding Remarks
520
Index
523