Dutch Advocate General Advises on LaSalle Bank Sale

Dutch Advocate General Timmerman has issued an advisory opinion that ABN AMRO was allowed to sell its US subsidiary LaSalle without the prior approval of company shareholders. An advisory opinion is independent legal advice to the Supreme Court of the Netherlands, which is expected to rule on the case next month. ABN AMRO Holding N.V. v. Vereniging Van Effectenbezitters (VEB)

This sale took place at the time the ABN AMRO board was involved in exclusive negotiations with Barclays regarding a share merger. Before the sale of LaSalle, a consortium of three banks had announced its intention to acquire the shares in ABN AMRO Holding.

Earlier, the Enterprise Chamber had ruled that, while it has not been established that the sale of LaSalle was executed in order to frustrate a competitive bid of the consortium, in view of the resolution by the board to seek an acquisition candidate, the sale of LaSalle exceeded the conduct of business area that is reserved to the board of directors and the supervisory board. In view of this rule and the circumstances of the case, it would be unacceptable if the shareholders of ABN AMRO Holding would not be allowed to express their views on the sale of LaSalle. The Enterprise Chamber further held that the principles of reasonableness and fairness laid down in section 2:8 of the Dutch Civil Code applied analogically to require that the execution of the sale of LaSalle must be suspended until the general meeting of shareholders has approved the transaction.

The advisory opinion starts with a comparative law study, in which the Advocate General pays attention to English and German law, as well as to the law of the State of Delaware. The Advocate General then focuses on the meaning and background of the Dutch Civil Code and the principles of reasonableness and fairness laid down in the code.

In recommending that the decision of the Enterprise Chamber be reversed, the Attorney General said that the principles of reasonableness and fairness embodied in the code did not grant the shareholders an approval right in relation to the LaSalle transaction. Only in very special circumstances, he continued, can the principles of reasonableness and fairness establish the authority of a corporate body. Such authority, which is not derived from the law or the articles of association, must be founded on a widely accepted legal conviction, which is not the case in the present matter.

In the advisory opinion, the Advocate General does not express his view on whether the board acted unlawfully with respect to its shareholders by selling LaSalle.