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Request for an EGM to dismiss Chairman of the Board does not meet required standards under Dutch law
AkzoNobel N.V. (AKZA.AS; AKZOY)
AkzoNobel strongly respects and greatly values its shareholders and regularly engages in an open and direct dialog with them to better understand and consider their perspectives.
Within the last week alone, the management of AkzoNobel has held face-to-face meetings with shareholders at an Investor Day followed by an extensive international shareholder roadshow and today’s Annual General Meeting (AGM). This dialog will continue to be intensive and the valued insights of AkzoNobel shareholders will be carefully considered by the Board of Management and the Supervisory Board.
AkzoNobel fully supports the rights that shareholders have under Dutch law. One of these rights is for shareholders representing at least 10% of issued share capital to request a general meeting as qualified by Dutch law. According to Dutch law, this includes meeting standards of reasonableness and fairness and a ‘legitimate interest’ test.
In its statement of April 12, 2017, AkzoNobel confirmed receipt of a request from certain shareholders, led by Elliott Advisors, to hold an EGM with the sole agenda item of dismissing Mr. Antony Burgmans as Chairman of the Supervisory Board. The Supervisory Board subsequently conducted a thorough review in response to this request and has taken detailed legal advice (see also footnotes below).
The Supervisory Board has concluded that the request from Elliott Advisers to dismiss the Chairman does not meet the standards required under Dutch law. The request is irresponsible, disproportionate, damaging and not in the best interests of the Company. Given the sole agenda item, there is no legal basis for calling an EGM.
Byron Grote, Deputy Chairman of the Supervisory Board said:
“Following a thorough review and careful considering of this request the Supervisory Board reiterates its unanimous support for Mr. Burgmans in his role as Chairman. His unique experience in international business and global transactions is crucial to the Company. He has played an important role in overseeing and supporting management in the transformation of the Company in recent years, contributing to its significantly improved performance. It is essential that the steady and experienced hand of the Supervisory Board and its Chairman remains focused on the task of steering the company at this crucial time.”
Notes to Editors:
- The Articles of association of AkzoNobel do not provide for the right of shareholders to call an Extraordinary General Meeting ("EGM"). Statutory Dutch law does not grant a right to shareholders to call a meeting either. It provides that a request can be made to the Boards of Dutch companies to call a meeting as qualified by Dutch law. This includes that shareholders hold more than 10% of the issued capital and standards of reasonableness and fairness and a 'legitimate interest' test are met.
- Under Dutch law, the Supervisory Board must always act in accordance with the best interests of AkzoNobel and its stakeholders and with a focus on long term value creation. On that basis, the Supervisory Board has carefully reviewed whether the relevant standards for calling an EGM under Dutch law have been met. For the reasons set out above it has been concluded that this is not the case.
- In many U.S. states, including Delaware, New York and Pennsylvania, shareholders of a public company do not have a general statutory right to call a special (extraordinary) general meeting of shareholders (EGM) unless the organizational documents of the company specifically provide that right. Even if such a right is provided in the articles of a Pennsylvania corporation, Pennsylvania law currently mandates that the minimum level of ownership required to call a special meeting cannot be less than 25%. PPG, which is incorporated in Pennsylvania, does not provide shareholders with a right to call a special meeting (even at the 25% level).