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Investment screening in the Netherlands: legal provisions amended in the House of Representatives

On September 2021 we published an article on investment screening in the Netherlands. Since that date the legal provisions were amended in the House of Representatives. As a result, the manager of a business campus (in Dutch: beheerder van een bedrijfscampus) is added to the proposed act. This piece will first discuss the current status of the bill and then further discuss the manager of a business campus.

Current situation of the act

The Wet vifo (hereinafter: โ€œthe actโ€) can enter into force after the adoption of two general measures (in Dutch: amvbโ€™s) of administration and a ministerial regulation. These include a general measure that determines which sensitive technologies fall under the scope of the act, and a technical-legal general measure that prescribes how transactions must be reported for security assessments (which will be further elaborated upon in the ministerial regulation). In April 2022, the House of Representatives passed the proposal. On May 17, 2022, the Senate also passed the proposal without further amendments. The draft general measures were placed in an online consultation this summer. Online consultation is a form of consultation in which citizens, businesses and institutions receive information about the legislative proposal via the internet and can make suggestions about them. Reactions to the consultation have been taken into account in the draft general measures. The general measure about sensitive technologies was submitted to the parliament on November 25th.

When the law will come into force is yet to be determined by royal decree (in Dutch: Koninklijk besluit). It is expected that the act, including lower regulations, will come into effect in the first half of 2023. It is important to note that once the law enters into force, it will have retroactive effect until 8 September 2020. The retroactive effect is included to prevent strategic behavior and evasion of the investment test.

The act applies to certain acquisition activities if they relate to a target company that is:

  1. a vital provider; or
  2. a manager of a business campus; or
  3. a company that is active in sensitive technology.

The category of “manager of a business campus” was brought within the scope of the act through an adopted amendment and is defined in it as “a company that manages a territory on which a collection of enterprises is active and where public-private cooperation is carried out on technologies and applications that are economically and strategically important to the Netherlands.”

Manager of a business campus

The act was adopted by the House of Representatives with an amendment due to potential implementation problems based on the original text of the law. The amendment resulted in an expansion of the act including the managers of business campuses as a separate category. An investment, merger, or acquisition in a manager of a business campus will be subject to assessment and, in extreme cases, may be prohibited.

Six elements are listed in the act that can be used to determine if a business campus manager is involved:

  • Enterprise
  • Territory
  • Management
  • Collection of enterprises
  • Public-private cooperation
  • Technologies and applications that are economically and strategically important to the Netherlands

In addition to these elements researchers from Birch and The Hague Centre for Strategic Studies have drafted a framework that can determine which business campuses and their managers now fall within the scope of the Act. This should be clear in the context of legal certainty. The framework starts with posing three questions at campus level:

  • Is there a collection of enterprises on a defined territory?
  • Is sensitive technology being used?
  • Is there public-private cooperation involved?

If the answer to all three of these questions is affirmative, additional questions are asked at the level of management tasks regarding general facilities, specific facilities, access to and/or programming of the ecosystem, and distribution of management tasks. The risks of potential management tasks are weighted and elaborated in a risk matrix (see link below). The goal is to indicate whether the potential risks are sufficiently high to require notification under the act. In this context, the risk (in the case of an acquisition) is greater for most management tasks as the influence on a campus becomes more centralized. This risk matrix serves as a guidance for the campus manager to determine if coverage under the act is applicable and therefore requires notification for a security assessment (see schematic representation of risk matrix here: Campusbeheerders en de Wet VIFO: Invulling van de wet veiligheidstoets investeringen, fusies en overnames voor campusorganisaties – HCSS.

The research will form the basis for a policy rule. The minister aims to establish and publish the policy rule in the State Gazette by the middle of 2023.

More information

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