Elliott Advisors (UK) Limited Provides Perspectives on Stichting Akzo Nobel

AMSTERDAM, LONDON and NEW YORK, March 27, 2017 /PRNewswire/ --

Elliott, a private investment firm founded in 1977, and its affiliates ("Elliott"), have a position representing over 3% of Akzo Nobel N.V. ("Akzo Nobel") making Elliott one of the Company's top 5 investors according to data available on Bloomberg.  Elliott would like to present its understanding of the rights of Stichting Akzo Nobel, on the basis of Dutch law and publicly available information, including Akzo Nobel's Annual Report, Extracts from the English translation of the Articles of Association of Akzo Nobel, and the Dutch Civil Code.

Elliott commented: 

"Regardless of Stichting Akzo Nobel, we believe shareholders hold the power to remove Supervisory Board and Management Board members." 

For more information, please see below: 

The Priority Shares 

• Stichting Akzo Nobel holds all of the Priority Shares in Akzo Nobel.
• The Stichting's Board consists of four members of Akzo Nobel's Supervisory Board.
• The meeting of holders of Priority Shares has nomination rights for Akzo Nobel's Supervisory Board and Management Board members, which the Stichting has indicated it will only use in extraordinary circumstances (including hostile takeovers):
  • Based on Elliott's analysis of Akzo Nobel's board nominations over the past six years, (i) Stichting Akzo Nobel has never used its nomination right during this period, and (ii) the appointments that were made during this period were based on (non-binding) nominations made by Akzo Nobel's Supervisory Board.

No call option over shares in Akzo Nobel 

• Stichting Akzo Nobel does not hold any call options over shares in Akzo Nobel, and, therefore, does not appear to have in place this often mentioned Dutch takeover defence mechanism:
  • Akzo Nobel's Management Board can issue up to 10% of outstanding capital under a delegation received from the General Meeting of Shareholders, and a further 10% of outstanding capital in connection with acquisitions, with such authorisations generally standard across Europe.
  • However, while the delegation is granted to the Management Board at the Annual General Meeting of Shareholders, shareholders can elect to not grant such delegation at the next Annual General Meeting of Shareholders, in which case the previous delegation will expire 18 months from April 20, 2016.

Nomination rights  

• If Stichting Akzo Nobel uses its extraordinary right to make a binding nomination for at least two nominees for each vacancy at the Supervisory Board and Management Board, then, according to the Company's Articles of Association, shareholders can only select between those nominees, and as such no other candidate can be nominated.

Removal rights 

• However, shareholders still hold the power to remove Supervisory Board and Management Board members (even those nominated by Stichting Akzo Nobel):
  • One or more shareholders jointly representing 10% of issued capital required to convene an EGM:
    • Art. 2:110 of the Dutch Civil Code.
  • This may potentially have to be done by means of judicial leave but the courts will not grant leave if such shareholders did not previously make a similar request with the Supervisory Board and Management Board.

• At such EGM, any and all Supervisory Board and Management Board members can be removed:
  • Regular majority vote in the event that over half of the issued capital is represented at the EGM.
  • 2/3 majority vote in the event that less than half of the issued capital is represented at the EGM.

Changes to the Articles of Association of Akzo Nobel  

• Any change to the Articles of Association does require the prior approval of the Stichting.
• However, only the shareholders have the power to decide to amend the Articles of Association.
• There is no unilateral power of the Stichting to change the Articles of Association of Akzo Nobel.

Legal Disclaimer 

This press release should not be viewed as legal advice.  No responsibility can be taken for any reliance on the contents of this press release.  Shareholders are urged to seek independent legal advice.

About Elliott  

Elliott Management Corporation was founded in 1977 and has one of the longest track records of any private investment fund manager operating today.  Employing a multi-strategy trading approach, the firm manages approximately USD 32 billion in two funds for a range of investors, including pension plans, sovereign wealth funds, endowments, foundations, funds-of-funds, high net worth individuals and families, and employees of the firm.  Elliott Management, which is headquartered in New York, has approximately 400 employees worldwide, with offices in the U.S., London, Hong Kong and Tokyo.  The firm's principal objective is to generate a return which is as high as is consistent with a goal of minimizing losses during adverse financial market periods. 

Appendix:  

Extracts from the English translation of the Articles of Association of Akzo Nobel N.V. 

Article 25  

25.1.    The number of members of the Supervisory Board shall be fixed by the Supervisory Board.

25.2    The members of the Supervisory Board shall be appointed to and removed from office by the General Meeting of Shareholders.

25.3    Appointment shall be made from a binding list of at least two nominees for each vacancy to be filled, such list to be drawn up by the meeting of holders of priority shares within three months of the date that the Board of Management shall by registered letter have invited the holders of priority shares to do so. If the binding list of nominees has not been drawn up in time, the General Meeting of Shareholders shall be free to nominate and appoint candidates of its own choice. Nominees for any one vacancy may not at the same meeting be nominated to fill any other vacancy.

25.4    As soon as possible upon the occurrence of a vacancy, the Board of Management shall send out the letter as referred to in the first sentence of paragraph 3 to the holders of priority shares. The right of the holders of priority shares to draw up a binding list of nominees as referred to in the preceding paragraph shall not be affected in the event that the letter of the Board of Management remains forthcoming.

25.5    In the event the meeting of holders of priority shares has not drawn up a binding list as referred to in paragraph 3, the Supervisory Board may make a nonbinding nomination consisting of one person.

25.6    A nomination shall be included as an item in the notice of the general meeting at which the appointment shall be considered, including a statement as to who has made the nomination.

25.7    In the event the meeting of holders of priority shares has not drawn up a binding list as referred to in paragraph 3, a resolution to appoint a member of the Supervisory Board, not nominated by the Supervisory Board, shall be adopted by at least two-thirds majority of the votes cast, if such majority represents more than half the issued share capital.

25.8    If the General Meeting of Shareholders has not appointed a person on the basis of a nomination referred to in paragraph 5 and no other person has been appointed with due observance of these Articles, a second General Meeting of Shareholders shall be convened within three months after the date of the original General Meeting of Shareholders. The provisions of paragraphs 3 up to and including 7 of this article shall apply in respect of this second General Meeting of Shareholders.

25.9    The General Meeting of Shareholders can only adopt a resolution to remove a member of the Supervisory Board from office by a two-thirds majority of the votes cast, in the event that less than half of the issued capital is represented, unless the Supervisory Board itself proposes the removal.

25.10    Nominations for persons to fill a vacancy made by shareholders must comply with the provisions of article 46, paragraph 4 of these Articles.

25.11    A second General Meeting of Shareholders as referred to in Section 120, subsection 3 of Book 2 of the Dutch Civil Code may not be convened.

Article 32  

32.1    The number of members of the Board of Management shall be fixed by the Supervisory Board.

32.2    A member of the Board of Management shall be appointed for a maximum period of four years, provided however that unless such member of the Board of Management has resigned at an earlier date, his term of office shall lapse on the day, in the fourth year after the year of his appointment, on the last day of the month in which the annual General Meeting is held. A member may be reappointed with due observance of the preceding sentence. By resolution of the General Meeting of Shareholders, the maximum period of four years may be deviated from. The Supervisory Board may draw up a retirement schedule for the members of the Board of Management who are appointed for a maximum period.

32.3    The members of the Board of Management shall be appointed to and removed from office by the General Meeting of Shareholders.

32.4    Appointment shall be made from a binding list of at least two nominees for each vacancy to be filled, such list to be drawn up by the meeting of holders of priority shares within three months of the date that the Board of Management shall by registered letter have invited the holders of priority shares to do so. If the binding list of nominees has not been drawn up in time, the General Meeting of Shareholders shall be free to nominate and appoint candidates of its own choice. Nominees for any one vacancy may not at the same meeting be nominated to fill any other vacancy.

32.5    As soon as possible upon the occurrence of a vacancy, the Board of Management shall send out the letter as referred to in the first sentence of paragraph 4 to the holders of priority shares. The right of the holders of priority shares to draw up a binding list of nominees as referred to in the preceding paragraph shall not be affected in the event that the letter of the Board of Management remains forthcoming.

32.6    In the event the meeting of holders of priority shares has not drawn up a binding list as referred to in paragraph 4, the Supervisory Board may make a nonbinding nomination consisting of one person.

32.7    A nomination shall be included as an item in the notice of the general meeting at which the appointment shall be considered, including a statement as to who has made the nomination.

32.8    In the event the meeting of holders of priority shares has not drawn up a binding list as referred to in paragraph 4, a resolution to appoint a member of the Board of Management, not nominated by the Supervisory Board, shall be adopted by at least a two-thirds majority of the votes cast, if such majority represents more than half the issued share capital.

32.9    If the General Meeting of Shareholders has not appointed a person on the basis of a nomination referred to in paragraph 6 and no other person has been appointed with due observance of these Articles, a second General Meeting of Shareholders shall be convened within three months after the date of the original General Meeting of Shareholders. The provisions of paragraphs 4 up to and including 8 of this article shall apply in respect of this second General Meeting of Shareholders.

32.10    The General Meeting of Shareholders can only adopt a resolution to remove a member of the Board of Management from office by a two-thirds majority of the votes cast, in the event that less than half the issued capital is represented, unless the Supervisory Board itself proposes the removal.

32.11    Nominations for persons to fill a vacancy made by shareholders must comply with the provisions of article 46, paragraph 4 of these Articles.

32.12    A second General Meeting of Shareholders as referred to in Section 120, subsection 3 of Book 2 of the Dutch Civil Code may not be convened.

Article 57  

57.1    The General Meeting of Shareholders can only decide to amend the Articles of Association if the provisions of the paragraphs 2, 4, 5 and 6 of this article have been met.

57.2    If a proposal to amend these Articles is to be submitted to a General Meeting of Shareholders, it shall be so stated in the notice convening the meeting, and a copy of the resolution containing the text of the proposed amendment shall be held available at the Company's office for inspection by every shareholder and other person entitled to attend meetings, as specified in paragraph 1 of article 45, from the date of the notice convening the meeting until the conclusion of such meeting.

57.3    A resolution to dissolve the Company may be adopted only with due observance of the provisions of this article and by a majority of at least two-thirds of the votes cast in a General Meeting of Shareholders at which at least two-thirds of the outstanding capital is represented. If the required proportion of outstanding capital is not represented at such a meeting, a second meeting may be convened for a date within four weeks of the date of the first meeting. At such second meeting a resolution to dissolve the Company may be adopted by a majority of at least two-thirds of the votes cast, regardless of the capital represented. In the notice convening such a meeting it shall be stated that and why a resolution may be adopted regardless of the part of the capital represented at such meeting.

57.4    A proposal to amend these Articles shall require the prior approval of the meeting of holders of priority shares. A proposal to dissolve the Company shall require the prior approval of the Supervisory Board.

57.5    Amendment of these Articles to the effect that the special rights accorded holders of any series of preferred shares are changed, shall require the prior approval of the meeting of holders of that series of preferred shares.

57.6    The General Meeting of Shareholders may only resolve upon an amendment of these Articles which changes the special rights enjoyed by holders of priority shares if such change has been approved by a meeting of holders of priority shares. A resolution to give such approval must be adopted by a majority of at least three-fourths of the outstanding priority shares.