act implementing the treaty of almelo and … · proliferation of nuclear weapons; c. as a natural...

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ACT IMPLEMENTING THE TREATY OF ALMELO AND CORRESPONDING TREATIES AND TO PROTECT THE PUBLIC INTEREST IN CONNECTION WITH THE ENRICHTMENT OF URANIUM, THE PRODUCTION OF RADIOACTIVE MATERIALS AND THE DEVELOPMENT AND EXPLOITATION OF THE TECHNOLOGY SERVING THIS PURPOSE (TREATY OF ALMELO IMPLEMENTING ACT)

BILL

We Willem-Alexander, by the grace of God, King of the Netherlands, Prince of Oranje-

Nassau, etc. etc. etc.

Greetings to all those who shall see or hear these presents! Be it known:

Considering that we have decided that it is necessary to provide rules to implement

the Treaty of Almelo and related treaties and to protect the public interest with regard to

uranium enrichment, the production of radioactive substances or the development and

exploitation of the related technology by private enterprises;

And thus, after hearing the advice of the Council of State, and after joint consultation

of the States General, we have approved and decided the following:

CHAPTER I. GENERAL PROVISIONS

Article 1 1. In this Act and the provisions based on this Act, the following terms shall have

the following meanings:

share: share as referred to in Article 5:33 (1) (b) of the Act on Financial

Supervision or share which a person has at his disposal or is deemed to have at his

disposal pursuant to Article 5:45 (1) to (11), inclusive, of the Act on Financial

Supervision;

equity interest: a number of shares or controlling rights;

affiliated institution, affiliated institution as referred to in Section 1 of the Securities

(Bank Giro Transactions) Act;

designated enterprise: a legal entity designated under Article 2 (1);

business secret: technological information which:

a. in its entirety or in the correct composition and sequence of its parts, is not

generally known by or easily accessible to persons within the circles ordinarily

involved in this type of information;

b. has commercial value because it is confidential;

c. has been made subject to reasonable measures by the person who rightfully

has this information at his disposal, in order to keep this information confidential;

and

d. is an asset for dual use;

listed designated enterprise: designated enterprise the shares of which are

admitted to trading on a regulated market or a system comparable with a regulated

market outside the European Economic Area;

competent authority of the Federal Republic of Germany: an authority exercising

the Federal Republic of Germany's powers towards an ancillary company of a

designated enterprise as part of the Federal Republic of Germany's responsibility for

the group to which a designated enterprise and its ancillary companies belong

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under the Treaty of Almelo or the Treaty of Cardiff;

competent authority of the United Kingdom of Great Britain and Northern Ireland:

an authority exercising the United Kingdom of Great Britain and Northern Ireland's

powers towards an ancillary company of a designated enterprise as part of the

United Kingdom of Great Britain and Northern Ireland's responsibility for the group

to which a designated enterprise and its ancillary companies belong under the

Treaty of Almelo or the Treaty of Cardiff;

competent authority of the French Republic: an authority directly or indirectly

exercising the French Republic's powers towards a designated enterprise as part of

the French Republic's responsibility for a designated enterprise under the Treaty of

Cardiff;

custodian of an investment institution: custodian of an Undertaking for Collective

Investment in Transferable Securities as referred to in Article 1:1 of the Act on

Financial Supervision or entity with the object under the articles of association of

legally owning, whether or not jointly with holding and administering, the shares or

controlling rights of an investment fund or a fund for collective investments in

securities;

central institution: central institution as referred to in Section 1 of the Securities


deposit: account with an equity interest or account in which an equity interest is

reflected that is administered or maintained professionally and differently than as a

shareholder;

divestment:

a. disposal of a subsidiary or sale of shares in a subsidiary or joint venture;

b. issue of shares in a subsidiary; or

c. activities designated by an Order in Council;

jointly managed company: legal person whose shares, except for shares to which

special control rights are attached, are all jointly held, directly or indirectly, by the

designated enterprise and the ancillary companies;

subsidiary:

a. subsidiary as defined in Section 2:24a of the Dutch Civil Code;

b. jointly managed company;

c. subsidiary as defined in Section 2:24a of the Dutch Civil Code of a jointly managed

company;

Euratom Treaty: the Treaty establishing the European Atomic Energy Community,

done on 25 March 1957 in Rome;

regulated market: regulated market as referred to in Article 1:1 of the Act on

Financial Supervision;

classified information: protected technological information laid down in documents,

drawings, electronic media, data or materials that may negatively affect the security of

the state or international peace and security should non-authorised persons become

aware of it and that is classified in accordance with the security and classification policy

referred to in Annex 2, sub 1, 2, 3 and 4 of the Treaty of Almelo and Article VII (1) of

and Annex 2, sub 1 and 2 to the Treaty of Cardiff;

giro deposit: giro deposit as referred to in Section 34(1) of the Securities (Bank Giro

Transactions) Act;

asset for dual use: product for dual use as referred to in Article 2(1) of Regulation

428/2009;

group: group as referred to in Section 2:24b of the Dutch Civil Code;

group company: group company as referred to in Section 2:24b of the Dutch Civil

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Code;

United Nations Charter: the Charter of the United Nations, done at San Francisco on

26 June 1945;

foreign institution: foreign institution as referred to in Section 49a (b) of the

Securities (Bank Giro Transactions) Act;

intermediary: intermediary as referred to in Section 1 of the Securities (Bank Giro

Transactions) Act;

international obligations: the obligations pursuant to:

(a) the Charter of the United Nations, done at San Francisco on 26 June

1945;

(b) the Treaty on the Functioning of the European Union, done at Rome on

25 March 1957;

(c) the Treaty establishing the European Atomic Energy Community, done at

Rome on 25 March 1957;

(d) the Treaty on European Union, done at Maastricht on 7 February 1992;

(e) the Treaty on the Non-Proliferation of Nuclear Weapons, done at London,

Moscow and Washington on 1 July 1968;

(f) the Convention implementing the obligation emanating from Article III of

the Treaty on the Non-Proliferation of Nuclear Weapons;

(g) an Additional Protocol to the Agreement implementing Article III of the

Treaty on the Non-Proliferation of Nuclear Weapons;

(h) the Convention on the Physical Protection of Nuclear Material, done at

Vienna and New York on 3 March 1980;

(i) the Comprehensive Nuclear-Test-Ban Treaty, done at New York on 10

September 1996;

(j) the International Convention for the Suppression of Acts of Nuclear

Terrorism, done at New York on 13 April 2005;

(k) the Convention on the Prohibition of the Development, Production,

Stockpiling and Use of Chemical Weapons and on their Destruction, done

at Paris on 13 January 1993;

(l) the Convention on the Prohibition of the Development, Production and

Stockpiling of Bacteriological (Biological) and Toxin Weapons and on

their Destruction, done at London, Moscow and Washington on 10 April

1972;

(m) the Convention on Nuclear Safety, done at Vienna on 20 September

1994;

(n) the Joint Convention on the Safety of Spent Fuel Management and on the

Safety of Radioactive Waste Management, done at Vienna on 5

September 1997;

(o) the Treaty of Almelo;

(p) the Treaty of Cardiff;

(q) the Treaty of Paris;

(r) the Treaty of Washington;

investment:

a. investment connected with the establishment or taking into operation of a

production facility for the enrichment of uranium, the production of radioactive

substances, or the development or exploitation of the technology for those purposes

outside the territory of the Kingdom of the Netherlands, the Federal Republic of

Germany or the United Kingdom of Great Britain and Northern Ireland;

b. investment resulting in a considerable expansion of the production capacity of

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an existing production facility established outside the territory of the Kingdom of the

Netherlands, the Federal Republic of Germany or the United Kingdom of Great

Britain and Northern Ireland;

c. investment relating to the establishing or taking into operation of a new

production facility inside the territory of the Kingdom of the Netherlands, the Federal

Republic of Germany or the United Kingdom of Great Britain and Northern Ireland;

d. purchase of assets for dual use, intellectual property rights, business secrets or

services relating to an asset for dual use, to the extent that this purchase does not

fall within the normal business operations and if it involves assets, intellectual

property rights, business secrets, services or security rights or rights of use created

in these for which a licence requirement is in place:

1º. under or pursuant to the Strategic Services Act;

2º. under or pursuant to the Strategic Assets Decree (Besluit strategische

goederen);

3º. pursuant to Article 4 (1) to (3) inclusive and Article 5 (1) of Regulation

428/2009;

4º. pursuant to article 3 (1) of Regulation 428/2009 in so far as this concerns the

products referred to in Annex 1 or as updated in accordance with article 15 (1) of

Regulation 428/2009 under international arrangements concerning non-proliferation

and export control falling under:

i. category 0, or

ii. categories 1 to 9 inclusive to the extent that, based on the nuclear technology

note, this concerns technology directly related to assets of category 0;

e. investments designated by an Order in Council;

- weapons of mass destruction: chemical, biological or nuclear weapons or other

nuclear explosives, including missiles capable of transporting such weapons to their

target;

- multilateral trading facility: multilateral trading facility as referred to in Article

1:1 of the Act on Financial Supervision;

- ancillary company: a legal entity holding shares, directly or indirectly, in a

jointly managed company in addition to the designated enterprise itself and

forming an organisational and managerial unity with the designated enterprise.

undesired person: person who:

a. is subject to sanctions under:

1o. Chapter 7 of the United Nations Charter;

2°. Article 215 of the Treaty on the Functioning of the European Union;

3°. the 1977 Sanctions Act;

b. as a natural person is a national and resident of, or as a legal entity has its

corporate seat and central management in, a state that has been found by a

decision pursuant to chapter 7 of the United Nations Charter or by a decision

pursuant to Article 28 (1) or Article 29 of the Treaty on the Functioning of the

European Union, to be in violation of:

1o. the Treaty on the Non-Proliferation of Nuclear Weapons;

2o. an Agreement implementing Article III of the Treaty on the Non-

Proliferation of Nuclear Weapons;

c. as a natural person is a national and resident of, or as a legal entity has its

corporate seat and central management in, a state which:

1o. is not a party to the Treaty on the Non-Proliferation of Nuclear Weapons;

2o. is not a party to an agreement implementing Article III of the Treaty on the

Non-Proliferation of Nuclear Weapons;

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the Minister: the Minister of Economic Affairs;

public interest:

a. the essential interests of the state's security as referred to in Article 346 (1) (a)

of the Treaty on the functioning of the European Union;

b. the interest of public security as referred to in Articles 52 (1) and 65 (1) (b) of the

Treaty on the Functioning of the European Union;

c. the international obligations, treaties and regulations resulting from the Treaty

on the Functioning of the European Union that are binding for the European

Union or the Member States of the European Union and which relate to the

export of assets for dual use, intellectual property rights, business secrets or

the provision of a service to promote non-proliferation and to protect the public

security referred to in Articles 52 (1) and 65 (1) (b) of the Treaty on the

Functioning of the European Union;

- joint venture: a legal entity or other arrangement for the durable cooperation

between a designated enterprise or subsidiary and another person and which:

a. enriches uranium;

b. produces radioactive substances;

c. develops and exploits the technology for the activities referred to in a and b;

- alert: providing the data from the registration referred to in Article 1 (b) of the Legal

Entities (Supervision) Act, a summary of these data and a risk analysis;

supervisory committee: Joint Committee as referred to in Article II (1) of the

Treaty of Almelo or Quadripartite Committee as referred to in Article III (1) of the

Treaty of Cardiff;

Non-Proliferation Treaty: the Treaty on the Non-Proliferation of Nuclear Weapons,

done at London, Moscow and Washington on 1 July 1968

Treaty of Almelo: the Agreement between the Kingdom of the Netherlands, the

Federal Republic of Germany and the United Kingdom of Great Britain and Northern

Ireland on collaboration in the development and exploitation of the gas centrifuge

process for producing enriched uranium, done at Almelo on 4 March 1970 (Treaty

Series 1970, 41);

Treaty of Cardiff: the Agreement between the Governments of the Kingdom of the

Netherlands, the Federal Republic of Germany, the French Republic and the United

Kingdom of Great Britain and Northern Ireland regarding collaboration in centrifuge

technology, done at Cardiff on 12 July 2005 (Treaty Series 2005, 266);

Treaty of Paris: the Agreement between the Government of the United States of

America and the four Governments of the French Republic, the United Kingdom of

Great Britain and Northern Ireland, the Kingdom of the Netherlands, and the Federal

Republic of Germany regarding the establishment, construction and operation of

uranium enrichment installations using gas centrifuge technology in the United

States of America, done at Paris on 24 February 2011 (Treaty Series 2011, 83);

Treaty of Washington: the Agreement between the three Governments of the

Kingdom of the Netherlands, the Federal Republic of Germany, and the United Kingdom

of Great Britain and Northern Ireland and the United States regarding the

establishment, construction and operation of a uranium enrichment installation in the

United States, done at Washington on 24 July 1992 (Treaty Series 1992, 174);

Regulation 428/2009: Council Regulation (EC) No 428/2009 of 5 May 2009 setting

up a Community regime for the control of exports, transfer, brokering and transit of

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assets for dual use (OJ 2009, L 134);

confidential position: a position as referred to in Section 1 (1) (a) of the Security

Screening Act;

collective deposit: collective deposit as referred to in Section 9 (1) of the Securities


security of supply: security of supply of enriched uranium, precursors and

radioactive substances as referred to in Article 122 (1) of the Treaty on the

Functioning of the European Union;

controlling rights: votes as referred to in Article 5:33 (1) (d) of the Act on

Financial Supervision or votes at a person's disposal or deemed to be at a person's

disposal under Article 5:45 (1) to (11), inclusive, of the Act on Financial

Supervision;

2. A share, controlling rights, or equity interest in an ancillary company as

defined in this Act refers to a share, controlling rights, or equity interest in an

ancillary company that is inextricably bound to a share, controlling rights, or equity

interest in a designated enterprise.

Article 2

1. In order to protect the public interest, the Minister may designate a legal entity with

corporate seat in the Netherlands which or a subsidiary of which enriches uranium,

produces radioactive substances or develops or exploits the technology for those

purposes and falls under the scope of the Treaty of Almelo, the Treaty of Cardiff or the

Treaty of Washington.

2. The Minister shall notify the parties to the Treaty of Almelo, the Treaty of Cardiff or

the Treaty of Washington of a designation.

3. A designation shall be announced in the Official Gazette.

CHAPTER 2. STRUCTURE OF AND CONTROL MECHANISMS IN A DESIGNATED

ENTERPRISE

Article 3

1. Any amendment to the articles of association or the terms and conditions of

administration of a designated enterprise, or dissolution, merger, demerger, conversion

or relocation of corporate seat or head office of a designated enterprise without the

Minister's approval is prohibited.

2. The Minister shall refuse to approve the amendment to the articles of association or

the terms and conditions of administration, dissolution, merger, demerger, conversion, or

relocation of corporate seat or head office of a designated enterprise if the public interest

may be threatened.

3. If a competent authority of the Federal Republic of Germany or the United Kingdom of

Great Britain and Northern Ireland has not notified an ancillary company that it consents

to the amendment of the articles of association or terms and conditions of

administration, dissolution, merger, demerger, conversion, or relocation of a designated

enterprise's corporate seat or head office, any approval shall not take effect until the

moment the consent of both the competent authority of the Federal Republic of Germany

and the competent authority of the United Kingdom of Great Britain and Northern Ireland

has entered into force.

Article 4

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1. A designated enterprise may not without the Minister's approval cooperate with any

amendment to the articles of association or the terms and conditions of administration,

dissolution, merger, demerger or conversion of an ancillary company or jointly managed

company, or the relocation of the corporate seat office or head office of an ancillary

company or jointly managed company.

2. The Minister shall not approve the designated enterprise's cooperation with the

amendment to the articles of association or the terms and conditions of administration,

dissolution, merger, demerger or conversion of an ancillary company or jointly managed

company, or the relocation of the corporate seat or head office of an ancillary company

or jointly managed company if the public interest may be threatened.

Article 5

1. A designated enterprise shall ensure that its subsidiaries, in so far as this is

permitted under the law governing these subsidiaries:

a. refrain from any action causing the designated enterprise to act in violation of any

provisions in or pursuant to this Act, and

b. behave in accordance with the provisions in or pursuant to this Act, in so far as

these subsidiaries are subject to obligations.

2. A designated enterprise shall ensure that the articles of association of subsidiaries

and the agreements or deeds that record the (control) structure and organisation of

subsidiaries, provide that the designated enterprise's or its subsidiaries’ obligations under

or pursuant to this Act, where this is permitted under the law governing these

subsidiaries, shall be given effect.

Article 6

The articles of association of a designated enterprise shall:

a. set requirements which have to be met by the directors, which ensures that the

circle of persons eligible for appointment is limited;

b. contain conditions for ownership of shares or controlling rights;

c. provide that the holder of shares or controlling rights must offer and transfer all or

part of his shares or controlling rights in the circumstances specified in the articles of

association;

d. provide that the rights to vote, attend meetings, receive information or receive

dividends shall be suspended in the circumstances specified in the articles of association

for as long as a holder of shares or controlling rights fails to fulfil an obligation or

condition set out in the articles of association;

e. provide that if a holder of shares or controlling rights fails to fulfil an obligation as

referred to in (c) within a reasonable period of time, the legal entity shall be irrevocably

authorised to offer and transfer the shares or controlling rights in the circumstances

specified in the articles of association;

f. provide that the board must act in accordance with the instructions of another body

or an ancillary company of the legal entity in the circumstances specified in the articles of

association;

g. provide that an executive or non-executive director may be suspended by a body

other than the body that has the power to appoint the director.

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CHAPTER 3. EXECUTIVE DIRECTORS, NON-EXECUTIVE DIRECTORS, AND OTHER

OFFICERS OF A DESIGNATED ENTERPRISE

Article 7

1. A designated enterprise shall notify the Minister of its intention to appoint an

executive or non-executive director prior to a period before the intended appointment to

be set by a ministerial regulation.

2. The Minister may instruct a designated enterprise within a period after receipt of

the notification to be set by a ministerial regulation, to apply for a declaration of no

objection in respect of the appointment of an executive or non-executive director of the

enterprise.

3. Executive or non-executive directors of a designated enterprise may not be

appointed without:

a. a declaration of no objection issued by the Minister, or

b. a declaration equivalent to a declaration of no objection as referred to in (a), issued

to an ancillary company by a competent authority of the Federal Republic of Germany or

the United Kingdom of Great Britain and Northern Ireland and relating to the

appointment of the relevant executive or non-executive director of an ancillary company.

4. The Minister shall refuse to issue a declaration of no objection if:

a. the declarations as referred to in Article 13 (1) of the Security Screening Act gives

reason to do so;

b. the appointment may threaten the public interest.

5. The Minister shall notify the competent authorities of the Federal Republic of

Germany and the United Kingdom of Great Britain and Northern Ireland prior to a period

before the envisaged date of issue to be set by a ministerial regulation, of any intention

to issue a declaration of no objection.

6. The Minister shall not further consider the application for a declaration of no

objection if the competent authority of the Federal Republic of Germany or the United

Kingdom of Great Britain and Northern Ireland has informed an ancillary company within

the period referred to in paragraph 5 that it objects to the appointment of the ancillary

company's executive or non-executive director as referred to in paragraph 1.

7. Any appointment of an executive or non-executive director of a designated

enterprise in violation of paragraph 3 shall be void.

Article 8

1. An executive or non-executive director of a designated enterprise may not be

appointed if:

a. the Minister has notified the designated enterprise within a period after the receipt

of the intention of a competent authority of the Federal Republic of Germany or the

United Kingdom of Great Britain and Northern Ireland to issue a declaration as referred

to in Article 7 (3) (b) to be set by a ministerial regulation, that the appointment may

threaten the public interest.

b. a competent authority of the Federal Republic of Germany or the United Kingdom of

Great Britain and Northern Ireland has notified an ancillary company, within a period

after its receipt of the intention of the other competent authority to issue a declaration as

referred to in Article 7 (3) (b) to be set by a ministerial regulation, that it objects to the

appointment.

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2. Any appointment of an executive or non-executive director of a designated

enterprise in violation of paragraph 1 or 3 shall be void.

Article 9

1. The Minister may ask the Minister of the Interior and Kingdom Relations to issue

declarations as referred to in Section 13 (1) of the Security Screening Act for the purpose

of issuing a declaration of no objection as referred to in Article 7 (3) (a).

2. Section 13 (2) to (6) of the Security Screening Act, shall apply mutatis mutandis,

with the exception of the first full sentence of paragraph 2.

Article 10

1. The Minister may suspend an executive or non-executive director of a designated

enterprise if it is believed that the public interest may be threatened by the executive or

non-executive director;

2. An executive or non-executive director of a designated enterprise shall be

suspended as of the date on which:

a. a decision of the Minister adopted on the basis of paragraph 1, has entered into

force;

b. a measure by a competent authority of the Federal Republic of Germany or the

United Kingdom of Great Britain and Northern Ireland has entered into force suspending

an executive or non-executive director of an ancillary company.

3. The Minister may dismiss an executive or non-executive director of a designated

enterprise if it is believed that the public interest may be threatened by the executive

or non-executive director.

4. An executive or non-executive director of a designated enterprise shall be dismissed

as of the date on which:

a. the revocation of a declaration of non-objection as referred to in Article 7 (3) (a)

concerning the executive or non-executive director, has entered into force;

b. the revocation of a declaration as referred to in Article 7 (3) (b) concerning the

executive or non-executive director and issued to an ancillary company by a

competent authority of the Federal Republic of Germany or the United Kingdom of

Great Britain and Northern Ireland, has entered into force.

c. a decision of the Minister adopted on the basis of paragraph 3, has entered into

force;

d. a measure has entered into force in which a competent authority of the Federal

Republic of Germany or the United Kingdom of Great Britain and Northern Ireland has

dismissed the executive or non-executive director of an ancillary company.

Article 11

Certain positions in a designated enterprise and its subsidiaries may be made subject

to Articles 7 to 10 (inclusive) under or pursuant to an Order in Council.

Article 12

If a person within a designated enterprise or a subsidiary fulfils a position that has

been designated as a confidential position based on Section 3 (1) of the Security

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Screening Act, a security screening has been conducted with regard to this person by a

relevant competent authority of the Federal Republic of Germany, the United Kingdom of

Great Britain and Northern Ireland, the French Republic, or the United States and this

person has been accredited in accordance with the security and classification system

referred to in Annex II, sub 1, 2, 3 and 4 to the Treaty of Almelo or Article VII (1) of and

Annex II, sub 1 and 2 to the Treaty of Cardiff, or in accordance with the Treaty of

Washington, then such accreditation will be deemed to constitute a declaration as

referred to in Section 1 (1) (b) of the Security Screening Act.

CHAPTER 4. SHAREHOLDERS, SHARES, CONTROL AND RIGHTS IN A

DESIGNATED ENTERPRISE ATTACHED TO SHARES

§ 4.1. General

Article 13

1. A listed designated enterprise shall provide the Minister with the communication of

the Authority for the Financial Markets as referred to in Article 5:49 (1) of the Act on

Financial Supervision, to the extent that this communication relates to a notification as

referred to in Articles 5:38, 5:39, 5:40 or 5:43 of the Act on Financial Supervision.

2. A designated enterprise shall notify the Minister if it is aware that a holder of shares

or controlling rights holds those shares or rights in violation of this Act.

3. A designated enterprise shall notify the Minister if it is aware that the holder of

shares intends to trade the shares on:

a. a specific multilateral trading facility;

b. a specific system comparable with a multilateral trading facility outside the

European Economic Area.

4. A designated enterprise shall provide the Minister on his request with an extract

from the register regarding a right in respect of a share. If the share is subject to a right

of usufruct or pledge, the extract must state who are entitled to the rights referred to in

Sections 2:88 (2) and (4) and 2:89 of the Dutch Civil Code.

5. A designated enterprise shall launch an investigation into the identity of a holder of

shares or controlling rights and that holder's ties with third parties at the request of:

a. the Minister if facts or circumstances occur that cause the Minister to suspect that

the holder holds those shares or rights in violation of this Act, or may threaten the public

interest;

b. an ancillary company if a competent authority of the Federal Republic of Germany

or the United Kingdom of Great Britain and Northern Ireland have instructed the ancillary

company to do so.

6. An investigation conducted by a listed designated enterprise shall be subject to

Section 49a, 49b (1) and (4) of the Securities (Bank Giro Transactions) Act, provided

that:

a. supplementary to Section 49a (d) of the Securities (Bank Giro Transactions) Act, an

issuing institution is also a listed designated enterprise.

b. supplementary to Section 49a (1) (d) of the Securities (Bank Giro Transactions) Act

an issuing institution can also request a custodian of an investment fund to provide

information on the manager of an investment fund or a fund for collective investments in

securities;

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c. notwithstanding Section 49d of the Securities (Bank Giro Transactions) Act, a listed

designated enterprise shall notify the results of the investigation to the Minister.

d. Section 49e of the Securities (Bank Giro Transactions) Act is also applicable to a

request as referred to in Section 49b (1) (c) of the Securities (Bank Giro Transactions)

Act.

7. An affiliated institution, central institution, intermediary, foreign institution,

custodian of an investment institution or foreign institution with a function comparable

with that of the central institution shall cooperate with a listed designated enterprise in

the investigation.

8. Rules can be set by ministerial regulation as to how a request pursuant to Section

49b (1) of the Securities (Bank Giro Transactions) Act considered in combination with

paragraph 6, is to be made and responded to.

Article 14

1. A designated enterprise shall notify the Minister of any intention to start preparing

an application for admission of shares to trading on:

a. a specific regulated market or a specific multilateral trading facility;

b. a specific system comparable with a multilateral trading facility outside the European

Economic Area prior to a period before the envisaged date for carrying out such intention

to be set by a ministerial regulation.

2. A designated enterprise may not carry out an intention as referred to in paragraph 1

if the Minister has informed the designated enterprise within a period after receipt of the

notification to be set by a ministerial regulation, that the enterprise will not, or not fully,

be able to meet its obligations pursuant to this chapter or that the Minister is not or only

partially able to exercise his powers under or pursuant to this chapter, after shares have

been admitted to:

a. a specific regulated market or a specific multilateral trading facility to be applied for

prior to a period before the envisaged date for carrying out such intention to be set by a

ministerial regulation;

b. a specific system comparable with a regulated market or multilateral trading

facility outside the European Economic Area.

3. A holder of shares in a designated enterprise shall inform the Minister and the

designated enterprise of an intention to apply for the admission of shares to the trade

on:




4. A holder of shares in a designated enterprise may not carry out the intention

referred to in paragraph 3 if the Minister has informed the holder within a period after

receipt of the notification to be set by a ministerial regulation, that the holder will not, or

not fully, be able to meet his obligations pursuant to this chapter or the Minister is unable

to exercise his powers under or pursuant to this chapter, after shares have been

admitted to:




5. A designated enterprise and holder of shares in a designated enterprise may not

carry out the intention referred to in paragraph 1 or 3 if competent authority of the

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Federal Republic of Germany or the United Kingdom of Great Britain and Northern Ireland

has notified an ancillary company that it objects to the intention.

§ 4.2. Shares or controlling rights in a designated enterprise

Article 15

1. A designated enterprise or a holder of shares or controlling rights may not dispose of

or allot shares in a designated enterprise, or dispose of controlling rights in a designated

enterprise, to an undesired person.

2. An undesired person may not acquire or hold shares or controlling rights in a

designated enterprise.

Article 16

Shares or controlling rights in a designated enterprise may not be acquired or held if

the threshold of 3% of the shares or the votes is reached or exceeded as a result, if the

prospective acquirer or holder:

a. is a natural person who is a national and a resident of a State which is not a party to

an additional protocol to the Agreement implementing Article III of the Treaty on the

Non-Proliferation of Nuclear Weapons;

b. is a legal entity which has its corporate seat and central management established in

a State which is not a party to an additional protocol to the Agreement implementing

Article III of the Treaty on the Non-Proliferation of Nuclear Weapons.

§ 4.3. Shares or controlling rights in an unlisted designated enterprise

Article 17

1. An unlisted designated enterprise shall notify the Minister of any intention to

dispose of or allot shares or dispose of controlling rights in the enterprise prior to a

period before the envisaged date for carrying out such intention to be set by a ministerial

regulation.

2. A holder of shares or controlling rights in an unlisted designated enterprise shall

notify the Minister and the unlisted designated enterprise of any intention to dispose of or

allot the shares or dispose of controlling rights prior to a period before the envisaged

date for carrying out such intention to be set by a ministerial regulation.

3. The Minister may instruct the enterprise or a holder of shares or controlling rights in

the enterprise within a period after receipt of the notification pursuant to paragraph 1 or

2 to be set by a ministerial regulation, to apply for a declaration of no objection for the

disposal or allotment of the shares or the disposal of the controlling rights.

4. An unlisted designated enterprise or a holder of shares or controlling rights in an

unlisted designated enterprise may not dispose of or allot shares in the enterprise or

dispose of controlling rights in the enterprise without:


b. a declaration equivalent to a declaration of no objection as referred to in a, issued

by a competent authority of the Federal Republic of Germany or the United Kingdom of

Great Britain and Northern Ireland and relating to the disposal or allotment of the shares

or the disposal of the controlling rights in an unlisted ancillary company.

5. An application for a declaration of no objection shall in any event specify:

13

a. the number of shares to be disposed of or allotted or the nature and scope of the

controlling rights to be disposed of in the unlisted designated enterprise;

b. the draft agreement relating to the exercise of controlling rights and rights attached

to the shares by the prospective holder;

c. the identity of the prospective holder.


a. the prospective holder of the shares or controlling rights is an undesired person;

b. the intended acquirer by acquiring or being allotted the shares or by acquiring the

controlling rights acts in violation of Article 16;

c. the public interest may be threatened.

7. In assessing whether the public interest may be threatened the Minister shall

consider the following factors as a whole:

a. the ownership structure of the prospective holder is insufficiently transparent or

improper;

b. the influence a third party can exert on the exercise by the prospective holder of

the rights attached to his shares or to his controlling rights, is insufficiently transparent

or undesirable; in this context, the factors mentioned sub a and sub c up to and including

sub r are jointly taken into account in the Minister’s assessment whether the influence is

insufficiently transparent or undesirable;

c. the prospective holder does not have a good track record on nuclear non-

proliferation, nuclear security or nuclear safety and the compliance with statutory

provisions in this context;

d. the prospective holder has close ties with a natural person, legal entity or non-state

entity that is subject to sanctions as referred to in Article 1, undesired person under (a);

e. the prospective holder is, or has close ties with, a natural person, legal entity or

non-state entity that is known, or can be assumed to have, the intention to develop or

own weapons of mass destruction, and that poses a danger to:

1˚. the national or international security;

2˚. the non-proliferation of weapons of mass destruction;

f. the motives, not being financial motives, for acquiring shares or controlling rights by

the prospective holder whereby obtaining access to proliferation-sensitive technology is

at any rate a motive;

g. the security situation in the prospective holder's country of residence, in the

country where the prospective holder's central management is established, or in the

countries of the surrounding region is uncertain or poor;

h. the prospective holder maintains relations with a state which is not a party to or is

in violation of a treaty referred to in Article 1 under international obligations (e) to (n)

inclusive;

i. the prospective holder maintains relations with a state that is not a partner to the

multilateral Global Initiative to Combat Nuclear Terrorism founded in St Petersburg on 15

July 2006;

j. the prospective holder is a state that is known or assumed to have the intention to

gain access to enrichment technology or other proliferation-sensitive technology that can

be used to develop weapons of mass destruction or the prospective holder is an entity

controlled by such a state;

k. the prospective holder is a state that is known, or can be assumed, to have the

intention to influence a designated enterprise with regard to nuclear proliferation or the

prospective holder is an entity controlled by such a state;

l. the prospective holder is a state that is known, or can be assumed, to have the

intention of developing or owning weapons of mass destruction or has the intention to

14

gain access to enrichment technology or other proliferation-sensitive technology that can

be used to develop weapons of mass destruction or the prospective holder is an entity

controlled by such a state or maintains relations with that state;

m. the prospective holder is a state that is known, or can be assumed, to have no or

an inadequate or a non-transparent separation of civil and military nuclear programmes

or the prospective holder is an entity controlled by such a state or maintains relations

with that state;

n. the prospective holder is a state that is known, or can be assumed, to pose a

danger to the national or international security by having insufficient safeguards in place

with regard to the non-proliferation of weapons of mass destruction or by inadequately

applying these safeguards or the prospective holder is an entity controlled by such a

state or maintains relations with such a state;

o. insufficient information is available about the prospective holder, or it is not or only

partly possible to directly verify information about the prospective holder in a state,

unless that state is able to obtain information and verification of that information as part

of a cooperative relationship with the prospective holder's state of residence or with the

state where the prospective holder's central management is established;

p. the existence of an export control policy and the track record relating to the export

control of the prospective holder's state of residence or the state where the prospective

holder's central management is established;

q. the existence of national or international nuclear safeguards or regulation in the

prospective holder's state of residence or the state where the prospective holder's central

management is established, or the state being bound to treaties made by that state, in

which context treaties shall in any event mean: specific treaties or specific international

agreements relating to the designated enterprise; or

r. other factors as specified by an Order in Council.



before the envisaged date of issue to be set by a ministerial regulation, of an intention to

issue a declaration of no objection.


objection if a competent authority of the Federal Republic of Germany or the United

Kingdom of Great Britain and Northern Ireland has notified an ancillary company or the

holder of shares or controlling rights within the period referred to in paragraph 8, that it

objects to the disposal or allotment of the shares or the disposal of the controlling rights

in an unlisted ancillary company.

10. The Minister shall notify the prospective holder of the shares or controlling rights

and the unlisted designated enterprise of a decision on an application for a declaration of

no objection.

Article 18

1. An unlisted designated enterprise or holder of shares or controlling rights attached to

shares in an unlisted designated enterprise may not dispose of or allot such shares or

dispose of controlling rights in an unlisted designated enterprise, if:

a. the Minister has notified the enterprise or the holder of the shares or controlling

rights within a period after receipt of the intention of a competent authority of the


to grant a declaration as referred to in Article 17 (4) (b) to be set by a ministerial

regulation, that the prospective acquirer of the shares or controlling rights is an

15

undesired person, that by acquiring the shares or the controlling rights the prospective

acquirer acts in violation of Article 16 or that the public interest may be threatened as a

result of the acquisition or allotment of the share or the acquisition of the controlling

rights;


Great Britain and Northern Ireland has notified an ancillary company or the holder of the

shares or controlling rights within a period after its receipt of the intention of the other

competent authority to grant a declaration as referred to in Article 17 (4) (b) to be set by

a ministerial regulation, that it objects to the disposal or allotment of the share or the

disposal of the controlling rights in an unlisted ancillary company.

2. Article 17 (7) shall apply in making the assessment whether the public interest may be

threatened.

3. The Minister shall notify the prospective holder of the shares or controlling rights and

the unlisted designated enterprise of a decision taken pursuant to paragraph 1 (a).

§ 4.4. Equity interest in a listed designated enterprise

Article 19

1. Any person who:

a. holds an equity interest in a listed designated enterprise of ten percent, twenty

percent, thirty percent, fifty percent, seventy percent, ninety percent or ninety-five

percent shall notify the Minister and the designated enterprise of this as soon as it is

apparent to this person that this threshold has been or will be reached;

b. intends to acquire or increase an equity interest in a listed designated enterprise to

such an extent that a threshold as referred to under (a) is reached or exceeded, shall

notify the Minister and the designated enterprise of this intention prior to a period before

the envisaged date for carrying out this intention to be set by a ministerial regulation.

2. The Minister may, within a period after receipt of the notification to be set by a

ministerial regulation, instruct a holder or the prospective holder of an equity interest to

apply for a declaration of no objection in connection with the holding, acquisition, or

expansion of the equity interest if a threshold as referred to in paragraph 1 has been or

is reached or exceeded.

3. An equity interest in a listed designated enterprise may not be held, acquired or

expanded to such an extent that a threshold of ten percent, twenty percent, thirty

percent, fifty percent, seventy percent, ninety percent, or ninety-five percent has been

attained, will be attained or will be exceeded without:




Great Britain and Northern Ireland and relating to the holding, acquisition of expanding of

the equity interest in a listed ancillary company.

4. The application for a declaration of no objection shall at any event specify the identity

of the holder or the prospective holder.


a. the applicant is an undesired person;

b. the applicant by holding, acquiring or increasing the equity interest acts in violation of

Article 16.

c. the public interest may be threatened;

16

6. Article 17 (7) shall apply mutatis mutandis in making the assessment whether the

public interest may be threatened.

7. The Minister shall notify the competent authorities of the Federal Republic of Germany

or the United Kingdom of Great Britain and Northern Ireland, prior to a period before the

scheduled issue date to be set by a ministerial regulation, of its intention to issue a

declaration of no objection.

8. The Minister shall not further consider the application for a declaration of no objection

if a competent authority of the Federal Republic of Germany or the United Kingdom of

Great Britain and Northern Ireland has notified the holder or the prospective holder of an

equity interest within the period referred to in paragraph 7 that it objects to the holding,

acquisition or expansion of the equity interest in a listed ancillary company.

9. The Minister shall notify the party disposing of the equity interest and the listed

designated enterprise of a decision taken in respect of an application for a declaration of

no objection.

Article 20

1. It is prohibited to hold or acquire an equity interest in a listed designated enterprise, or

to expand such holding to such an extent that the threshold as referred to in Article 19

(1) has been or will be reached or exceeded, if:

a. the Minister has notified the holder or the prospective holder of the equity interest

within a period after receipt of the intention of a competent authority of the Federal

Republic of Germany or the United Kingdom of Great Britain and Northern Ireland to

grant a declaration as referred to in Article 19 (3) (b) to be set by a ministerial regulation

that he is an undesired person or that by holding, acquiring or increasing the equity

interest he acts in violation of Article 16 or that the public interest may be threatened;


Great Britain and Northern Ireland has notified the holder or the prospective holder of

the equity interest within a period after its receipt of the intention of the other competent

authority to grant a declaration as referred to in Article 19 (3) (b) to be set by a

ministerial regulation, that it objects to the holding, acquisition or expansion of the equity

interest in a listed ancillary company.



3. The Minister shall notify the the party disposing of the equity interest and the listed

designated enterprise of a decision taken pursuant to paragraph 1 (a).

§ 4.5. No exercise of controlling rights or rights attached to shares and compulsory sale

of shares, controlling right, or equity interests

Article 21

1. Rights attached to shares in a designated enterprise, except for rights to dividend and

to receiving distributions from the reserves, and controlling rights in a designated

enterprise may not be exercised by a holder of shares or controlling rights if the Minister

has notified the holder of the shares or the controlling rights that the exercise of such

rights or controlling rights may threaten the public interest.

2. Rights attached to shares in a designated enterprise, except for rights to dividend and

to receiving distributions from the reserves, and controlling rights in a designated

enterprise may not be exercised by a holder of shares or controlling rights if a competent

17

authority of the Federal Republic of Germany or the United Kingdom of Great Britain and

Northern Ireland has notified the holder of a share or controlling rights in an ancillary

company that it objects to the exercise of the rights attached to that share or of these

controlling rights.



4. If the identity of the holder of an equity interest in a listed designated enterprise

cannot be confirmed, for the purpose of paragraph 1 and paragraph 2 the last person

identified in the investigation referred to in Article 13 (5) or identified otherwise as co-

owner in a collective deposit, giro deposit, deposit of a foreign institution or a deposit of

a foreign institution with a function comparable to that of the central institution shall be

deemed to be the holder or owner of the equity interest.

5. If paragraph 4 is applied, this is stated in the decision taken pursuant to paragraph

1.


custodian of an investment institution or foreign institution with a function comparable

with that of the central institution shall refrain from actions as a result of which a holder

of an equity interest can exercise rights or controlling rights in a designated enterprise

attached to a share in violation of the prohibition referred to in paragraph 1 or paragraph

2.

Article 22

1. A designated enterprise shall comply with the prohibition referred to in Article 21

(1) or (2).


custodian of an investment institution or a foreign institution with a function comparable

with that of the central institution shall cooperate with a listed designated enterprise in

complying with the prohibition.

3. If the cooperation is not forthcoming as a result of which the prohibition cannot be

complied with, a listed designated enterprise shall inform the Minister of this.

4. The Minister may establish who was the last party to cooperate. A listed designated

enterprise shall observe such assesment.

5. A listed designated enterprise shall observe an assessment issued by a competent


Northern Ireland to an ancillary company that is equivalent to the assessment referred to

in paragraph 4, and in which it is determined who was the last party to cooperate.

6. If paragraph 4 or paragraph 5 is applied, the person who is co-owner in the collective

deposit, giro deposit, deposit of a foreign institution or deposit of a foreign institution

with a function comparable to that of the central institution and of which the holder has

most recently rendered cooperation shall be deemed to be the holder or owner of the

equity interest. Rules may be imposed under or pursuant to an Order in Council with

regard to how and within what period the prohibition will be complied with.

Article 23

1. The Minister shall order the person who is acting in violation of Article 15 (2) to

dispose of his shares or controlling rights in a designated enterprise within a reasonable

period of time to be determined by the Minister.

18

2. If a holder of shares or controlling rights in a designated enterprise acts in violation of

Article 16, the Minister shall order that holder to dispose of such a number of shares or

controlling rights, within a reasonable period of time to be determined by the Minister,

that the threshold referred to in Article 16 is no longer reached or exceeded.

3. The Minister may order a holder of shares or controlling rights in an unlisted

designated enterprise who has acquired or been allotted shares or acquired controlling

rights from the person who has acted in violation of Article 17 (4) or 18 (1) to dispose of

shares or controlling rights within a reasonable period to be determined by the Minister.

4. The Minister may order a holder of an equity interest in a listed designated enterprise

who is acting in violation of Article 19 (3) or 20 (1) to dispose of or reduce his equity

interest to a level below the threshold referred to in Article 19 (1) within a reasonable

period of time to be determined by the Minister.

5. Notwithstanding paragraphs 1 to 4, if the public interest is threatened, the Minister

may:

a. order a holder of shares or controlling rights in an unlisted designated enterprise to

dispose of or reduce his shares or controlling rights within a reasonable period to be

determined by the Minister;

b. order a holder of shares in a listed designated enterprise to dispose of his shares

below a threshold to be determined by the Minister within a reasonable period to be

determined by the Minister.



7. A holder of:

a. a share or controlling rights in an unlisted designated enterprise shall dispose of his

share or controlling rights within a period to be set in an order given by a competent


Northern Ireland, if the competent authority has ordered this holder to dispose of a share

or controlling rights in an unlisted ancillary company

b. an equity interest in a listed designated enterprise shall dispose of his equity interest

or reduce it to below a threshold value within a period set in an order given by a

competent authority of the Federal Republic of Germany or the United Kingdom of Great

Britain and Northern Ireland, if the competent authority has ordered this holder to

dispose of or reduce an equity interest in a listed ancillary company.

8. The recipient of an order as referred to in paragraph 1, 2, 3, 4, 5 or 7 shall comply

with the order.

9. The Minister shall notify the designated enterprise of an order imposed pursuant to

paragraph 1, 2, 3, 4, or 5.

10. Rules may be imposed under or pursuant to an Order in Council with regard to how

and within what period the order as referred to in paragraph 1, 2, 3, 4, 5 or 7 will be

implemented.

11. If the identity of the holder of an equity interest in a listed designated enterprise

cannot be confirmed, for the purpose of this Article the last person identified in the

investigation referred to in Article 13 (5) or identified otherwise as co-owner in a

collective deposit, giro deposit, deposit of a foreign institution or a deposit of a foreign

institution with a function comparable to that of the central institution shall be deemed to

be the holder or owner of the equity interest.

12. If paragraph 11 is applied, this shall be stated in the order referred to in paragraph

1, 2, 4, or 5 (b).

Article 24

19

1. If, after the period referred to in Article 23 paragraphs 1, 2, 3, 4, 5, or 7, the

shares, controlling rights or equity interest to which the order as referred to in Article 23

paragraph 1, 2, 3, 4, 5 or 7 relates to have or has not been disposed of or reduced:

a. a designated enterprise shall be exclusively and irrevocably authorised to effect the

disposal or reduction on behalf of and for the account of the holder of the shares,

controlling rights or equity interest;

b. a designated enterprise shall be obliged to dispose of shares or controlling rights or

to dispose of or reduce an equity interest on behalf of and for the account of the holder

of the shares, controlling rights or equity interest.

2. Further rules may be imposed under or pursuant to an Order in Council with regard

to within what period a disposal may take place and how the proceeds of the transfer of

the shares or controlling rights or the transfer or reduction of the equity interest are

provided or credited to the owner of the shares, controlling rights or equity interest or

another entitled party.

3. In disposing of or reducing an equity interest under paragraph 1, a listed

designated enterprise can dispose of or reduce the equity interest for the account of the

person who:

a. pursuant to Article 23 (11), is deemed to be the holder or owner of the equity

interest;

b. has been identified as the last holder of the equity interest in an ancillary company

by the competent authority of the Federal Republic of Germany or the United Kingdom of

Great Britain and Northern Ireland.

4. An affiliated institution, central institution, intermediary, foreign institution or foreign

institution with a function comparable with that of the central institution shall cooperate

with a listed designated enterprise in the implementation of the disposal or reduction of

the equity interest pursuant to paragraph 1.

Article 25

1. If an affiliated institution, central institution, intermediary, foreign institution or

foreign institution with a function comparable with that of the central institution does not

or is unable to render its cooperation as referred to in Article 24 (4) to a listed

designated enterprise in the implementation of a disposal or reduction of an equity

interest pursuant to Article 24(1), a listed designated enterprise shall inform the Minister

of this.

2. The Minister can give a listed designated enterprise an instruction to make a

request for delivery as referred to in Article 26 (1).

3. A listed designated enterprise shall observe an instruction.

4. A listed designated enterprise shall observe an instruction given to an ancillary

company by a competent authority of the Federal Republic of Germany or the United

Kingdom of Great Britain and Northern Ireland that is equivalent to an instruction as

referred to in paragraph 2, and which pertains to making a request for delivery.

Article 26

1. If after the expiry of the period referred to in Article 23 (1), (2), (4), (5) (b) or

(7)(b), the equity interest in a listed designated enterprise has not been disposed of or

reduced, this enterprise shall be irrevocably authorised to make a request for the

delivery of the equity interest to which the order as referred to in Article 23 paragraph 1,

20

2, 4, 5 (b) or 7(b) relates, from a collective deposit, giro deposit, deposit of a foreign

institution or deposit of a foreign institution with a function comparable to that of the

central institution.

2. A central institution, intermediary, affiliated institution, foreign institution or foreign

institution with a function comparable with that of the central institution:

a. shall deliver the equity interest in response to a request for delivery;

b. shall reduce a collective deposit, deposit of a foreign institution or deposit of a

foreign institution with a function comparable to that of the central institution by the

number of shares which the holder of the equity interest is a direct or indirect co-owner

for;

c. shall inform the other affiliated institution, intermediary or foreign institution that a

collective deposit or deposit of a foreign institution or deposit of a foreign institution with

a function comparable to that of the central institution must be reduced by the amount of

shares which the holder of the equity interest is a direct or indirect co-owner for.

3. The reduction pursuant to paragraph 2 subparagraph b and c shall only take place

at the expense of the co-owner who is the holder of the equity interest on which the

order has been imposed or the co-owner who is a direct or indirect co-owner in the

collective deposit, deposit of a foreign institution or deposit of a foreign institution with a

function comparable to that of the central institution for the benefit of that holder.

4. A listed designated enterprise shall process the delivery referred to in paragraph 2

(a) by entering the equity interest in the shareholders’ register referred to in Section

2:85 of the Dutch Civil Code, and shall register the equity interest in the name of the

person to whom the order as referred to in Article 23, paragraph 1, 2, 4, 5 (b) or 7(b) is

addressed or who is legally obliged to execute such order.

5. The entry in the shareholders’ register may be invoked against any person who has

become co-owner after the date of the delivery request referred to in paragraph 1 of a

giro deposit, collective deposit, deposit of a foreign institution or deposit of a foreign

institution with a function comparable to that of the central institution that contains the

equity interest to be delivered.

6. Further rules may be imposed under or pursuant to an Order in Council with regard

to the authorisation to make a request for delivery as referred to in paragraph 1 and the

obligations under paragraphs 2, 3 and 4.

7. In making a request for delivery as referred to in paragraph 1 a listed designated

enterprise can have the equity interest delivered for the account of the person who:

a. pursuant to Article 23 (11), is deemed to be the holder or owner of the equity

interest;

b. has been identified as the last holder of the equity interest in an ancillary company

by the competent authority of the Federal Republic of Germany or the United Kingdom of

Great Britain and Northern Ireland.

Article 27

1. If an affiliated institution, central institution, intermediary, foreign institution or

foreign institution with a function comparable with that of the central institution does not

or is unable to render its cooperation to a listed designated enterprise in the

implementation of a reduction of an equity interest pursuant to Article 26(2), a listed

designated enterprise shall inform the Minister of this.

2. The Minister can determine who was last to render the cooperation.

3. A listed designated enterprise shall observe the determination.

21

4. A listed designated enterprise shall observe a determination issued to an ancillary

company by a competent authority of the Federal Republic of Germany or the United

Kingdom of Great Britain and Northern Ireland that is equivalent to a determination as

referred to in paragraph 2, and in which it is determined who was last to render

cooperation.

5. If paragraph 2 or 4 is applied, the person who is co-owner in the collective deposit,

giro deposit, deposit of a foreign institution or deposit of a foreign institution with a

function comparable to that of the central institution and of which the holder has most

recently rendered cooperation shall be deemed to be the holder or owner of the equity

interest to be reduced.

Article 28

1. Any person who has received an order as referred to in Article 23 (1), (2), (3), (4),

(5) or (7) shall notify the Minister and a designated enterprise of an intention to acquire

shares or controlling rights in an unlisted designated enterprise or an equity interest in a

listed designated enterprise equal to or above the threshold set in the order, prior to a

period before the envisaged date for carrying out such intention to be set by a ministerial

regulation.

2. The Minister may instruct a holder or the prospective holder of shares, controlling

rights, or an equity interest, within a period after receipt of the notification to be set by a

ministerial regulation, to apply for a declaration of no objection in respect of the

acquisition of shares, controlling rights, or an equity interest.

3. Any person who has received an order as referred to in Article 23 23 (1), (2), (3),

(4), (5) or (7) may not acquire shares or controlling rights in an unlisted designated

enterprise or an equity interest in a listed designated enterprise equal to or above the

threshold without:




Great Britain and Northern Ireland and relating to the acquisition of the shares,

controlling rights or equity interest in an ancillary company.

4. An application for a declaration of no objection shall include:

a. the number of shares to be acquired or the nature and scope of the controlling

rights to be acquired in the designated enterprise;

b. where an unlisted enterprise is concerned, the draft agreement relating to the

exercise of controlling rights and rights attached to the shares by the prospective holder.


a. the prospective holder of the shares, controlling rights or equity interest is an

undesired person or acts in violation of Article 16;

b. the public interest may be threatened.




Germany or the United Kingdom of Great Britain and Northern Ireland, prior to a period

before the scheduled issue date to be set by a ministerial regulation, of its intention to




Kingdom of Great Britain and Northern Ireland has notified the holder or prospective

22

acquirer of a share, controlling rights or equity interest in an ancillary company within

the period referred to in paragraph 7 that it objects to the acquisition of the shares,

controlling rights or equity interest in the ancillary company.

9. The Minister shall notify the party disposing of the shares, controlling rights or

equity interest and the designated enterprise of a decision on an application for a

declaration of no objection.

10. Paragraph 1 or 3 shall not apply to a holder or prospective holder of shares,

controlling rights, or an equity interest who – after having received a an order as referred

to in article 23(1)(2)(3)(4)(5) or (7) - has obtained a declaration of no objection.

11. The Minister may order a person who has acted in violation of paragraph 3 or

Article 29(1) to dispose of his share or controlling rights in an unlisted designated

enterprise or to dispose of or reduce his equity interest in a listed designated enterprise

to the threshold value as specified in the order referred to in paragraph 1, within a

reasonable period of time to be determined by the Minister.

12. Articles 23(7) to (12), inclusive, 24, 25, and 26 are applicable mutatis mutandis to

the disposal of a share or controlling rights as referred to in paragraph 11, or the

disposal or reducing of an equity interest as referred to in paragraph 11.

Article 29

1. Any person who has received an order as referred to in Article 23 (1), (2), (3), (4),

(5) or (7) may not acquire shares or controlling rights in an unlisted designated

enterprise or an equity interest in a listed designated enterprise equal to or above the

threshold set in the order if:

a. the Minister has notified the prospective holder within a period after receipt of the

intention of a competent authority of the Federal Republic of Germany or the United

Kingdom of Great Britain and Northern Ireland to grant a declaration as referred to in

Article 28 (1) (b) to be set by a ministerial regulation, that the public interest may be

threatened or that he is an undesired person or acts in violation of Article 16;


Great Britain and Northern Ireland has notified the prospective holder within a period

after its receipt of the intention of the other competent authority to grant a declaration

as referred to in Article 28 (1) (b) to be set by a ministerial regulation, that it objects to

the acquisition of the shares, the controlling rights or the equity interest in an ancillary

company.



3. The Minister shall notify the party disposing of the shares, controlling rights or

equity interest and the designated enterprise of a decision taken pursuant to paragraph 1

(a).

Article 30

1. An undesired person may not exercise rights attached to shares and controlling

rights in a designated enterprise.

2. A person who acts in violation of Article 16 may not exercise rights attached to

shares, except for rights to dividend and receiving distributions from the reserves, and

controlling rights in a designated enterprise to the extent that the rights are based on

shares or controlling rights at or above the threshold of 3% of the shares or the votes.

23

3. It is prohibited for any person to exercise rights attached to shares, except for

rights to dividend and receiving distributions from the reserves, or controlling rights in

the designated enterprise if:

a. an order as referred to in Article 23 (5) has been imposed on him;

b. an order as referred to in Article 23 (7) has been imposed on him.

4. It is prohibited for any person to exercise rights attached to a share or controlling

rights in a designated enterprise if this person:

a. has acquired the share or controlling interests from a designated enterprise or

holder that or who has acted in violation of Article 17 (4) of Article 18 (1);

b. acts in violation of Article 19 (3) of Article 20 (1);

c. acts in violation of an order as referred to in Article 23 (5);

d. acts in violation of an order as referred to in Article 23 (7);

e. acts in violation of Article 28 (3) (a);

f. acts in violation of Article 28 (3) (b) or article 29 (1).

CHAPTER 5. ACTIVITIES OF A DESIGNATED ENTERPRISE

§ 5.1. Agreements and transfers relating to and availability of assets for dual use,

intellectual property rights, business secrets or services

Article 31

1. A designated enterprise and its subsidiaries may not negotiate or conclude an

agreement for the sale of assets for dual use, intellectual property rights, business

secrets or a service relating to assets for dual use if it involves an asset, intellectual

property right, business secret or a service which is subject to a licence requirement:

a. under or pursuant to the Strategic Services Act;

b. under or pursuant to the Strategic Assets Decree (Besluit strategische goederen);

c. pursuant to Article 4 (1) to (3) inclusive and Article 5 (1) of Regulation 428/2009;

d. pursuant to article 3 (1) of Regulation 428/2009 in so far as this concerns products

referred to in Annex 1 or as updated in accordance with Article 15 (1) of Regulation

428/2009 under international arrangements concerning non-proliferation and export

control falling under:

1°. category 0, or

2°. categories 1 to 9 inclusive to the extent that, based on the nuclear technology

note, this concerns technology directly related to assets of category 0.

2. Notwithstanding paragraph 1, a designated enterprise and its subsidiaries are

prohibited from:

a. negotiating or entering into an agreement concerning the transfer or making

available of assets for dual use, intellectual property rights, business secrets, or services

relating to assets for dual use;

b. de facto making available assets for dual use, intellectual property rights, business

secrets, or services relating to assets for dual use;

c. entering into a form of cooperation with a third party which may lead to activities

referred to in (a) or (b),

d. entering into an agreement to create security rights or rights of use in respect of

assets for dual use, intellectual property rights or business secrets, in those instances

where no sale of assets, intellectual property rights, business secrets or service which is

subject to a licence requirement as referred to in paragraph 1 is involved.

24

3. This Article shall not apply to the sale, transfer or making available of assets for dual

use, intellectual property rights, business secrets or services or the creation of security

rights or rights of use between:

a. a designated enterprise and a subsidiary as referred to in article 1, under subsidiary,

subparagraph c, the shares of which are fully owned, directly or indirectly, by a jointly

managed company;

b. a designated enterprise and a jointly managed company;

c. subsidiaries as referred to in article 1, under subsidiary, subparagraph c, the shares

of which are fully owned, directly or indirectly, by a jointly managed company;

d. a jointly managed company and a subsidiary as referred to in article 1, under

subsidiary, subparagraph c, the shares of which are full owned, directly or indirectly, by a

jointly managed company,

and whereby the subsidiary and the jointly managed company have their corporate

seat/registered office and central management in a state which is a party to the Treaty of

Almelo, Treaty of Cardiff, Treaty of Washington, Treaty of Paris or a treaty in the field of

nuclear cooperation with a comparable purpose.

4. Under or pursuant to an Order in Council:

a. assets for dual use, intellectual property rights, business secrets or services and

security rights or rights of use created therein may be designated as also being subject

to paragraph 1 and 2;

b. parties or categories of parties with which negotiations are conducted or an

agreement is concluded may be designated as not being subject to paragraph 1 and 2

and obligations arising from a designation pursuant to (a);

c. assets for dual use, intellectual property rights, business secrets or services may be

designated as not being subject to paragraphs 1 and 2;

d. forms of cooperation may be designated as not being subject to paragraph 2.

Article 32

1. A designated enterprise may notify the Minister of an intention to carry out an

activity which is prohibited pursuant to Article 31 prior to a period before the envisaged

date for carrying out such intention to be set by a ministerial regulation.

2. The Minister may decide to allow a designated enterprise within a period after

receipt of the notification to be set by a ministerial regulation, to apply for an exemption

from the prohibition pursuant to Article 31 (1) and (2).

3. Article 31 (1) and (2) shall not apply if:

a. the Minister has granted an exemption in respect of implementing an intention as

referred to in paragraph 1;


Great Britain and Northern Ireland has given consent to an ancillary company that is

equivalent to the exemption referred to in paragraph 2 and relates to the intention

referred to in paragraph 1.

4. The Minister shall refuse an exemption if the public interest may be threatened.



before the envisaged date of issue to be set by a ministerial regulation, of any intention

to grant an exemption.

6. The Minister shall not further consider the request for an exemption if the

competent authority of the Federal Republic of Germany or the United Kingdom of Great

25

Britain and Northern Ireland has informed an ancillary company within the period

referred to in paragraph 5 that it objects to the intention referred to in paragraph 1.

7. The exemption may relate to the conclusion of a number of agreements, certain

types of agreements and agreements concerning categories of activities or involving

categories of parties.

Article 33

Notwithstanding Article 32 (3), Article 31 (1) and (2) shall apply fully if:

a. the Minister has notified a designated enterprise within a period after receipt of the


Kingdom of Great Britain and Northern Ireland to give consent as referred to in Article 32

(3) (b) to be set by a ministerial regulation, that the intended activity as referred to in

Article 32 (1) may threaten the public interest;


Great Britain and Northern Ireland has notified an ancillary company within a period after

its receipt of the intention of the other competent authority to give consent as referred to

in Article 32 (3) (b) to be set by a ministerial regulation, that it objects to the intended

activity referred to in Article 32 (1).

Article 34

1. A designated enterprise or its subsidiary must suspend the execution of an activity

for which an exemption or permission as referred to in Article 32 (3) has been granted, if

the Minister has notified it of the belief that the execution of the activity may threaten

the public interest.

2. No activity for which an exemption or permission as referred to in Article 32 (3) has

been granted may be executed if the Minister has notified a designated enterprise or its

subsidiaries that the implementation activity may threaten the public interest.

3. The Minister shall submit the draft decision pursuant to paragraph 1 or 2 to a

designated enterprise or its subsidiaries. The designated enterprise or its subsidiaries

may submit a view to the Minister within a period to be set by a ministerial regulation.

4. The Minister shall take a decision pursuant to paragraph 1 or 2 within a period after

receiving the views to be set by a ministerial regulation or, in the absence of those views,

within a period after the period referred to in paragraph 3 to be set by a ministerial

regulation.

5. In case of an urgent threat to the public interest, the Minister may depart from the

requirements of paragraphs 3 and 4.

6. A decision taken with application of paragraph 5 shall lapse after 6 months of its

entry into force.

7. If a competent authority of the Federal Republic of Germany or the United Kingdom

of Great Britain and Northern Ireland has not notified an ancillary company that the

execution of the activity is suspended or prohibited, a decision of the Minister pursuant to

paragraph 1 or 2 will not take effect until a suspension or prohibition by both the

competent authority of the Federal Republic of Germany and the competent authority of

the United Kingdom of Great Britain and Northern Ireland has entered into force.

§ 5.2. Investments and divestments

Article 35

26

1. A designated enterprise and its subsidiaries may not without the Minister's approval

make an investment as referred to in Article 1 under investment, subparagraph a.

2. The Minister may only give his approval to an investment as referred to in

paragraph 1 if a treaty in the field of nuclear cooperation with a purpose comparable to

the Treaty of Washington, the Treaty of Cardiff, or the Treaty of Paris has been concluded

and which has entered into force between on the one hand the Kingdom of the

Netherlands, the Federal Republic of Germany and the United Kingdom of Great Britain

and Northern Ireland and on the other hand the State on whose territory the production

facility is to be created or commissioned.

3. If the competent authority of the Federal Republic of Germany or the United

Kingdom of Great Britain and Northern Ireland has not informed an ancillary company

that it consents to an investment as referred to in paragraph 1, the approval shall not

take effect until the consent of both the competent authority of the Federal Republic of

Germany and the competent authority of the United Kingdom and Northern Ireland has

entered into force.

Article 36

1. A designated enterprise shall notify the Minister of an investment as referred to in

Article 1 under investment, subparagraphs b or c prior to a period before the envisaged

date for negotiations about or the conclusion of an agreement concerning the

investment.

2. The Minister may instruct a designated enterprise, within a period after receipt of

the notification to be set by a ministerial regulation, to apply for approval for the

negotiations or conclusion of an agreement about an investment as referred to in

paragraph 1.

3. A designated enterprise and its subsidiaries may not make an investment as

referred to in Article 1, under investment, subparagraph b or c without:

a. a declaration of no objection issued by the Minister; or

b. a declaration issued to an ancillary company by a competent authority of the Federal

Republic of Germany or the United Kingdom of Great Britain and Northern Ireland and

which is equivalent to the declaration of no objection and relates to the investment.

4. The Minister shall refuse a declaration of no objection if the public interest may be

threatened.








the period referred to in paragraph 5 that it objects to the investment referred to in

paragraph 1.

Article 37

A designated enterprise and its subsidiaries may not make an investment as referred

to in Article 1 under investment, subparagraph b or c if:

27



Kingdom of Great Britain and Northern Ireland to issue a declaration as referred to in

Article 36 (3) (b) to be set by a ministerial regulation, that the investment may threaten

the public interest;



its receipt of the intention of the other competent authority to issue a declaration as


investment.

Article 38

1. A designated enterprise shall notify the Minister of any investment as referred to in

Article 1 under investment, subparagraph d or e prior to a period before the envisaged

date for making the investment to be set by a ministerial regulation.

2. The Minister may instruct a designated enterprise within a period after receipt of the

notification to be set by a ministerial regulation, to apply for a declaration of no objection

in respect of the investment as referred to in paragraph 1.

3. A designated enterprise and its subsidiaries may not make an investment as

referred to in Article 1, under investment, subparagraph d or e without:


b. a declaration issued to an ancillary company by a competent authority of the Federal

Republic of Germany or the United Kingdom of Great Britain and Northern Ireland which

is equivalent to the declaration of no objection referred to in (a) and relates to the

investment.

4. The Minister shall refuse to issue a declaration of no objection if the public interest

may be threatened.








the period referred to in paragraph 5 that it objects to the investment referred to in

paragraph 1.

7. Under or pursuant to an Order in Council, investments as referred to in Article 1,

under investment, subparagraph d or e may be designated as not being subject to

paragraph 3.

8. This Article shall not apply to an investment as referred to in Article 1, under

investment, subparagraph d or e, by:

a. a designated enterprise in a subsidiary as referred to in article 1, under subsidiary,


managed company;

b. a designated enterprise in a jointly managed company;

c. subsidiaries in another subsidiary as referred to in article 1, under subsidiary,


managed company;

28

d. a jointly managed company in a subsidiary as referred to in article 1, under

subsidiary, subparagraph c, the shares of which are fully owned, directly or indirectly, by

a jointly managed company,

if this investment results in the sale, transfer or making available of assets, intellectual

property rights, business secrets or services or the creation of security rights or rights of

use and whereby the subsidiary and the jointly managed company have their corporate

seat and central management in a state which is a party to the Treaty of Almelo, Treaty

of Cardiff, Treaty of Washington, Treaty of Paris, or a treaty in the field of nuclear

cooperation with a comparable purpose.

Article 39

A designated enterprise and its subsidiaries may not make an investment as referred

to in Article 1, under investment, subparagraph d or e if:




to in Article 38 (3) (b) to be set by a ministerial regulation, that the appointment may

threaten the public interest;





investment.

Article 40

1. A designated enterprise shall notify the Minister of any divestment prior to a period

before the envisaged date of carrying out the divestment to be set by a ministerial

regulation.



objection in respect of the divestment.

3. A designated enterprise and its subsidiaries are prohibited from carrying out the

divestment without:


b. a declaration equivalent to the declaration of no objection as referred to in

subparagraph (a) and relating to the divestment, granted by a competent authority of

the Federal Republic of Germany or the United Kingdom of Great Britain and Northern

Ireland to an ancillary company.


may be threatened.


Germany and the United Kingdom of Great Britain and Northern Ireland, prior to a period

before the scheduled issue date to be set by a ministerial regulation, of his intention to





29

the period referred to in paragraph 5 that it objects to the divestment referred to in

paragraph 1.

7. Under or pursuant to an Order in Council, divestments can be designated as not

being subject to paragraph 3.

8. This Article shall not apply to a divestment between:

a. a designated enterprise and a subsidiary as referred to in article 1, under


a jointly managed company;

b. a designated enterprise in a jointly managed company;

c. subsidiaries as referred to in article 1, under subsidiary, subparagraph c, the shares

of which are fully owned, directly or indirectly, by a jointly managed company;

d. a jointly managed company and a subsidiary as referred to in article 1, under


a jointly managed company,

whereby the subsidiary and jointly managed company have their corporate

seat/registered office and central management in a state which is a party to the Treaty of

Almelo, Treaty of Cardiff, Treaty of Washington, Treaty of Paris, or a treaty in the field of

nuclear cooperation with a comparable purpose.

Article 41

A designated enterprise and its subsidiaries may not carry out a divestment if:




Article 40 (3) (b) to be set by a ministerial regulation, that the divestment may threaten

the public interest.





divestment.

Article 42

1. Articles 31 to 37 inclusive shall not apply to:

a. negotiating, concluding or implementing an agreement with the state, the Federal


b. de facto making available assets for dual use, intellectual property rights, business

secrets, or services relating to assets for dual use on behalf of the state, the Federal


c. making an investment as referred to in Article 1, under investment, subparagraphs

a, b or c, on behalf of or to the state, the Federal Republic of Germany or the United

Kingdom of Great Britain and Northern Ireland;

d. an activity prohibited pursuant to Article 31 (1), (2) (a), (b) or (d), or (4) (a) to

implement an instruction as referred to in Article 72 (1), (2) or (5);

e. executing an activity as referred to in Article 34 (1) or (2) to implement an

instruction as referred to in Article 72 (1), (2) or (5);

f. making an investment as referred to in Article 1, under investment, subparagraphs

a, b or c, to implement an instruction as referred to in Article 72 (1), (2) or (5).

30

2. Articles 38 and 39 shall not apply to:

a. the purchase of assets for dual use, intellectual property rights, business secrets or

services relating to an asset for dual use referred to in Article 1, under investment,

subparagraph d or e, for the benefit of the state, the Federal Republic of Germany or the

United Kingdom of Great Britain and Northern Ireland;

b. the acquisition by a designated enterprise of intellectual property rights or business

secrets to implement an instruction as referred to in Article 48 (2) (a) or (4) (b) under

1°;

c. the making of an investment as referred to in Article 1, under investment,

subparagraphs d or e to implement an instruction as referred to in Article 72 (1), (2) or

(5).

3. Articles 40 and 41 shall not apply to a divestment for the benefit of or to the state,

the Federal Republic of Germany or the United Kingdom of Great Britain and Northern

Ireland.

4. Under or pursuant to an Order in Council states may be designated to which

paragraph 1 (a), (b) or (c), paragraph 2 (a) or paragraph 3 relate.

§ 5.3. Other restrictions

Article 43

A designated enterprise and its subsidiaries are prohibited for the purpose of

manufacturing nuclear weapons or other nuclear explosives:

a. to enrich or produce uranium to an enrichment level required for military use;

b. to enrich or produce other substances.

Article 44

A designated enterprise and its subsidiaries shall prevent any information, technology,

equipment, uranium, enriched uranium or other radioactive substances at their disposal

from being used for, contributing towards or facilitating the manufacture, processing or

control of nuclear weapons or other nuclear explosives by a non-nuclear weapon state

within the meaning of in article III of the Treaty on the Non-Proliferation of Nuclear

Weapons or by a non-state entity.

CHAPTER 6. JOINT VENTURES OF A DESIGNATED ENTERPRISE

Article 45

1. A designated enterprise shall notify the Minister of any intention related to creation,

amendment of the terms of, or termination of a joint venture by the designated

enterprise or its subsidiaries if this may cause the joint venture, legal person or entity

that forms part of the joint venture or a third party to gain or lose access to assets for

dual use, intellectual property rights, business secrets or services as referred to in Article

31 (1), (2) or (4) (a), prior to a period before the envisaged date for carrying out this

intention to be set by a ministerial regulation.

2. The Minister may instruct a designated enterprise to apply for a declaration of no

objection for the creation, amendment of terms, or termination of a joint venture within a

period after receipt of the notification pursuant to paragraph 1 to be set by a ministerial

31

regulation.

3. A joint venture may not be created, amended or terminated if this causes a legal

entity or an entity that is part of the joint venture or a third party to obtain or lose access

to an asset for dual use, an intellectual property right, a business secret or a service as

referred to in Article 31 (1), (2) or (4) (a), without:




Great Britain and Northern Ireland to an ancillary company and relating to the creation,

amendment or termination of the joint venture.

4. The Minister shall refuse a declaration of no objection if the creation, amendment of

terms or termination of the joint venture referred to in paragraph 1 may threaten the

public interest.


Germany and the United Kingdom of Great Britain and Northern Ireland of his intention

to issue a declaration of no objection prior to a period before the scheduled issue date to

be set by a ministerial regulation.



Kingdom of Great Britain and Northern Ireland has notified an ancillary company within

the period referred to in paragraph 5 that it objects to the creation, amendment of terms

or termination of a joint venture of the ancillary company.

7. The creation, amendment of terms or termination of a joint venture in violation of

paragraph 3 shall be void.

8. This article shall not apply to the creation, amendment of terms or termination of a

joint venture where this takes place in implementation of an instruction as referred to in

Article 48 (1) or (4) (a).

Article 46

1. A joint venture may not be created, amended or terminated as referred to in Article

45 (1) if:




Article 45 (3) (b) to be set by a ministerial regulation, that the creation, amendment of

the conditions or termination of the joint venture may threaten the public interest;





creation, amendment of terms or termination of the joint venture.

2. The creation, amendment of terms or termination of a joint venture in violation of

paragraph 1 shall be void.

Article 47

1. Positions in a joint venture may be declared subject to Articles 7, 8, 9 and 12 under

or pursuant to an Order in Council, provided that the designated enterprise is authorised

or has de facto power, based on its articles of association, shares or controlling rights or

32

under an agreement, to nominate or appoint individuals to these positions or consent to

the appointment of individuals to these positions.

2. A designated enterprise shall ensure that a person is suspended or removed from

his position by exercising the rights and powers vested in the designated enterprise if:

a. a declaration of no objection as referred to in Article 7 (3), under (a) has been

revoked in respect of the person fulfilling a position in a joint venture as referred to in

paragraph 1;


Great Britain and Northern Ireland has revoked a declaration of no objection as referred

to in Article 7 (3), under (b), issued to an ancillary company in respect of the person

fulfilling a position in a joint venture as referred to in paragraph 1;

c. the Minister has instructed the designated enterprise to arrange the suspension or

dismissal of the person because the public interest may be threatened;

d. a competent authority of the Federal Republic of Germany or the United Kingdom of

Great Britain and Northern Ireland has instructed an ancillary company to arrange the

suspension or dismissal of the person because the public interest may be threatened.

Article 48

1. To protect the public interest, the Minister may instruct a designated enterprise or

its subsidiaries to ensure or contribute to, by way of a joint venture, within a reasonable

period of time and by exercising the rights or powers vested in the designated enterprise

or its subsidiaries under the articles of association, its shares, controlling rights, an

agreement, or otherwise:

a. the compliance with the designated enterprise's, its subsidiaries’ or a joint venture’s

obligations under or pursuant to this Act;

b. the acquisition of shares or controlling rights in the joint venture.


its subsidiaries to exercise a right or power vested in the designated enterprise or its

subsidiaries in the joint venture under the articles of association, its shares, controlling

rights, an agreement, or otherwise, in connection with changes to or protection of:

a. intellectual property rights or business secrets;

b. control structures in the joint venture;

c. ownership of shares in the joint venture.

3. A designated enterprise and its subsidiaries shall comply with instructions as

referred to in paragraphs 1 and 2.

4. A designated enterprise and its subsidiaries shall comply with an instruction issued


Great Britain and Northern Ireland to an ancillary company which is equivalent to:

a. an instruction as referred to in paragraph 1;

b. an instruction as referred to in paragraph 2 relating to changes or protection of:

1°. intellectual property rights or business secrets;

2°. control structures in the joint venture;

3°. ownership of shares in the joint venture.

5. If not provided for in another way, the Minister shall grant the designated

enterprise or its subsidiaries compensation for all costs incurred by the designated

enterprise or its subsidiaries in the execution of instructions as referred to in paragraph 1

(b) and paragraph 2 (a) or (c).

Article 49

33

1. The Minister can designate, by way of a decree, agreements relating to assets for

dual use, intellectual property rights, business secrets or services relating to assets for

dual use as referred to in Article 31 (1) or (2) or (4) (a), between a designated

enterprise or its subsidiaries and a joint venture, as agreements that are subject to

paragraph 2 to 7 inclusive and Article 50.

2. A designated enterprise shall notify the Minister of any amendment, termination or

dissolution of an agreement as referred to in paragraph 1, prior to a period before the

envisaged date of amendment, termination or dissolution to be set by a ministerial

regulation.



objection in respect of the amendment, termination or dissolution of an agreement as


4. A designated enterprise may not amend, terminate or dissolve an agreement as

referred to in paragraph 1 without:



to an ancillary company by a competent authority of the Federal Republic of Germany or

the United Kingdom of Great Britain and Northern Ireland and relating to the agreement.


may be threatened.



before the envisaged date of issue to be set by a ministerial regulation, of an intention to


7. The Minister shall not further consider applications for a declaration of no objection

if a competent authority of the Federal Republic of Germany or the United Kingdom of

Great Britain and Northern Ireland has notified an ancillary company within the period

referred to in paragraph 6, that it objects to the amendment, termination or dissolution

of an agreement as referred to in paragraph 1.

8. This Article shall not apply to:

a. an agreement as referred to in paragraph 1 relating to the delivery of assets for

dual use for the benefit of the state, the Federal Republic of Germany or the United


b. the amendment, termination or dissolution of an agreement concerning intellectual

property rights or business secrets where the amendment takes place in implementation

of:

1°. an instruction as referred to in Article 48 (1) or (2) (a) or (b);

2°. an instruction as referred to in Article 48 (4) (a) or (b) under 1° or 2°.

9. Articles 31, 32, 33, and 34 are not applicable to an amendment, termination or

dissolution of an agreement as referred to in paragraph 1, where such amendment,

termination or dissolution is also an agreement to which Article 31 (1) or (2) applies.

10. Articles 38, 39, 40, and 41 are not applicable to an amendment, termination or

dissolution of an agreement as referred to in paragraph 1, where such amendment,

termination or dissolution:

a. is also an agreement for purchase as referred to in Article 1, investment, at d;

b. is also an agreement that is designated in an Order in Council as referred to in

Article 1, investment, at e.

34

c. is also an agreement that is designated in an Order in Council as referred to in

Article 1, divestment, at c.

Article 50

A designated enterprise may not amend, terminate or dissolve an agreement as

referred to in Article 49 (1) 1 if:




to in Article 49 (4) (b) to be set by a ministerial regulation, that the amendment,

termination or dissolution of the agreement may threaten the public interest;





amendment, termination or dissolution of the agreement.

CHAPTER 7. FINANCIAL CONTROL OF A DESIGNATED ENTERPRISE

§ 7.1. Creditworthiness

Article 51

1. A designated enterprise:

a. shall ensure that the creditworthiness of the group that the designated enterprise

belongs to is maintained at least at the level to be set under or pursuant to an Order in

Council, and;

b. shall not execute any acts that can be expected to cause the downgrading of the

creditworthiness of the group or parts of the group that the designated enterprise

belongs to, below the level referred to under (a);

2. The designated enterprise shall annually, before a date to be set by a ministerial

regulation, report to the Minister on the creditworthiness.

3. Under or pursuant to an Order in Council:

a. rules may be imposed with regard to how the creditworthiness is determined;

b. additional rules may be imposed with regard to the obligations based on paragraphs

1 and 2.

Article 52

If a designated enterprise does not, or it is inevitable that it will not, comply with

Article 51 (1) (a), the designated enterprise shall notify this to the Minister.

Article 53

1. If a designated enterprise

a. fails to comply with Article 51 (1) (a); or

b. has notified pursuant to Article 52 that it is inevitable that it will not comply with

Article 51 (1) (a),

35

the designated enterprise and the group companies of the designated enterprise may

not raise financial loans or make investments in so far as the borrowing or investing is

not related to the normal business operations and the designated enterprise may not

distribute dividends, reduce capital, purchase own shares, or make a distribution from

the reserves.

2. Paragraph 1 shall cease to apply if it is shown that a designated enterprise has

complied with Article 51 (1) (a) throughout six months after the notification pursuant to

Article 52.

Article 54

1. A designated enterprise may notify the Minister of its intention to raise a financial

loan or to make investments in so far as the borrowing or investing is not related to the

normal business operations, to pay out dividend to a holder of shares in a designated

enterprise, reduce capital, purchase own shares or make a distribution from the reserves

prior to a period before the envisaged date of carrying out such intention to be set by a

ministerial regulation.

2. Within a period after receipt of the notification to be set by a ministerial regulation,

the Minister may offer the designated enterprise the possibility to apply for an exemption

from the prohibition pursuant to Article 53 (1).

3. Article 53 (1) shall not apply if:

a. the Minister has granted an exemption with regard to the implementation of an

intention as referred to in paragraph 1;


Great Britain and Northern Ireland has granted consent to an ancillary company which is

equivalent to the exemption referred to in paragraph 2 and pertains to the intention





before the envisaged grant date to be set by a ministerial regulation to be set by a

ministerial regulation, of an intention to grant an exemption.

6. The Minister shall not further consider the application for an exemption if the

competent authority of the Federal Republic of Germany or of the United Kingdom of

Great Britain and Northern Ireland has informed an ancillary company that it objects to

the intention referred to in paragraph 1

Article 55

In departure from Article 54 (3), Article 53(1) shall fully apply if:



Kingdom of Great Britain and Northern Ireland to grant consent as referred to in Article

54 (3) (b) to be set by a ministerial regulation, that the carrying out of the intention

referred to in Article 54 (1) may threaten the public interest;



after its receipt of the other competent authority's intention to grant consent as referred

to in Article 54 (3) (b) to be set by a ministerial regulation, that it objects to the carrying

out of the intention referred to in Article 54 (1).

36

Article 56

1. After it has emerged that a designated enterprise fails to comply with Article 51 (1)

(a) or after the designated enterprise has notified pursuant to Article 52 that it is

inevitable that it will fail to comply with Article 51 (1) (a), the designated enterprise shall

draw up a recovery plan within a period to be set by a ministerial regulation.

2. The recovery plan shall specify how the designated enterprise will start complying

with Article 51 (1) (a) within a reasonable period.

3. The designated enterprise shall submit to the Minister the recovery plan within a

period after the end of the period referred to in paragraph 1 to be set by a ministerial

regulation.


the recovery plan to be set by a ministerial regulation, to apply for a declaration of no

objection in respect of the implementation of the recovery plan.

5. The recovery plan may not be implemented without:




Great Britain and Northern Ireland to an ancillary company and relating to the recovery

plan.

6. The Minister shall refuse a declaration of no objection if the recovery plan

insufficiently shows that the designated enterprise will comply with Article 51 (1) (a)

within a reasonable period.








the period referred to in paragraph 7 that it objects to the implementation of the

recovery plan.

Article 57

The recovery plan referred to in Article 56 (1) may not be implemented if:



Kingdom of Great Britain and Northern Ireland to grant a declaration of no objection as

referred to in Article 56 (5) (b) to be set by a ministerial regulation, that the recovery

plan insufficiently shows that the designated enterprise will comply with Article 51 (1) (a)

within a reasonable period;



after its receipt of the other competent authority's intention to issue a declaration of no

objection as referred to in Article 56 (5) (b) to be set by a ministerial regulation, that it

objects to the implementation of the recovery plan.

37

Article 58


enterprise if:

a. the designated enterprise fails to submit a recovery plan as referred to in Article 56

(1) or fails to do so in time;

b. a declaration of no objection as referred to in Article 56 (5) has been refused and

the designated enterprise also after amendment of the recovery plan is unable to comply

with the provisions of Article 51 (1) (a);

c. the designated enterprise fails to implement the recovery plan referred to in Article

56 (1); or

2. An executive or non-executive director of a designated enterprise shall be dismissed

as of the date on which:

a. a decision pursuant to paragraph 1 has entered into force;

b. a measure of a competent authority of the Federal Republic of Germany or the

United Kingdom of Great Britain and Northern Ireland has entered into force dismissing

the executive or non-executive director of an ancillary company.

Article 59

1. If the information submitted on the basis of the reporting obligation referred to in

Article 51 (2) shows that the designated enterprise will most likely fail to comply with

Article 51 (1) (a) in the next three years, the designated enterprise shall, if so requested

by the Minister, submit a plan of action to the Minister before a deadline to be set by a



of Great Britain and Northern Ireland has not made a request to an ancillary company to

provide a plan of action, a request based on paragraph 1 shall only take effect at the

moment that the request of both the competent authority of the Federal Republic of

Germany and the competent authority of the United Kingdom of Great Britain and

Northern Ireland has entered into force.

3. The plan of action shall contain a strategy and measures to ensure compliance with

Article 51 (1) (a).


enterprise if the designated enterprise fails to draw up or implement the plan of action in

good faith or with sufficient care.

5. Additional requirements may be imposed by an Order in Council in respect of the

plan of action.

6. The Minister shall determine three years after the submission of the plan of action

whether a designated enterprise will also most likely fail to comply with Article 51 (1) (a)

in the following year.

7. The Minister may extend the decision pursuant to paragraph 6 by consecutive

periods of one year if a designated enterprise will also most likely fail to comply with

Article 51 (1) (a) in that year.


of Great Britain and Northern Ireland has not notified an ancillary company of the

determination that the credit-worthiness of the group to which the designated enterprise

belongs during the year as referred to in paragraph 6 or 7 will most likely remain at least

at the level as determined by or pursuant to Order in Council as referred to in Article 51

(1) (a), a decision based on paragraph 6 or 7 shall not take effect until the determination

38

by both the competent authority of the Federal Republic of Germany and the competent

authority of the United Kingdom and Northern Ireland has entered into force.

9. Article 53 (1) shall apply in respect of the year for which the Minister has

determined pursuant to paragraph 6 or 7 and the competent authorities of the Federal

Republic of Germany and the United Kingdom and Northern Ireland have determined

pursuant to paragraph 8 that the credit-worthiness of the group to which the designated

enterprise belongs will not remain at least at the level as determined by or pursuant to

Order in Council as referred to in Article 51 (1) (a).

10. For the purpose of taking a decision as referred to in paragraphs 6 and 7, the

Minister shall seek advice from an independent external expert about the

creditworthiness of the designated enterprise.

Article 60

Notwithstanding Articles 51 through 59, the designated enterprise shall at the Minister's

request submit proposals for a different manner of determining the creditworthiness if

the designated enterprise is effectively no longer able to comply with Article 51 (1) or the

rules imposed under or pursuant to an Order in Council as referred to in Article 51 (3), as

a result of circumstances unrelated to the financial situation of the group to which the

designated enterprise belongs,.

§ 7.2. Nuclear management plan

Article 61

1. A designated enterprise shall have in place a nuclear management plan that

contains an adequate strategy with regard to the converting of substances, the

permanent storage of substances, the decommissioning, dismantling, security, disposal,

and destruction or adjustment of installations, equipment, data carriers, and materials

that are or may be used for the enrichment of uranium, the production of radioactive

substances or the development or exploitation of the technology for that purpose by the

designated enterprise or its subsidiaries, in so far as the subsidiaries have statutory

obligations relating to these matters.

2. A designated enterprise shall ensure sufficient funding is available to implement the

strategy.

3. The nuclear management plan demonstrates that paragraph 2 has been complied

with.

4. The nuclear management plan:

a. contains an estimate of the costs of implementing the strategy;

b. contains an estimate of the funding to cover the costs of implementing the

strategy, which at any rate is based on the cash flow of the designated enterprise and its

subsidiaries;

c. reflects that a designated enterprise or its subsidiaries shall provide for one or more

funds with capital which is ringed-fenced from the designated enterprise or its

subsidiaries and structured to ensure that, in the event of insolvency or bankruptcy of

the designated enterprise or its subsidiaries, the personal creditors, in so far as legally

possible under legislation applicable to the relevant fund, have no recourse against the

ring-fenced capital and the assets that are part of the ring-fenced capital;

39

d. reflects how the nuclear management plan is fleshed out, the details of the nuclear

management plan being provided on the basis of data, assumptions or expected market

developments that are reasonable, well-founded and probable.

5. Additional rules may be imposed under or pursuant to an Order in Council with

regard to:

a. the format and methodology of the nuclear management plan;

b. the implementation of the nuclear management plan;

c. the structure, management and functioning of the funds referred to in paragraph 4

(c), in so far as these have been created to cover the costs of implementing the strategy

in the Netherlands.

6. A designated enterprise shall implement the nuclear management plan.

Article 62

1. A designated enterprise shall provide the Minister, before a date to be set by a

ministerial regulation, with the first nuclear management plan as referred to in Article 61

(1) which has been drawn up after the instruction pursuant to Article 2 A91).

2. The Minister may instruct a designated enterprise, within a period after receipt of the

first nuclear management plan to be set by a ministerial regulation, to apply for a

declaration of no objection in respect of the plan.

3. The first nuclear management plan may not be implemented without:




Great Britain and Northern Ireland to an ancillary company and relating to the nuclear

management plan.

4. The Minister shall refuse a declaration of no objection if there is insufficient

compliance with Article 61 (1) to (4) inclusive, or the obligations by or pursuant to the

Order in Council, as referred to in article 61 (5) (a), have not been met.








the period referred to in paragraph 5 that it objects to the implementation of the first

nuclear management plan.

Article 63

The first nuclear management plan, as referred to in Article 61 (1), may not be

executed if:




Article 62 (3) (b) to be set by a ministerial regulation, that article 61 (1) to (4) inclusive,

or the obligations by or pursuant to the Order in Council, as referred to in article 61

(5)(a), have not been met;

40





execution of the first nuclear management plan.

Article 64

1. After a designated enterprise has obtained a declaration of no objection as referred

to in Article 62 (3), it shall annually provide the Minister with the nuclear management

plan referred to in Article 61 (1) before a date to be set by a ministerial regulation.


the nuclear management plan to be set by a ministerial regulation, to apply for a

declaration of no objection in respect of an amendment of the nuclear management plan

in relation to the previous year if the amendment concerns the model or methodology of

the plan.

3. If the amendment concerns the model or methodology, the nuclear management

plan referred to in Article 61 (1) may not be amended without:


b. a declaration equivalent to a declaration of no objection as referred to in (a) issued


Great Britain and Northern Ireland to an ancillary company and relating to the

amendment of the nuclear management plan.

4. The Minister shall refuse a declaration of no objection if there is insufficient

compliance with Article 61 (1), (2), (3), or (4) (c), or the obligations by or pursuant to

the Order in Council, as referred to in article 61 (5) (a), have not been met.








the period referred to in paragraph 5 that it objects to the amendment of the nuclear

management plan in relation to its format or methodology.

Article 65

The nuclear management plan referred to in Article 61 (1) may not be amended if this

amendment relates to the format or methodology if:

a. the Minister, within a period after receipt of the intention of a competent authority

of the Federal Republic of Germany or the United Kingdom of Great Britain and Northern

Ireland to issue a declaration as referred to in Article 64 (3) (b) to be set by a ministerial

regulation, has notified a designated enterprise that there is insufficient compliance with

Article 61 (1), (2), (3), or (4) (c), or the obligations by or pursuant to the Order in

Council, as referred to in article 61 (5) (a), have not been met;



after its receipt of the other competent authority's intention to issue a declaration as

41


amendment of the nuclear management plan.

Article 66

1. A designated enterprise may not implement a nuclear management plan as referred

to in Article 61 (1) if the Minister has notified the designated enterprise within a period

after receipt of the nuclear management plan pursuant to Article 64 (1) to be set by a

ministerial regulation that:

a. compliance with Articles 61 (1) and (2) is insufficiently ensured;

b. the details of the nuclear management plan are incompatible with the model or the

methodology of the plan;

c. there is insufficient compliance with the provisions in or pursuant to the Order in

Council referred to in Article 61 (5) (b);

d. the content of the nuclear management plan is based on data, assumptions, or

expected market developments that are unreasonable, ill-founded or improbable.

2. For the purpose of taking a decision pursuant to paragraph (1) (e), the Minister shall

seek the advice of an independent external expert on the data, assumptions or expected

market developments.


of Great Britain and Northern Ireland has not informed an ancillary company that it

objects to the implementation of the nuclear management plan referred to in Article 61

(1), a decision based on paragraph 1 shall not take effect until the measure by both the

competent authority of the Federal Republic of Germany and the competent authority of

the United Kingdom and Northern Ireland, which is equivalent to the decision of the

Minister, has entered into force.

Article 67

If a designated enterprise is unable to comply with Article 61 (2), the designated

enterprise shall notify this to the Minister.

Article 68

1. A designated enterprise may not distribute dividend, reduce capital, purchase own

shares, or make a distribution from the reserves if:

a. a designated enterprise is acting in violation of Article 61 (1) or (6);

b. a designated enterprise acts in violation of Article 62 (3), 63, 64 (3), or 65;

c. a designated enterprise is prohibited from implementing the nuclear management

plan pursuant to Article 66; or

d. a designated enterprise fails or its subsidiaries fail to make a payment into the fund

or funds referred to in Article 61 (4) (c), as described in the nuclear management plan

referred to in Article 61 (1).

2. To the extent that financial restrictions have been imposed pursuant to paragraph 1

due to the fact referred to in paragraph 1 (c), these restrictions shall apply up to such

amount as is required in order to comply with Article 61 (2), based on the nuclear

management plan referred to in Article 61 (1).

3. In so far as financial restrictions have been imposed pursuant to paragraph 1 on

account of the fact referred to in paragraph 1 (d), such restrictions shall apply up to a

42

sum to the amount that a designated enterprise or its subsidiaries should have made a

financial contribution to the fund or funds referred to in Article 61 (4) (c).

4. Notwithstanding paragraph 1 (d), a designated enterprise shall not make a financial

contribution to the fund or funds referred to in Article 61 (4) (c) if this results in the

designated enterprise failing to comply with Article 51 (1) (a).

Article 69

1. A designated enterprise may notify the Minister of its intention to pay out a

dividend to a holder of shares in a designated enterprise, reduce the capital, purchase

own shares, or make a distribution from the reserves as referred to in Article 68 (1) prior

to a period before the envisaged date of carrying out such intention to be set by a


2. Within a period after receipt of the notification to be set by a ministerial regulation,

the Minister may offer the designated enterprise the possibility to apply for an exemption

from Article 68 (1).

3. Article 68 (1) shall not apply if:

a. The Minister has granted an exemption for an intention as referred to in paragraph

1;


Great Britain and Northern Ireland has granted consent to an ancillary company which is

equivalent to the exemption referred to in paragraph 2 and pertains to the intention





to be set by a ministerial regulation of an intention to grant an exemption prior to the

envisaged date of granting.

6. The Minister shall not further consider of the application for an exemption if the

competent authority of the Federal Republic of Germany or of the United Kingdom of

Great Britain and Northern Ireland has informed an ancillary company that it objects to

the intention referred to in paragraph 1

Article 70

Notwithstanding Article 69 (3), Article 68 (1) shall fully apply if:



Kingdom of Great Britain and Northern Ireland to grant consent as referred to in Article

69 (3) (b) to be set by a ministerial regulation, that the carrying out of the intention

referred to in Article 69 (1) may threaten the public interest;



after its receipt of the other competent authority's intention to grant consent as referred

to in Article 69 (3) (b) to be set by a ministerial regulation, that it objects to the carrying

out of the intention referred to in Article 69 (1).

§ 7.3. Restrictions as to security and funding

Article 71

43

1. A designated enterprise and its subsidiaries may not provide guarantees for third

parties or provide security to third parties for the performance of obligations by other

third parties, with the exception of providing guarantees or security in connection with:

a. activities that are directly related to the normal business operations of the

designated enterprise and its subsidiaries designated under or pursuant to an Order in

Council;

b. compliance with statutory obligations.

2. A designated enterprise and its subsidiaries may not:

a. grant financial loans to third parties;

b. assume obligations with third parties that must be performed in an accelerated

manner as a result of another third party failing to perform its obligations or as a result

of circumstances related to that other third party;

c. enter into transactions with third parties on terms more favourable than the terms

that would have been agreed in business transactions by independent parties.

3. The Minister may grant an exemption from paragraphs 1 and 2.



of Great Britain and Northern Ireland has not granted consent to an ancillary company

equivalent to the exemption as referred to in paragraph 3, the exemption shall not take

effect until the decision to grant an exemption of both the competent authority of the

Federal Republic of Germany and the competent authority of the United Kingdom of

Great Britain and Northern Ireland has entered into force.

6. Under or pursuant to an Order in Council financial transactions of a designated

enterprise or its subsidiaries may be designated as not being subject to paragraphs 1 and

2.

CHAPTER 8. POWERS OF INTERVENTION IN RELATION TO A DESIGNATED

ENTERPRISE

Article 72

1. To protect the public interest, security of supply or public health, or to comply with

the Euratom Treaty or the United Nations Charter, the Minister may instruct a designated

enterprise to enrich uranium, produce radioactive substances or precursors, or making

available the relevant production facilities or equipment within a reasonable period for

the purpose of medical use, research and development, energy supply or public security.


its subsidiaries:

a. to invest to increase the security or safety within a reasonable period;

b. in respect of production facilities, storage facilities and offices of the designated

enterprise that come within the scope of a treaty on nuclear cooperation other than the

Treaty of Almelo or the Treaty of Cardiff, to comply within a reasonable period with the

security requirements set by:

1°. the Minister with regard to a designated enterprise, or

2°. a competent authority of the Federal Republic of Germany or the United Kingdom

of Great Britain and Northern Ireland in respect of an ancillary company;

c. offer technical assistance within a reasonable period to the International Atomic

Energy Agency or the European Atomic Energy Community in the form of training,

advice, or other services to these international organisations.

44


of Great Britain and Northern Ireland does not issue an instruction to the ancillary

company that is equivalent to the instruction as referred to in paragraph 2 (a), an

instruction as referred to in paragraph 2 (a) will not take effect until the instruction of

both the competent authority of the Federal Republic of Germany and the competent

authority of the United Kingdom of Great Britain and Northern Ireland has entered into

force.

4. A designated enterprise shall comply with the instructions as referred to in

paragraphs 1 and 2.

5. A designated enterprise shall observe an instruction issued by the competent


Northern Ireland to an ancillary company that is equivalent to an instruction as referred

to in paragraphs 1 and 2, (a) and (b).

6. The Minister shall award the designated enterprise or its subsidiaries compensation

for all costs incurred by a designated enterprise or its subsidiaries in the execution of

instructions as referred to in the paragraphs 1 and 2 (c) including a reasonable profit

margin and minus the proceeds of the implementation of the instruction.

CHAPTER 9. SPECIAL PROVISIONS REGARDING SUSPENSION OF PAYMENTS,

BANKRUPTCY AND THE CONTINUITY OF A DESIGNATED ENTERPRISE

Article 73

1. In order to protect the public interest and where immediate intervention is

required, the Minister may issue a direction to a designated enterprise to comply with the

instructions given by a person designated by the Minister, if:

a. the designated enterprise does not comply with Article 51 (1) (a) or has stated in

accordance with Article 52 that it is inevitable that it will not comply with Article 51 (1)

(a);

b. in the opinion of the Minister the continuity of the designated enterprise or its

subsidiaries is jeopardised on account of the business operations, because a suspension

of payments or bankruptcy is most likely or inevitable, and

c. in the opinion of the Minister, the competent authorities of the German Federal

Republic and the United Kingdom of Great-Britain and Northern Ireland the continuity of

the designated enterprise or its subsidiaries is jeopardised on account of the business

operations because a suspension of payments is most likely or inevitable.

2. A designated enterprise shall observe a direction as referred to in paragraph 1.

3. The designated person referred to in paragraph 1 shall only give instructions for the

purpose of protecting the public interest.

4. A designated person shall take into account a direction issued by a competent

authority of the German Federal Republic or the United Kingdom of Great-Britain and

Northern Ireland to an ancillary company that is equivalent to a direction as referred to in

paragraph 1.

5. A designated enterprise and its subsidiaries shall, where requested, fully cooperate

with the designated person as referred to in paragraph 1.

6. Our Minister may replace the designated person as referred to in paragraph 1.

7. A designated person as referred to in paragraph 1 shall exercise his powers within

the time period set by the Minister in the direction. This period shall not exceed a period

of six months, but may be extended once with not more than six months.

45

8. Directors are personally liable to a designated enterprise for any damage resulting

from an action, by the directors, in violation of instructions given by a designated person

as referred to in paragraph 1.

9. The direction referred to in paragraph 1 and the instructions given by a designated

person as referred to in paragraph 1 are classified in accordance with the security and

classification policy referred to in Annex II under 1, 2, 3 and 4 to the Treaty of Almelo or

article VII (1) and Annex II, under 1 and 2 to the Treaty of Cardiff.

Article 74

1. If a designated enterprise or a subsidiary is declared bankrupt in accordance with

Article 6 of the Bankruptcy Act, the District Court may only appoint a trustee in

accordance with Article 14 (1) of the Bankruptcy Act who has undergone a security

screening as referred to in Article 13 (4) of the Security Screening Act before being

appointed.

2. The District Court may ask the Minister of the Interior and Kingdom Relations, for

the benefit of the appointment of a trustee pursuant to paragraph 1, to issue notifications

within the meaning of Article 13 (1) of the Security Screening Act.

3. Article 13 (2) to (6) inclusive of the Security Screening Act shall apply mutatis

mutandis, with the exception of Article 13 (2), first sentence.

4. The District Court shall not appoint a trustee if the security screening referred to in

Article 13 (4) of the Security Screening Act warrants this.

Article 75

A trustee who is appointed pursuant to Article 14 (1) of the Bankruptcy Act shall

comply with all statutory obligations, instructions, restrictions and conditions that are

applicable to a designated enterprise and its subsidiaries under or pursuant to this Act, if

necessary in derogation from the Bankruptcy Act.

Article 76

Articles 74 and 75 shall apply mutatis mutandis to the appointment of an administrator

within the meaning of Section 215 (2) of the Bankruptcy Act.

Article 77

1. To protect the public interest and the security of the state and its allies the

Minister may designate production facilities, storage facilities, offices or parts of

production facilities and offices of a designated enterprise or its subsidiaries, situated in

the Netherlands, as a restricted location within the meaning of Section I of the Protection

of State Secrets Act, if:

a. the operational management of a designated enterprise or its subsidiaries

jeopardises the continuity of the production facilities, storage facilities, or offices situated

in the Netherlands;

b. the operational management of the designated enterprise or its subsidiaries or the

actions of third parties seriously affect the security of production facilities, storage

facilities, or offices situated in the Netherlands;

c. a designated enterprise's subsidiary established in the Netherlands is declared

bankrupt in accordance with Section 6 of the Bankruptcy Act;

46

d. suspension of payments has been granted to a designated enterprise's subsidiary

established in the Netherlands in accordance with Section 215 (2) of the Bankruptcy Act.

2. Sections IV and V of the Protection of State Secrets Act shall apply mutatis

mutandis.

Article 78

1. If all executive or non-executive directors of a designated enterprise are absent or

unable to act, or have been suspended or dismissed, resulting in the board or supervision

as required by the articles of association no longer being in place, the Enterprise

Chamber of the Amsterdam Court of Appeal may temporarily fill the relevant vacancies at

the request of an interested party. The interested party informs the interested parties

referred to in paragraph 10 (b) and (c) simultaneous with making the request, failing

which the request will be void.

2. In ordering the provisional arrangements based on paragraph 1, the Enterprise

Chamber shall where possible take into account the qualitative requirements under the

articles of association for executive and non-executive directors and any other relevant

provisions in the articles of association.

3. The Enterprise Chamber may only fill vacancies referred to in paragraph 1 by

appointing a person who has been subject to a security screening as set out in Section 13

(4) of the Security Screening Act or an equivalent security screening by the competent

authorities of the Federal Republic of Germany or the United Kingdom of Great Britain

and Northern Ireland.

4. The Enterprise Chamber may ask the Minister of the Interior and Kingdom

Relations, for the benefit of temporarily filling vacancies as referred to in paragraph 1, to

issue notifications within the meaning of Article 13 (1) of the Security Screening Act.

5. Article 13 (2) to (6) inclusive of the Security Screening Act shall apply mutatis

mutandis, except for the first sentence of Article 13 (2).

6. The Enterprise Chamber shall not appoint a person if the security screening

referred to in Article 13 (4) of the Security Screening Act or an equivalent security

screening as referred to in paragraph 3 warrants this.

7. The Enterprise Chamber shall deal with the request referred to in paragraph 1 with

the utmost urgency.

8. Notwithstanding Section 282 (1) of the Dutch Code of Civil Procedure, an

interested party may file a defence until a date prior to the start of the proceedings

determined by the Enterprise Chamber. The petitioning parties and the designated

enterprise shall appear before the Enterprise Chamber either represented by a lawyer or

accompanied by a lawyer. Prior to rendering its decision, the Enterprise Chamber shall

give the petitioner and the interested parties which have submitted a defence an

opportunity to be heard.

9. Without prejudice to the provisions in Article 10, in the event that the Enterprise

Chamber decides to temporarily fill the vacancies by appointing certain persons as

executive or non-executive director, the newly appointed directors shall fulfil their tasks

until the board of the designated enterprise is composed in the manner set out in the

articles of association or until such other time as determined by the Enterprise Chamber.

10. The interested parties as referred to in paragraphs 1 and 8 are at any rate:

a. a holder of at least ten percent of the shares in the designated enterprise;

b. the Minister;

c. the competent authorities of the Federal Republic of Germany and the United


47

11. In dealing with the request referred to in paragraph 1, the Enterprise Chamber

shall give the employee representative body of a designated enterprise an opportunity to

be heard.

CHAPTER 10. INFORMATION OBLIGATIONS OF A DESIGNATED ENTERPRISE

Article 79

1. A designated enterprise shall provide a status overview to the Minister and the

competent authorities of the Federal Republic of Germany and the United Kingdom of

Great Britain and Northern Ireland at least twice a year.

2. A status overview shall in any event contain:

a. an overview of the developments that have taken place at the designated

enterprise and its subsidiaries since the last status overview in respect of the themes

referred to in paragraph 3;

b. an overview of the business strategy and intended activities of the designated

enterprise and its subsidiaries.

3. A status overview shall contain information about the following subjects:

a. production of enriched uranium, radio-active substances and related technology

and equipment;

b. investments and divestments;

c. sales contracts, purchase contracts, and negotiations about these contracts;

d. joint ventures;

e. financial situation;

f. safety, security, environmental situation, and maintenance of the production

facilities;

g. market developments.

4. At the request of the Minister or a competent authority of the Federal Republic of

Germany or the United Kingdom of Great Britain and Northern Ireland, a designated

enterprise shall:

a. submit interim updated status overviews;

b. provide oral or written explanations of the status overview;

5. A designated enterprise shall provide the Minister and the competent authorities of

the Federal Republic of Germany and the United Kingdom of Great Britain and Northern

Ireland, voluntarily or on request, with information necessary for the application of this

Act, the Treaty of Almelo, the Treaty of Cardiff, or the Treaty of Washington.

6. Additional rules may be imposed under or pursuant to an Order in Council

regarding:

a. the content of the status overview;

b. the manner in which a designated enterprise shall explain the status overview

pursuant to paragraph 4 (b);

c. the manner of submitting information by a designated enterprise pursuant to

paragraphs 4 (a) and 5;

d. the content of the information a designated enterprise shall provide pursuant to

paragraph 4 (a) and (5).

Article 80

48

An executive or non-executive director of a designated enterprise shall attend

meetings of a supervisory committee if the Minister or a competent authority of the


has instructed him to do so.

Article 81

A designated enterprise shall submit to the Minister and the competent authorities of

the Federal Republic of Germany and the United Kingdom of Great Britain and Northern

Ireland:

a. the remuneration policy of a designated enterprise and the remuneration

recommendations to the remuneration committee of a designated enterprise;

b. the minutes of the remuneration committee of a designated enterprise.

Article 82

1. A designated enterprise shall take all appropriate measures to safeguard classified

information.

2. In implementation of the security and classification policy referred to in Annex II

under 1, 2, 3 and 4 to the Treaty of Almelo or Article VII (1) and Annex II, under 1 and 2

to the Treaty of Cardiff, the Minister may issue a direction in respect of the security and

classification of classified information.

3. A designated enterprise shall comply with the instructions.

4. A designated enterprise shall comply with instructions issued by a competent

authority of the Federal Republic of Germany and the United Kingdom of Great Britain

and Northern Ireland which is equivalent to a direction as referred to in paragraph 2 and

pertains to the security and classification of the classified information.

Article 83

1. A designated enterprise and its subsidiaries may not share or disclose classified

information with or to:

a. persons not authorised to take note of these;

b. holders of shares or controlling rights in a designated enterprise.

2. A designated enterprise and its subsidiaries are prohibited from sharing or disclosing

classified information with or to executive or non-executive directors, officers, and

employees of a designated enterprise and its subsidiaries, with the exception of the

information that the executive or non-executive director, officer, or employee requires for

a proper execution of his tasks.

3. Paragraphs 1 and 2 are not applicable to sharing classified information with or

disclosing classified information to:

a. the relevant Minister, or

b. the relevant competent authorities of the Federal Republic of Germany or the United


c. persons of competent authorities of the French Republic authorised for that purpose

in accordance with the provisions and restrictions of the Treaty of Cardiff;

d. persons of competent authorities of the United States of America authorised for that

purpose in accordance with the provisions and restrictions of the Treaty of Washington or

the Treaty of Paris.

49

Article 84

1. The documents to be drawn up and provided by the designated enterprise pursuant

to Article 79 (1), (4) and (5) and the discussions in the meetings referred to in Article 80

are classified in accordance with the security and classification policy referred to in Annex

II under 1, 2, 3 and 4 to the Treaty of Almelo or Article VII (1) and Annex II, under 1

and 2 to the Treaty of Cardiff.

2. The classification of the documents and the discussions in the meetings referred to

in paragraph 1 do not result in classification of the information included therein or

information provided, unless this information itself is classified in accordance with the

security and classification policy referred to in Annex II under 1, 2, 3 and 4 to the Treaty

of Almelo or Article VII (1) and Annex II, under 1 and 2 to the Treaty of Cardiff.

CHAPTER 11. DESIGNATED ENTERPRISE THAT FALLS UNDER THE SCOPE OF THE

TREATY OF CARDIFF

Article 85

Article 3 (3), Article 4, Article 7 (1), (2), (3) (b), (5) and (6), Article 8, Article 10 (2)

(b), (4) (b), (c) and (d), Article 13 (5) (b), Article 14 (5), Article 17 (1), (2), (3), (4) (b),

(8) and (9), Article 18, Article 19 (1), (2), (3) (b), (7) and (8), Article 20, Article 21 (2),

Article 22 (5), Article 23 (7), Article 24 (3) (b), Article 25 (4), 26 (7) (b), Article 27 (4),

Article 28 (1), (2), (3) (b), (7) and (8), Article 29, Article 30 (3) (b) and (4) (d) and (f),

Article 31 (3), Article 32 (1), (2), (3) (b), (5) and (6), Article 33, Article 34 (7), Article 35

(3), Article 36 (1), (2), (3) (b), (5) and (6), Article 37, Article 38 (1), (2), (3) (b), (5)

and (6), Article 37, Article 38 (1), (2), (3) (b), (5), (6) and (8), Article 39, Article 40 (1),

(2), (3) (b), (5), (6) and (8), Article 41, Article 43, Article 45 (2) (b) (c) and (d), Article

46, Article 47, Article 48 (4), Article 49 (2), (3), (4) (b), (6), (7) and (8) (b) sub 2°,

Article 50, Article 51 to Article 70 inclusive, Article 71 (5), Article 72 (2) (b) sub 2°, (3)

and (5), Article 73 (1) (a) and (c) and (4), Article 78 (10) (c), Article 79 to Article 81

inclusive, Article 82 (4), Article 83 (3) (b), (c) and (d), and Article 84, of this Act do not

apply to a designated enterprise that is a subsidiary of a company that falls under the

scope to the Treaty of Cardiff and does not fall under the Treaty of Almelo.

Article 86

1. Article 4 and Article 43 of this Act do not apply to a designated enterprise under the

scope of the Treaty of Cardiff and does not fall under the scope of the Treaty of Almelo

and that is not a designated enterprise to which Article 85 applies.

2. For the purpose of applying this Act to a designated enterprise as referred to in

paragraph 1, the following shall apply:

a. in deviation from Article 1, an ancillary company is a legal entity that holds shares

in a designated enterprise;

b. in deviation from Article 1, a competent authority of the Federal Republic of

Germany is an authority that directly or indirectly exercises the powers of the Federal

Republic of Germany vis-à-vis a designated enterprise in the context of the Federal

Republic of Germany's responsibility for a designated enterprise based on the Treaty of

Cardiff;

c. in deviation from Article 1, a competent authority of the United Kingdom of Great

Britain and Northern Ireland is an authority that directly or indirectly exercises the

50

powers of the United Kingdom of Great Britain and Northern Ireland vis-à-vis a

designated enterprise in the context of the responsibility of the United Kingdom of Great

Britain and Northern Ireland for a designated enterprise based on the Treaty of Cardiff;

d. where “the Federal Republic of Germany and the United Kingdom of Great Britain

and Northern Ireland” is mentioned, this means: the Federal Republic of Germany, the

United Kingdom of Great Britain and Northern Ireland, and the Republic of France;

e. where “the Federal Republic of Germany or the United Kingdom of Great Britain and

Northern Ireland” is mentioned, with the exception of Article 83 (3) (b), this means: the

Federal Republic of Germany, the United Kingdom of Great Britain and Northern Ireland

and the Republic of France;

f. where “both the competent authority of the Federal Republic of Germany and the

competent authority of the United Kingdom of Great Britain and Northern Ireland” is

mentioned, this means: the competent authority of the Federal Republic of Germany, the

competent authority of the United Kingdom of Great Britain and Northern Ireland, and

the competent authority of the Republic of France;

g. in Article 7 (3) (b) and Article 10 (2) (b) and (4) (d) and Article 58 (2) (b), the

words “of an ancillary company” do not apply;

h. in Article 7 (6), the words “of an ancillary company” do not apply;

i. in Article 17 (4) (b) and (9), Article 18 (1) (b) and Article 23 (7) (a) and (b), the

words "in an unlisted ancillary company" do not apply;

j. in Article 19 (3) (b), (8) and Article 20 (1) (b) the words "in a listed ancillary

company" do not apply;

k. in Article 21 (2), Article 24 (3) (b), Article 26 (7) (b), Article 28 (3) (b), (8) and

Article 29 (1) (b), the words "in an ancillary company" do not apply;

l. where it is provided that the competent authority of the Federal Republic of Germany

or the competent authority of the United Kingdom of Great Britain and Northern Ireland

sends an ancillary company a decision or notifies an ancillary company, this means that

the competent authority of the Federal Republic of Germany or the competent authority

of the United Kingdom of Great Britain and Northern Ireland sends a decision or notifies a

legal entity that holds a share in a designated enterprise or its shareholder;

m. in deviation from Article 31 (3), Article 31 does not apply to the sale, transfer or

the making available of assets, intellectual property rights, business secrets, or services

or the creation of security rights or rights of use between:

1°. a designated enterprise and a subsidiary as referred to in article 1, under

subsidiary, subparagraph a, the shares of which are fully owned, directly or indirectly, of

the designated enterprise,

2°. subsidiaries as referred to in article 1, under subsidiary, subparagraph a, the

shares of which are fully owned, directly or indirectly, of the designated enterprise,

and whereby the subsidiary has its corporate seat/registered office and central

management in a state which is a party to the Treaty of Almelo, Treaty of Cardiff, Treaty

of Washington, Treaty of Paris or a treaty in the field of nuclear cooperation with a

comparable purpose;

n. in deviation from Article 38 (8), Article 38 does not apply to a investment as

referred to in Article 1, under investment, subparagraphs d or e, of:

1°. a designated enterprise in a subsidiary as referred to in Article 1, under subsidiary,

subparagraph a, the shares of which are fully owned, directly or indirectly, by a

designated enterprise;

2°. a subsidiary in another subsidiary as referred to in Article 1, under subsidiary,

subparagraph a, the shares of which are fully owned, directly or indirectly, by a

designated enterprise,

51

which leads to the sale, transfer or the making available of assets, intellectual property

rights, business secrets, or services or the creation of security rights or rights of use, and

whereby the subsidiary has its corporate seat/registered office and central management

in a state which is a party to the Treaty of Almelo, Treaty of Cardiff, Treaty of

Washington, Treaty of Paris or a treaty in the field of nuclear cooperation with a

comparable purpose;

o. in deviation from Article 40 (8), Article 40 does not apply to a divestment between:

1°. a designated enterprise and a subsidiary as referred to in Article 1, under

subsidiary, subparagraph a, the shares of which are fully owned, directly or indirectly, by

a designated enterprise;

2°. subsidiaries as referred to in Article 1, under subsidiary, subparagraph a, the

shares of which are fully owned, directly or indirectly, by a designated enterprise,

and whereby the subsidiary has its corporate seat/registered office and central

management in a state which is a party to the Treaty of Almelo, Treaty of Cardiff, Treaty

of Washington, Treaty of Paris or a treaty in the field of nuclear cooperation with a

comparable purpose;

p. in deviation from Article 72 (1), the Minister may only instruct, within a reasonable

period, to make available production facilities or equipment to enrich uranium, to

produce radioactive substances or precursors for the purpose of medical use, research or

development, energy supply or public security;

q. in deviation from Article 79 (3), subparagraph a, a status overview shall contain

information about the technology and equipment used in the production of enriched

uranium or radioactive substances.

CHAPTER 12. SUPERVISION AND ENFORCEMENT

Article 87

The Minister may ask a supervisory committee’s advice when taking decisions under

or pursuant to this Act.

Article 88

The Minister shall, in consultation with the Minister of Security and Justice, charge

certain government officials with supervising compliance with the provisions in and

pursuant to this Act.

Article 89

1. In the interest of the implementation and supervision of compliance with the

provisions in or under this Act, the Minister may request the Minister of Security and

Justice to issue an alert about a legal entity used, or suspected to be used or abused, or

which may be used or abused for the purpose of violating provisions in or under this Act.

2. The Minister of Security and Justice shall issue an alert to the Minister if the Minister

has requested this and shall process data in the registration referred to in Article 1 (b) of

the Legal Entities (Supervision) Act for the purpose of issuing the alert.

3. Articles 1 (a), (b), (c), (e) and (f), 2a, 3, 4, 5 (2) to (6) inclusive, 6 (1), (3) and

(4), 7 (1) and (2), 8 (2) and 9 of the Legal Entities (Supervision) Act shall apply mutatis

mutandis to issuing an alert, provided that:

52

a. notwithstanding Article 1 (b) of the Legal Entities (Supervision) Act, the registration

is the collection of data that are processed in the interest of issuing an alert as referred

to in paragraph 2;

b. supplementary to Article 1 (e) of the Legal Entities (Supervision) Act, a legal entity

is also a foreign legal entity with a corporate seat in a foreign country;

c. notwithstanding Articles 2a (1), 6 (1) and 7 (1) and (2) of the Legal Entities

(Supervision) Act, the duty is to issue an alert as referred to in paragraph 2;

d. notwithstanding Article 3 (1) of the Legal Entities (Supervision) Act, the purpose is

to issue an alert as referred to in the paragraph 2;

e. supplementary to Article 3 (2) of the Legal Entities (Supervision) Act, data may be

included in the registration that originate from the Minister, the National Coordinator for

Counterterrorism or authorities in a different country, which in that country have a

public-law function related to the objective of the registration;

4. The Minister of Security and Justice shall send a copy of an alert to the National

Coordinator for Counterterrorism.

Article 90

1. The Minister shall process personal data as referred to in Article 1 (a) of the

Personal Data Protection Act, with the purpose of guaranteeing the implementation and

supervision of compliance with the provisions under or pursuant to this Act relating to

chapters 3, 4, 6, 9, 10 and 11.

2. With regard to the processing of personal data pursuant to paragraph 1 the Minister

is the person responsible within the meaning of Article 1 (d) of the Personal Data

Protection Act.

Article 91

1. In the event of a violation of Article 3 (1), Article 4 (1), Article 5, Article 7 (3),

Article 8 (1), Article 13 (2), (3) and (5), Article 14 (2), (4) and (5), Article 15, Article 16,

Article 17 (4), Article 18 (1), Article 19 (3), Article 20 (1), Article 21 (1) and (2), Article

22 (1), (2) (4), second sentence and (5), Article 23 (8), Article 24 (1), introduction, (b)

and (4), Article 25 (3), (4), Article 26 (2) and (4), Article 27 (3) and (4), Article 28 (3),

(12), Article 29 (1), Article 30, Article 31 (1) and (2), Article 34 (1) and (2), Article 35

(1), Article 36 (3), Article 37, Article 38 (3), Article 39, Article 40 (3), Article 41, Article

43, Article 44, Article 45 (3), Article 46 (1), Article 47 (2), Article 48 (3) and (4), Article

49 (4), Article 50, Article 72 (4) and (5), Article 73 (2), (4) and (5), Article 79 (1), (4)

and (5), Article 82 (3) and (4) or Article 83 (1) and (2), the Minister may:

a. impose an administrative fine on the violating party; or

b. make an administrative enforcement order on the violating party.

2. In the event of a violation of Article 56 (1) and (3), Article 59 (1), Article 80, Article

81 or Article 82 (1), the Minister may impose an administrative enforcement order on the

violating party.

3. In the event of a violation of Article 7 (1), Article 13 (1), (4) and (7), Article 14 (1)

and (3), Article 17 (1) and (2), Article 19 (1), Article 21 (6), Article 22 (3), Article 25 (1),

Article 27 (1), Article 28 (1), Article 36 (1), Article 38 (1), Article 40 (1), Article 45 (1),

Article 49 (2), Article 51 (1) (b) and (2), Article 52, Article 53 (1), Article 56 (5), Article

57, Article 60, Article 61 (1), (2), (3), (4) and (6), Article 62 (1) and (3), Article 63,

Article 64 (1) and (3), Article 65, Article 66 (1), Article 67, Article 68 (1) or Article 71 (1)

and (2), the Minister may impose an administrative fine on the violating party.

53

4. If conditions attached to a decision pursuant to Article 95 (3) are not complied with,

the Minister may:

a. impose an administrative fine to the violating party; or

b. issue an administrative enforcement order to the violating party.

Article 92

1. The administrative fine, referred to in article 91, shall not exceed the higher of EUR

100,000,000 or 10% of the turnover of the relevant designated enterprise.

2. In derogation from paragraph 1, the administrative fine shall not exceed EUR

1,000,000 if Article 51 (2), under 2°, of the Criminal Code is declared applicable pursuant

to Article 5:1 (3) of the General Administrative Law Act.

3. The turnover as referred to in paragraph 1 shall be calculated in accordance with

Article 377 (6), of Book 2 of the Dutch Civil Code in respect of net turnover.

4. In the event of a violation of Article 13 (7), Article 21 (6), Article 22 (2), Article 24

(4) or Article 26 (2), the administrative fine shall not exceed 10% of the turnover of the

group that the relevant affiliated institution, central institution, foreign institution,

custodian of an investment institution, or foreign institution with a function comparable

with that of the central institution forms part of.

Article 93

The following Articles are inserted in the alphabetic order in Article 1, under 1°, of the

Dutch Economic Offences Act: the Treaty of Almelo Implementing Act, Article 3 (1),

Article 4 (1), Article 5, Article 7 (3), Article 8 (1), Article 13 (2), (3) and (5), Article 14

(2), (4) and (5), Article 15, Article 16, Article 17 (4), Article 18 (1), Article 19 (3), Article

20 (1), Article 21 (1) and (2), Article 22 (1), (4), second sentence and (5), Article 23 (8),

Article 24 (1), introduction, (b), Article 25 (3) and (4), Article 27 (3) and (4), Article 28

(3), (12), Article 29 (1), Article 30, Article 31 (1) and (2), Article 34 (1) and (2), Article

35 (1), Article 36 (3), Article 37, Article 38 (3), Article 39, Article 40 (3), Article 41,

Article 43, Article 44, Article 45 (3), Article 46 (1), Article 47 (2), Article 48 (3) and (4),

Article 49 (4), Article 50, Article 51 (1) (b), Article 53 (1), Article 56 (5), Article 57,

Article 61 (1), (2), (3) and (6), Article 62 (3), Article 63, Article 64 (3), Article 65, Article

66 (1), Article 68 (1), Article 71 (1) and (2), Article 72 (4) and (5), Article 73 (2), (4)

and (5), Article 82 (1), (3) and (4) and Article 83 (1) and (2).

CHAPTER 13. LEGAL PROTECTION

Article 94

1. The Treaty of Almelo Implementing Act: Article 2 (1) is inserted in Article 1 of Annex

2.: Rules governing administrative law of the General Administrative Law Act.

2. The Treaty of Almelo Implementing Act is inserted in Article 11 of Annex 2.: Rules

governing administrative law of the General Administrative Law Act.

CHAPTER 14. FINAL AND TRANSITIONAL PROVISIONS

Article 95

1. Rules may be imposed under or pursuant to an Order in Council with regard to:

54

a. how a decision is applied for under or pursuant to this Act;

b. the information and documents to be provided as part of an application.

2. Deadlines by which the Minister takes a decision under or pursuant to this Act may

be set by ministerial regulation.

3. Rules may be attached to decisions taken by the Minister under or pursuant to this

Act, except for a decision taken by the Minister:

a. pursuant to Article 2 (1), Article 17 (4) (a), Article 18 (1) (a), Article 19 (3) (a),

Article 20 (1) (a), Article 28 (3) (a), Article 29 (1) (a), Article 34 (2), Article 49 (1),

Article 56 (5) (a), Article 57 (a), Article 62 (3) (a), Article 63 (a), Article 64 (3) (a),

Article 65 (a), Article 66 (1), Article 71 (3) and Article 72 (1) and (2);

b. as referred to in Article 32 (3) (a), to the extent that it concerns an exemption

from the prohibition of Article 31 (1) or (2) (a), with regard to negotiations

concerning:

1˚ the sale of assets for dual use, intellectual property rights, business secrets, or

services as referred to in Article 31 (1), or

2˚ the transfer or the making available of assets for dual use, intellectual property

rights, business secrets, or services as referred to in Article 31 (2).

Article 96

By application of Article 28 (1), final phrase, of the Services Act, paragraph (4).1.3.3.

of the General Administrative Law Act does not apply to decisions taken by the Minister

under or pursuant to this Act.

Article 97

Chapter 4 of this Act does not apply to the direct or indirect holding or acquisition of

shares or controlling rights in a designated enterprise by the state, the Federal Republic

of Germany or the United Kingdom of Great Britain and Northern Ireland.

Article 98

In Article 28 (3) (a) of the Trade Register Act 2007, the following words shall be

inserted after “the Legal Entities (Supervision) Act”: issuing an alert as referred to in

Article 89 (1) of the Treaty of Almelo Implementing Act.

Article 99

Executive and non-executive directors who are executive or non-executive directors of

a designated enterprise on the date of the designation pursuant to Article 2 (1) shall

automatically hold a declaration of no objection as referred to in Article 7 (3) (a) on that

date.

Article 100

1. A holder of shares or controlling rights who is a holder of shares or controlling

rights in an unlisted designated enterprise on the date of the designation pursuant to

Article 2 (1) shall automatically hold a declaration of no objection as referred to in Article

17 (4) (a) or Article 19 (3) (a) on that date.

2. A holder of an equity interest in a listed designated enterprise who on the date of:

a. the designation pursuant to Article 2 (1);

55

b. the admission of shares to trading on a specific regulated market,

is a holder of the equity interest , shall automatically hold a declaration of no objection as

referred to in Article 19 (3) (a).

Article 101

For a joint venture existing on the date of a designation pursuant to Article 2 (1), the

designated enterprise shall automatically have a declaration of no objection as referred

to in Article 45 (3) (a) on that date.

Article 102

This Act shall enter into force on a date to be set by Royal Decree, which may differ

for the different sections or parts of the Act.

Article 103

This Act may be cited as: Almelo Treaty Implementing Act.

We order and command that this Act shall be published in the Bulletin of Acts and

Decrees, and that all ministries, authorities, bodies and officials whom it may concern

shall diligently implement it.

Done,

The Minister of Economic Affairs,

ACT IMPLEMENTING THE TREATY OF ALMELO AND CORRESPONDING

TREATIES AND TO PROTECT THE PUBLIC INTEREST IN CONNECTION WITH

THE ENRICHMENT OF URANIUM, THE PRODUCTION OF RADIOACTIVE

SUBSTANCES AND THE DEVELOPMENT AND EXPLOITATION OF THE

56

TECHNOLOGY SERVING THIS PURPOSE (TREATY OF ALMELO IMPLEMENTING

ACT)

EXPLANATORY MEMORANDUM

(29 August 2016)

I. GENERAL

1.1 Origin

The legislative proposal provides rules to implement the Agreement concluded on 4

March 1970 between the Kingdom of the Netherlands, the Federal Republic of Germany,

and the United Kingdom of Great Britain and Northern Ireland on the collaboration in the

development and exploitation of the gas-ultracentrifuge process for the production of

enriched uranium (Treaty Series 1970, 41), (hereinafter referred to as: the “Treaty of

Almelo”), and for securing the public interest in connection with the enrichment of

uranium, the production of radioactive substances, and the application and development

of the underlying technology. Pursuant to the proposed Act, the Minister of Economic

Affairs (hereinafter referred to as: the “Minister”) may designate an enterprise to which

the rules of this Act apply.

The origin for this legislative proposal is to be found in the intent expressed by the

United Kingdom of Great Britain and Northern Ireland (hereinafter referred to as: the

“United Kingdom”) and the German private shareholders E.ON and RWE – to sell the

shares they indirectly hold in URENCO Ltd. In that context both the indirect shareholders

in URENCO and the Contracting States of the Treaty of Almelo (The Netherlands, the

Federal Republic of Germany and the United Kingdom) have reviewed the existing

framework and structure of URENCO Ltd. This has resulted in the joint conclusion that

the existing supervision of URENCO Ltd. and the applied enrichment technology should

be revised.

A possible sale by the fellow shareholders inevitably leads to a situation whereby the

existing supervision through joint public shareholding is no longer effective. There is also

a risk that as a result of this proposed sale the Netherlands would end up as a minority

shareholder, without the public interest being effectively protected. The future public

interest thus needs to be secured, not only if the Dutch government is to carry out its

intention, discussed earlier with the States General, to dispose of the Dutch shares in

URENCO Ltd., but in the situation in which the Netherlands were to continue as

shareholder as well. This legislative proposal offers the instruments for securing the

public interest. Note that any decision regarding the future Dutch share ownership will in

any event be made after the hearing of this legislative proposal is completed, since this

will mean that the public interest will have been secured for the future as well.

This legislative proposal aims to secure in the future the public interest of non-

proliferation and safety. The starting point for the substance of this legislative proposal

was the existing practice of supervising URENCO Ltd., whereby the public interest is

ensured by the Joint Committee set up in the Treaty of Almelo, in combination with the

share ownership. The legislative proposal ensures an effective protection of the public

interest in respect of non-proliferation, safety and security of supply, which is at risk as a

57

consequence of the enrichment of uranium and the production of radioactive substances

for commercial use or developing and using the technology needed for this. The public

interest in connection with URENCO Ltd. is laid down in the Treaty of Almelo. Up until the

present, the joint share ownership ensures that the enterprise would ultimately

implement any decisions of the Joint Committee. The aim of this legislative proposal is to

prepare for the supervision of URENCO Ltd. in the future, regardless of the composition

of the shareholders.

In light of the specific international commitments that the Netherlands has assumed, it

is essential to draw up legal regulations to ensure the effectiveness of the treaties and

the safeguards and instruments for the protection of the public interest laid down

therein. In addition to the Treaty of Almelo, these are the Agreements concluded

between the three Governments of the Kingdom of the Netherlands, the Federal Republic

of Germany and the United Kingdom, and the government of the United States of

America regarding the creation, construction and operation of a system for the

enrichment of uranium in the United States, concluded in Washington on 24 July 1992

(Treaty Series 1992, 174) (hereinafter referred to as: the “Treaty of Washington”), the

Treaty between the Governments of the Kingdom of the Netherlands, the Federal

Republic of Germany, the French Republic, and the United Kingdom regarding the

collaboration in ultra-centrifuge technology signed in Cardiff on 12 July 2005 (Treaty

Series 2005, 266) (hereinafter referred to as: the “Treaty of Cardiff”) and the Agreement

between the Government of the United States of America and the Four Governments of

the French Republic, the United Kingdom, the Kingdom of the Netherlands, and the

Federal Republic of Germany on the creation, construction and operation of systems for

the enrichment of uranium using gas-ultracentrifuge technology in the United States of

America, signed in Paris on 24 February 2011 (Treaty Series 2011, 83) (hereinafter

referred to as: the “Treaty of Paris”). These safeguards were agreed in close consultation

with the Contracting States to the Treaty of Almelo on the basis of the responsibility for

URENCO Ltd. and the ultra-centrifuge technology that these States share.

1.2. Background

Under the treaties cited above, the Contracting States have the obligation to:

a. ensure that collaboration in the field of ultra-centrifuge technology between the

Contracting States takes place in such a manner that the risk of proliferation is

reduced to a minimum;

b. ensure that the ultra-centrifuge technology cannot be used by the joint industrial

enterprise (URENCO Ltd.) for the manufacture of nuclear weapons or other

nuclear explosives; and

c. to offer the possibility to continue the development of the technology in such a

manner that other European States may join this technological collaboration.

These obligations are further discussed in the Explanatory Memorandum to the Act

sanctioning the Treaty of Almelo (Parliamentary Papers II 1969/70, 10 733, no. 3, p. 1

and the memorandum further to the report to the Act sanctioning the Treaty of Cardiff,

Parliamentary Papers II 2005/06, 30 340, no. 7, p. 2-3).

In addition, these treaties regulate the efficient and commercial joint operation of the

ultra-centrifuge technology. As a result, the application and further development of the

58

ultra-centrifuge technology is under the permanent multinational supervision of the

collaborating Contracting States. This collaboration between the Contracting States in

turn supervised by the International Atomic Energy Agency (hereinafter referred to as:

“IAEA”) and the institutions of the European Atomic Energy Commission (Euratom).

Through the Treaty of Washington URENCO Ltd. and the three Contracting States that

collaborate within the framework of the Treaty of Almelo, took a first step together with

the United States of America as a treaty partner to involve other parties in the

application of ultra-centrifuge technology. The Treaty provides that the technology of

URENCO must be made available in the form of a “black box” for application in the US by

a joint enterprise of URENCO and a number of US companies, subject to the safeguards

and conditions laid down in the Treaty (see Parliamentary Papers II 1992/93, 22 991, no.

3). The Treaty of Washington itself does not alter the joint venture between the three

Contracting States of the Treaty of Almelo, nor the historical share ownership of URENCO

Ltd.

The Treaty of Cardiff created a new joint venture, in which context a new collaboration

was effected between the three parties to the Treaty of Almelo with the French Republic

as a treaty partner. Via the Enrichment Technology Company (hereinafter referred to as:

“ETC Holding”) a 50-50 joint venture between Urenco and Areva SA (hereinafter referred

to as: “Areva”), URENCO Ltd. and Areva work together on the development and

production of ultra-centrifuge technology. These companies do not, however, work

together on enrichment (see the Explanatory Memorandum to the Act sanctioning the

Treaty of Cardiff, Parliamentary Papers II 2005/06, 30 340, no. 3, p. 2).

The Treaty of Paris concluded between The Netherlands, the Federal Republic of

Germany, the French Republic, the United Kingdom and the United States is comparable

to the Treaty of Washington and does not affect any changes in the collaboration

between the Contracting States under the Treaty of Almelo and the Treaty of Cardiff (see

the explanatory notes to the Agreement, Parliamentary Papers II 2011/12, 33 080, no.

1, p. 2, last paragraph). The Treaty of Paris opened the possibility for Areva to build an

enrichment facility in the US, using the ultra-centrifuge technology of ETC Holding. To

date, this facility has not yet been realised.

Both the collaboration under the Treaty of Almelo and the collaboration under the

Treaty of Cardiff are based on the notion that the three governments, and the four

governments, respectively, are able to fulfil their obligations under these Treaties

through the control the Contracting States are able to exercise on URENCO Ltd. and ETC

Holding, respectively, via the supervisory committees (the Joint Committee and the

Quadripartite Committee) and the joint share ownership (see Explanatory Memorandum

to the Act sanctioning the Treaty of Almelo, Parliamentary Papers II, 1969/70, 10 733,

no. 3, p. 4). In connection with the collaboration under the Treaty of Almelo,

participation in the capital of URENCO Ltd. by the British and Dutch States to date is of

importance in order to ensure that the obligations under the Treaty of Almelo are fulfilled

and to safeguard the public interest. As regards ETC Holding, it may furthermore be

noted that the French State is able, via its interest in Areva, to exert influence in ETC

Holding as well, as part of the collaboration under the Treaty of Cardiff and is thus able

to secure its obligations.

Since the close direct operational involvement of the Contracting States in the

enterprise URENCO Ltd. (and the Joint Venture ETC Holding) may possibly decrease, the

structure and method through which the obligations under the Treaties and the public

59

interest in respect of these enterprises are safeguarded have been reconsidered. Further

to this reconsideration, it was concluded that the current supervision regime can no

longer be maintained and that a new supervision regime is required to secure the public

interest in the future, irrespective of the share ownership of URENCO Ltd. within the

present frameworks of the Treaties.

1.3 Public interest

Any action of the Minister further to this legislative proposal is aimed at securing these

public interest. In view of this, a definition is given in Article 1 of the legislative proposal

that defines the public interest protected by this legislative proposal. This definition has

been coordinated between the three Contracting States.

For the Federal Republic of Germany, the Netherlands and the United Kingdom the

public interest encompasses the protection of the material interests regarding their

security (within the meaning of Article 346(1)(a) of the Treaty on the functioning of the

European Union, hereinafter referred to as: the “Rome Treaty”), or the public security

(Articles 52(1) and 65(1)(b) Rome Treaty), that also comprises compliance with

obligations concerning international security and non-proliferation as set forth in

international treaties, agreements and export control regulations (in so far as these are

binding on each of the Federal Republic of Germany, the Netherlands, the United

Kingdom, or the European Union).

Securing the public interest, as defined, is aimed at realising the following policy

objectives:

a. prevention of the proliferation of nuclear arms or other nuclear explosives, and

preventing that the policy and measures aimed at realising the non-proliferation are

rendered ineffective;

b. prevention of and responding to acts in breach of international peace and security;

c. protecting and securing technology, information and sources of technology and

information for international security and security of the state;

d. ensuring the security of supply of enriched uranium for the purpose of national and

international security, non-proliferation and commitments under international treaties.

A few articles of the Act mention, in addition to the term “public interest”, other

specific compelling reasons that are of general interest and that determine the exercise

of those powers; see in this regard e.g. Article 72 in which these powers serve the public

health. The description of the public interest provides an effective basis for the Minister

to act on the basis of this Act, which is sufficiently carefully defined and does not go

beyond what is necessary in order to achieve the defined policy objectives.

Securing this public interest fits within the standing Dutch policy with regard to non-

proliferation This is phrased in the letter from the Minister of Foreign Trade and

Development Cooperation of 14 March 2014 (Parliamentary Papers II, 2013/14, 33 750

XVII, no. 56, p. 2, sub a) as follows: “without prejudice to cooperation with our allies, the

Netherlands does not contribute to the production, manufacture or use of weapons of

mass destruction, anywhere in the world.” The framework laid out in this proposal ties in

perfectly with this standing Dutch policy. URENCO Ltd. and, where relevant, ETC Holding

60

will be bound to various prohibitions and restrictions. Naturally, when introducing the

assessment of the shareholders and formulating the criteria the Dutch policy to avoid

contribution to the production, manufacture, or use of weapons of mass destruction in

any way has also been expressly taken into account.

2. Objective and content of the legislative proposal

2.1 Objective of the legislative proposal

The objective of the legislative proposal is to secure the public interest that is at risk in

connection with enriching uranium, the production of radioactive substances and the

application and development of the enrichment technology for these purposes, which

take place under the various Treaties within the context of multilateral collaboration. This

should result in the legislative proposal honouring the sovereign choice of the Contracting

States to decide whether or not they wish to be financially, economically or legally

involved, either via share ownership or not, in URENCO Ltd., and each Contracting State

being able to assess its own role therein, without affecting its obligations under the

Treaties.

The British, Dutch and German authorities share the view that each (possible) change

in the current composition of the share ownership of URENCO Ltd., as a result of which

the three Contracting States will no longer hold a joint majority, will make it impossible

for the Netherlands, the Federal Republic of Germany and the United Kingdom to fulfil

their obligations under the Treaties and to secure the public interest. For instance,

decisions of the supervisory committees may at present only be enforced via the majority

holding of the joint governments. Implementation of the decisions of the supervisory

committees is dependent on the cooperation of the enterprise and ultimately on the

circumstance that presently more than the majority of shares - currently two-thirds - in

URENCO Ltd. are indirectly held by the British and Dutch States. Any lack of cooperation

on the part of the enterprise may only be prevented or handled through this share

ownership.

At the same time, these analyses also bear out that the public interest is, on the face

of it, sufficiently safeguarded by the current laws and regulations of the respective

Contracting States pertaining to the specific subsidiaries having production sites in the

various countries. The additional securing of the public interest in this legislative proposal

is primarily aimed at the parent company that (in the new structure together with its

ancillary companies) controls the entire URENCO group and the intermediary holding

companies that direct and control the subsidiaries, together with the production

locations, in conjunction with the additional obligations for the subsidiaries to enable

them to continue fulfilling their obligations under the Treaty of Almelo. The three

Contracting States to the Treaty of Almelo also have a responsibility in respect of

situations that may occur outside the territory of the current three Contracting States to

the Treaty of Almelo. The additional securing of the public interest will strengthen the

alignment between parent company and subsidiaries (hereinafter referred to together as:

the “URENCO group”).

This legislative proposal gives the Minister powers that enable him to continue to

comply with the Dutch obligations under the Treaty in respect of the entire URENCO

group. The Act grants the Minister the power to designate an enterprise to which the

provisions of the Act will apply. This designation will in any event pertain to URENCO

61

Holding NV, which – together with the British and German ancillary companies – will de

facto act as one new parent company of Urenco Ltd. (see paragraph 3.2.2 below, and

Schedule B). The legislative proposal also provides the Minister with the means to

independently secure the public interest in accordance with the international obligations

and frameworks, such as the IAEA requirements, the requirements of the European

Union and Euratom, and other multilateral frameworks.

2.2 Basic premises for the legislative proposal

The legislative proposal is based on the following premises. The first premise is that

the legislative proposal is solely aimed at securing the public interest. This legislative

proposal does not encompass securing the economic or financial interests of the current

(historical) shareholders, including the Dutch State, the United Kingdom, and the two

German private shareholders. The legislative proposal solely pertains to securing the

public interest. Furthermore, the legislative proposal is phrased such that other

enterprises than URENCO Holding NV, where specific risks of proliferation of nuclear

technology occur may be designated. The aim, after all, is to provide a legislative

framework that is equipped for the future and that offers a basis for any restructuring

and divisions of the URENCO group and joint ventures of the URENCO group, such as ETC

Holding.

The second premise is that the legislative proposal reflects the shared

responsibilities of the respective Contracting States to the Treaty of Almelo and the

Treaty of Cardiff. Each Contracting State must be able to fulfil its obligations under the

Treaties, without diminishing the possibilities for the Netherlands for independently

exercising its own responsibilities. The Netherlands will be able to independently

secure the public interest. The legislative proposal is set up such that where necessary

the acts of the other Contracting States may also have impact on URENCO Holding NV

and all subsidiaries of URENCO Holding NV.

The third premise is that the legislative proposal respects the sovereignty of each

Contracting State. The division of powers among the three sovereign Contracting States

to the Treaty of Almelo entails that the Minister may only execute the powers conferred

on him in so far as the designated enterprise has its statutory office in the Netherlands,

such as URENCO Holding NV. As soon as this is the case, Dutch public law is applicable to

the enterprise and the Minister may apply the instruments laid down in this legislative

proposal.

The fourth premise of the legislative proposal follows on the second and third

premises: respecting the independent responsibility of each Contracting State to secure

the public interest in URENCO group and where applicable ETC Holding. This legislative

proposal fully respects the possibility and authority of the other Contracting States to

protect the public interest in their own jurisdiction via their own instruments and in

accordance with their own policy preferences regarding non-proliferation, security of the

state and public security. Thus, it is avoided, for instance, that the British government

would have to account to a Dutch court, which might result in state immunity clashing

with the necessity of safeguarding legal rights. This has been realised, first, by

preventing to all possible extent the occurrence of double execution of power or a clash

in the execution of power, and second by a form of mutual recognition between the three

Contracting States of each other's acts concerning the URENCO group. The corporate

structure of the URENCO group will be shaped such that each Contracting State is able to

62

execute all necessary powers without requiring the formal consent of the other

Contracting States, while this execution of power will also have effect in the other two

Contracting States, with the exception of a limited number of situations in which a

unanimous decision of the three Contracting States is required. The execution of powers

by the three Contracting States will, however, effectively be coordinated via the

supervisory committees that have been set up under the Treaty of Almelo.

The fifth premise is that the legislative proposal comes in addition to the already

applicable Dutch legislative frameworks and the legislative frameworks of the European

Union and Euratom. Where these frameworks already offer adequate protection, this

legislative proposal does not regulate statutory powers that may conflict with these.

The sixth and final premise is that the commercial nature of the enterprise will be

respected and preserved. It is a globally active enterprise with profit motive. The

legislative proposal aims to solely regulate and restrict the enterprise where a public

interest is at stake. The possibility of private shareholders participating in the capital of

the designated enterprise, which already exists, will be preserved as well.

Each time the designated enterprise or an investor in this enterprise is confronted with

an execution of the powers laid down in this legislative proposal, reasons will have to be

given for such execution, accompanied with decisions for which reasons are given and

that are open to objection and appeal. If the designated enterprise or the private investor

disagrees with such decision, it is open to appeal, whereby the Dutch court will rule.

Thus, the legislative proposal assumes a well-defined system of powers which, when

applied, require that they are accompanied with sufficient reasons, combined with a

proper legal protection.

2.3 Content and methodology of the legislative proposal

Taking the public interest set forth above (paragraph 1.3) as starting point, the

legislative proposal contains the following chapters:

1. Definitions and the basis for designating enterprises to which the provisions of this

Act are applicable.

2. Powers regarding the (new) legal structure of URENCO Holding NV, its ancillary

companies, the jointly managed company, and other subsidiaries.

3. Powers concerning the appointment, suspension and dismissal of executive and

non-executive directors and other officials of URENCO Holding NV.

4. Powers concerning the URENCO Holding NV shareholders, their review and

describing the situations in which the exercise of control may be suspended and

shareholders may be forced to sell their shares.

5. Powers used to control the activities of URENCO Holding NV and its subsidiaries.

6. The framework for the joint venture and regulating powers to exercise influence on

these joint ventures entered into by URENCO Holding NV and its ancillary

companies and subsidiaries, including the ETC joint venture.

7. Safeguarding the financial health of the aggregate of URENCO Holding NV and its

ancillary companies and subsidiaries, where these are necessary to protect the

63

public interest and offering adequate provisions for the costs for decommissioning

the facilities of the subsidiaries of URENCO Holding NV, also in the event of

bankruptcy.

8. Powers that allow URENCO Holding NV and its subsidiaries to undertake certain

activities or to follow certain instructions.

9. Special statutory obligations and powers in the event that the continuity of URENCO

Holding NV and its subsidiaries is at risk or in the event of a suspension of

payments or even bankruptcy.

10. Obligation to provide information for URENCO Holding NV, including the obligation

to have this information personally explained by the board if necessary.

11. Provisions for the situation in which a designation order is given to ETC Holding or

its Dutch subsidiary;

12. Supervision and enforcement of the statutory obligations;

13. Legal protection; and

14. Final and transitional provisions.

2.4 Alternatives for a legislative proposal

Various alternatives were contemplated and studied when considering how the public

interest may best be safeguarded. The shared objective of the Dutch, British and German

governments is to effectively protect the public interest. The first alternative is

maintaining the status quo. This would entail that the share ownership would remain the

same and that the existing methods and schemes under the Treaties would be continued

unchanged. Legal analyses have brought to light that the public interest will best be

safeguarded by maintaining the current status quo, in which the majority of the shares

are held by governments which cooperate in good faith and harmony.

The Dutch government repeatedly drew the attention of the other shareholders to this

finding, but it turned out to be irreconcilable with the wish of the other shareholders to

sell (part of) their shares in URENCO Ltd. The British and German governments take the

view that the public interest may also be effectively secured by other means. This is, for

instance, illustrated by the written declaration of the (former) Minister of State,

Department for Business, Innovation and Skills Michael Fallon:

“I wish to inform the House that the Government have decided to work with our

partners in the uranium enrichment company Urenco to move forward preparations for

the sale of all or part of our one-third shareholding. It is Government policy not to

continue to hold shares in companies where the shareholding itself does not deliver any

policy objective. Any sale of our Urenco shareholding remains contingent upon full

protection of our security and non-proliferation interests, and upon achieving value for

money for the UK taxpayer.”

(http://www.publications.parliament.uk/pa/cm201213/cmhansrd/cm130422/wmstext/

130422m0001.htm).

64

Thus, this alternative is unfeasible; nor is the Dutch government able to unilaterally

enforce it vis-à-vis the other Contracting States and the other shareholders.

The second alternative is maintaining the legal and economic control over Urenco Ltd

by a combination of government shareholders. This alternative is based on the notion

that for as long as the Contracting States together directly or indirectly hold more than

50% of the shares in the existing URENCO Ltd, the public interest will be adequately

secured, since this would mean that the enterprise is controlled by these government

shareholders. This 50%+ scenario does require that there is sufficient joint long-term

vision concerning the URENCO group between the participating States and that these

States are bound to the collaboration as it is shaped by the Treaty of Almelo. Specifically,

this alternative signifies that one or more of the current Contracting States to the Treaty

of Almelo and the Treaty of Cardiff will have to acquire a sufficiently large package of

shares, in addition to the existing shareholding of the Netherlands, or that one or more

other States will have to accede to an (amended) Treaty of Almelo and/or Treaty of

Cardiff. Furthermore, rules and policy lines will have to be more or less shared regarding

non-proliferation, international peace, and security. This means that the number of

States that might participate in the existing URENCO Ltd. via an equity participation will

be very limited. The Euratom Members in particular might qualify for this. However, it is

unlikely, for the time being, that this alternative can be realised, or that it offers

sufficient safeguards for securing the public interest.

The third alternative is to introduce corporate law instruments to secure the public

interest and to give the three Contracting States sufficient influence in the enterprise to

preserve these interests. This instrument would vest special powers in the three

Contracting States in respect of the appointment and dismissal of board members, the

power to approve or block specific investments and divestment or activities. A review of

the resale of shares to third parties, restricting the voting rights of certain private

shareholders, assessing the suitability of potential investments, and some special powers

in connection with the protection of the security of supply and preserving certain

installations are also some of the possible powers that may be laid down in corporate

law. This type of instrument is also known as a “special” share.

Although the instrument has been applied several times within the European Union, it

should be emphasised that public regulation is more effective because supervision and

enforcement requires fewer means, for example via administrative and criminal

enforcement. Also the enforcement of criminal law can be introduced in this context.

Public regulation also fits in better within the Dutch State’s policy on participating

interests (Memo on the Dutch government’s participating interests policy, chapters 3 and

7, paragraph Assessment Framework privatisation, Parliamentary Papers II 2013/14, 28

165, no. 165). Lastly, in view of the nature of the demanded powers, such an instrument

requires legislation that allows substantial departure from the Dutch Civil Code, in order

to make the introduction of such a share possible.

The fourth alternative is a supranational treaty with supranational supervision,

comparable with what takes place in the Benelux countries and the European Union.

Naturally, this would require a highly specific and well-defined supervision at

supranational level, but that would require a transfer of powers. Neither the United

Kingdom nor the Federal Republic of Germany wanted to explore this alternative.

65

The fifth alternative is forming a joint undertaking within the meaning of Chapter 5 of

the Treaty establishing the European Atomic Energy Community (Euratom). This

possibility had already been considered when the Treaty of Almelo was concluded. At the

time, the possibility was left open to ultimately turn the joint undertaking URENCO Ltd.

that was formed by the Treaty of Almelo into a joint undertaking in accordance with the

Euratom Treaty (See Parliamentary Papers II 1969/70, 10733, no. 3, p. 3). Although this

option is possible from a technical point of view, the incorporation of a joint undertaking

under the Euratom Treaty requires close involvement from the European Commission,

which will subject the proposal for such joint undertaking to an inquiry. The proposal for

a joint undertaking will subsequently be submitted, together with a reasoned opinion, to

the Council of the European Union (see Article 46 of the Euratom Treaty). In the end, it is

the Council that decides (and consequently not the three Contracting States to the Treaty

of Almelo) whether a joint undertaking will be established under the Euratom Treaty.

There is no guarantee that the necessary restrictions the three Contracting States to the

Treaty of Almelo want to include in the articles of association of the joint undertaking will

indeed be included. In addition, such a proposal would require political support from the

other Euratom Member States. Both the three Contracting States and the private

shareholders subsequently concluded that a different method for securing the public

interest, that would be fraught with fewer uncertainties, would be preferable and that

such method had to be explored further.

In the view of the Netherlands, apart from preserving the status quo described in the

first alternative, public regulation in the form of this legislative proposal would provide

the most effective method to secure the public interest. In addition, the law contains

fewer risks and fits within the Dutch State’s policy on participating interests (Memo on

the Dutch government’s participating interests policy, chapters 3 and 7, paragraph

Assessment Framework privatisation). This legislative proposal therefore complies with

the necessary securing of the public interest in accordance with paragraph 3.1 of the

response of the Dutch government to the “Connection Broken?” report of the Committee

of Inquiry regarding the privatisation and making independent of State Services of the

Dutch First Chamber and the “Public Affairs in a Market Society” report of the Scientific

Council for Government Policy (Parliamentary Papers I, 2012/13, C, I). Securing the

public interest will remain the task of the three Contracting States to the Treaty of

Almelo that are jointly responsible for the URENCO group.

A separate Act does justice to the independent nature of the international nuclear

collaboration created by the Treaty of Almelo and the Treaty of Cardiff. This is

furthermore reflected in the legislative proposal by including various references to the

competent authorities of the other Contracting States. Furthermore, the nature and

scope of the statutory powers requires an independent legislative framework from a

substantive point of view as well.

3. Powers and statutory obligations

3.1 General

In his letter of 23 May 2013, the Minister of Finance, also on behalf of the Minister of

Economic Affairs and the Minister of Foreign Affairs (Parliamentary Papers II, 2012/13,

28 165, no. 161), emphasised the importance of ensuring a strong and proper securing

of the public interest as conditio sine qua non before the Netherlands may consent to a

possible sale. The URENCO group is not a standard enterprise, nor is the joint venture

66

ETC Holding in which the URENCO group participates for 50%. The URENCO group and

ETC Holding were both created as a result of treaties and are governed by these treaties.

The activities they undertake in connection with the enrichment of uranium and the

relevant technology are high risk. This special position is emphasised by various

measures that ensure at various levels the protection of nuclear safety and the non-

proliferation of nuclear technology. The aforementioned letter emphasised that it is vital

to prevent at all times sensitive knowledge from falling into the hands of persons or

organisations that undertake activities that are a factor in the proliferation of nuclear

weapons.

This legislative proposal contributes to this by granting the Minister powers and by

imposing various obligations on URENCO Holding NV. These powers and obligations come

in addition to the existing statutory frameworks that are already in place in respect of the

current URENCO Ltd. and its subsidiaries. For instance, various statutory obligations are

already in place for the URENCO group regarding its production facilities and the supply

of enriched uranium. The Nuclear Energy Act for example, together with the relevant

licensing requirement, is also applicable to URENCO Nederland BV’s production facility in

Almelo. The positions held by the employees in Almelo are designated as positions of

trust. Comparable frameworks apply in the United Kingdom, the Federal Republic of

Germany and the US. Changes in the share ownership of the URENCO group will not alter

the applicability and effectiveness of the frameworks that are already in place.

The legislative proposal provides powers and obligations that are not or only partially

already regulated in existing statutory frameworks. A minor overlap might arise in a few

cases. Important to note in this respect is that, according to its obligations under the

treaties, the Netherlands is responsible for all activities of the URENCO group and not

only for the activities that take place on Dutch territory. Thus, the emphasis is on powers

towards and obligations in respect of the management of URENCO Holding NV, where

jointly with the two ancillary companies all strategic decisions for all group activities will

be taken.

These powers are based on, but are not confined to, the powers and obligations laid

down in the Treaty of Almelo and the Treaty of Cardiff. Some powers and obligations

were developed after analysis bore out that the public interest might potentially be at

risk if no specific statutory regulation is put in place. Instances of this are provisions

concerning the financial management of the enterprise that were already identified in the

aforementioned letter of 23 May 2013 as a relevant element of securing the public

interest.

The literal texts of the Treaty of Almelo and the Treaty of Cardiff were departed from

in several cases when the powers and obligations were defined. This is because the texts

of these treaties are in some parts too broadly phrased to be effectively applied vis-à-vis

third parties such as candidate board members or shareholders. The legislative proposal

must satisfy the standards prescribed in Union law and the European Convention for the

Protection of Human Rights and Fundamental Freedoms (ECHR) regarding transparency,

foreseeability, and proportionality of government intervention. At the same time, the

practice as it has developed under the Treaty of Almelo and the Treaty of Cardiff was

taken as starting point for defining certain powers. For instance, the manner of informing

the Joint Committee that was set up by the Treaty of Almelo by the URENCO group was

taken as starting point for the content, manner and scope of the obligation to inform

imposed on URENCO Holding NV, for instance the submission of the status overview.

67

The letter mentioned earlier of 23 May 2013 lists the powers that were anticipated at

the time as essential powers for securing the public interest in the event of a change in

the share ownership in URENCO Ltd. These powers are as follows:

● ensuring that compliance with the obligations under the treaties by the URENCO

group may be enforced, including the implementation of decisions of the Joint

Committee (referred to in the legislative proposal as: “supervisory committee”);

● verifying certain activities of the URENCO group, including the entering into

contracts of sale for enriched uranium and divesting vital assets;

● right of consent regarding the appointment of directors to URENCO Holding NV and

the possibility to dismiss directors in case of a risk of non-proliferation, security of

supply and safety;

● obtaining information necessary for a proper supervision of the URENCO group;

● right of consent regarding the capacity of shareholders and the extent of their

shareholding in URENCO Holding NV and the possibility to deny them their voting

rights;

● right of consent regarding the (re)sale of URENCO Holding NV;

● ensuring the security of supply of enriched uranium;

● possibility to block certain activities proposed by the URENCO group or to force the

URENCO group to undertake certain activities or research in connection with safety;

● requirements regarding a sound financial management of the URENCO group;

● right to consent to changes in the corporate structure of the URENCO group (e.g.

(re)sale of parts of the enterprise).

These powers were further outlined in discussions with the other Contracting States

and fellow shareholders. Additional powers and obligations have furthermore been

included on the basis of changing insights. Instances of this are the provisions in the

legislative proposal concerning special requirements in the event of bankruptcy or

suspension of payments.

The powers and obligations that are regulated in the legislative proposal correspond

with comparable powers and obligations regulated by the Federal Republic of Germany

and the United Kingdom and in the instruments opted for by them. Both countries have

stated their preference for introducing a special share. The powers have been

synchronised as regards their intended effect, scope of application and the incorporation

of the terms and conditions subject to which these powers may and will be used. The

Federal Republic of Germany's and United Kingdom's choice to introduce a special share

means that the protection of the public interest in these two countries primarily has to

follow the private-law trajectory and is dependent on private law enforcement

mechanisms. As is also explained in paragraph 2.4, this legislative proposal offers, in

addition to the possibility of private law enforcement, the possibility of administrative and

criminal law enforcement.

3.2 Structure

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3.2.1 Current structure

The current URENCO group is a multinational enterprise with facilities in the

Netherlands (Almelo), the Federal Republic of Germany (Gronau, Jülich), United Kingdom

(Stokes Podges, Capenhurst) and the US (Eunice). The group is directed from the top

holding URENCO Ltd., which has its registered office in the United Kingdom. The central

management of URENCO Ltd. is also situated in the United Kingdom. The current

shareholders of URENCO Ltd. consist of three (empty) holdings, each managing one-third

of the share capital of URENCO Ltd. and exercising the ensuing control. These are:

Ultracentrifuge Nederland NV (UCN NV) in the Netherlands; Enrichment Holdings Ltd.

(EHL Ltd.) in the United Kingdom; and Uranit GmbH (Uranit GmbH) in Germany. All

shares in UCN NV are held by the Dutch State. All shares in EHL Ltd. are held by the

British State. 50% of the shares in Uranit GmbH are held by the German energy

company E.ON and the other 50% by the German energy company RWE. This structure

can be schematically represented as follows:

Schedule A – Existing Structure

Enrichment

Holding Ltd

Ultracentrifuge

Nederland NV

Uranit Gmbh

RWE

British State Dutch State

URENCO Ltd.

EON 100% shares 100% shares

50% shares 50% shares

1/3 of the

shares 1/3 of the

shares 1/3 of the

shares

69

Thus, in the existing structure the states hold an indirect majority share in URENCO

Ltd. (66%, equally divided between the United Kingdom and the Netherlands). The two

German shareholders in Uranit GmbH are private parties. By designating Uranit GmbH as

a commercial body within the meaning of Article I(3) of the Treaty of Almelo, the German

government has accepted special responsibility to ensure that these private shareholders

comply with the Treaty of Almelo. The Treaty of Almelo already provides for a situation in

which one or more Contracting States would not directly or indirectly hold shares in

URENCO, but would designate and allow private parties to do so. In the existing

structure, URENCO Ltd. and the subsidiaries (“the URENCO group”) are directed, and the

strategic decisions are taken, by URENCO Ltd. The three legal entities UCN NV, EHL Ltd.,

and Uranit GmbH only act as holding companies.

This legal structure signifies that URENCO Ltd. – the current top holding of the

URENCO group – is subjected to English law (applicable are, among other things, the

Nuclear Installations Act 1965, the Nuclear Industries Security Regulations 2003

(consolidated) and the Uranium Enrichment Technology (Prohibition on Disclosure)

Regulations 2004) and British company law. The Netherlands exercises its responsibility

as Contracting State to the Treaty of Almelo via its indirect share ownership in URENCO

Ltd and, where necessary, exerts its influence in URENCO Ltd. in this way. The influence

in the Federal Republic of Germany is comparable with (but more indirect than) the

Netherlands. Furthermore, arrangements are in place between the shareholders that

ensure comparable influence.

The existing legal structure and method for securing the public interest is no longer

adequate in the event of an intended sale of the shares by one or more of the current

shareholders. First of all, the Federal Republic of Germany may not assume that the

relationship based on trust that has existed in the past 40 years with the current private

German shareholders E.ON and RWE will automatically be created with one or more new

shareholders as well. For the Federal Republic of Germany it is necessary that a

possibility exists to directly intervene in the top holding of the URENCO Ltd. group, i.e.

URENCO Ltd., in order to effectuate the responsibilities under the Treaty of Almelo and to

secure the public interest. The British authorities have concluded that in the event the

British shareholding is sold, additional measures and powers must be provided to secure

the public interest and to exercise the responsibilities under the Treaty of Almelo.

Where the Netherlands is concerned, additional measures will have to be taken in any

case, irrespective of whether it sells its shareholding. This is because if the other

government shareholder (the British State) falls away, the majority share of the

combined states will be abolished as well. Furthermore, it may not be assumed that if

part of the shares end up in private hands, the same kind of collaboration will be created

that has existed thus far with the existing private German shareholders E.ON and RWE.

The Netherlands will be unable to effectively secure the public interest and to take its

responsibilities under the Treaty of Almelo solely via its own (minority) shareholding. In

other words, it is essential for the Netherlands as well to obtain direct control over the

top holding of the URENCO Ltd. group where the strategic decisions are taken.

3.2.2. The new structure

If one or more of the existing shareholders sell their shares in URENCO Ltd., the

current structure will no longer be practicable. In line with the second, third and fourth

premises set out in paragraph 2.3, a solution will have to be found in respect of the

70

structure that: a) offers the Contracting States sufficient possibilities to allow them to

assume the shared responsibilities and to protect the public interest, b) respects the

equality and sovereignty of the Contracting States, and c) offers the Contracting States

the possibility to protect the public interest, in a manner that does the most justice to

their own approach in their own jurisdiction. Ultimately, a structure has been found that

respects these basic premises, which still allows a sale of the shares to private

shareholders, and at the same time that effectively secures the public interest and is

practicable for the enterprise.

The selected structure has the following characteristics. It constitutes a three-headed

structure, with three legal entities. The three legal entities will act towards all segments

of the URENCO group as one integrated, uniform parent company. This is realised,

among other things, by the way in which the board is organised. After all, the board of

the three legal entities will be completely the same and will therefore be in the form of a

personal union. Moreover, a personal union is provided for URENCO Ltd. with these three

legal entities. The day-to-day management of these three legal entities (the

“executives”) will also form the board of URENCO Ltd. In brief, this also constitutes a

personal union.

Each of the three legal entities will be a legal entity under the laws of a Contracting

State. The British legal entity will be URENCO Holding Ltd., having its registered office in

the United Kingdom. This legal entity will be formed by converting the present EHLT Ltd.

into a Limited through the conversion of another already existing holding company or by

incorporating a new company. The Dutch legal entity is URENCO Holding NV, having its

registered office in the Netherlands. This legal entity will be formed by amending the

Articles of Association of UCN NV or by incorporating a new legal entity. The German

legal entity will be URENCO Holding GmbH (a German legal person with shares), having

its registered office in the Federal Republic of Germany. The three legal entities will have

economic rights or interests in the present URENCO Ltd., as is presently the case.

These three legal entities will consequently each have an equal legal relationship with

the current URENCO Ltd., which will continue to exist as principal subsidiary of the

URENCO group and which is referred to in Article 1 as the jointly managed company,

which is placed immediately below Urenco Holding NV. This relationship will ensure that

instructions from all three legal entities to URENCO Ltd. will be equally binding on

URENCO Ltd. and that the impact of the decisions of the three legal entities is

safeguarded. In this manner, URENCO Ltd. and its subsidiaries are jointly controlled by

the three legal entities. The three legal entities are inextricably linked to each other by

cross-held preference shares, and by the stapling of shares, as a result of which the

shares may not be held separately and the share ownership in the three legal entities

and their influence on the management is the same fort all three. All this will may

possibly be supplemented with a management agreement to be concluded by and

between the three legal entities. The effect of this will be that any decision taken by one

of the three legal entities will automatically have effect on and will contractually bind the

other legal entities as well. In other words, the three legal entities cannot act

independently from each other, but are inextricably bound to each other and act as one

parent company towards URENCO Ltd. and the subsidiaries placed below it.

By creating three legal entities, each governed by the laws of the Contracting State in

which it has its registered office, a legal hold is created for each Contracting State that

allows it to regulate the URENCO group within its own jurisdiction by way of its proper

71

legal entity. Each Contracting State may decide for itself which instrument it prefers to

secure the public interest with, allowing it to keep an effective grip on the URENCO group

without subjecting itself to review by the court of one of the other Contracting States.

Nor will it be restricted in its choice of instrument. The United Kingdom opted for a

special share to secure the public interest, which is regulated in the articles of association

of URENCO Holding Ltd. and which will be held by the British government. The Federal

Republic of Germany has chosen a similar approach and will secure the public interest by

holding a special share in URENCO Holding GmbH. The Netherlands has stated that it

wishes to introduce legislation. The current legislative proposal is the outcome of this.

Schematically, the new structure is as follows (simplified):

Schedule B – New Structure

URENCO Holding

Ltd.

(ancillary company)

URENCO Holding

NV

(designated

enterprise)

URENCO

Holding GmbH

(ancilary company)

UK NL DUI

URENCO Ltd. (jointly managed

company)

Special Share Special

Share

Leglislation

33,1/3% shares 33,1/3% shares

33,1/3% shares

100% Shares stapled

Investors

72

Important to note, lastly, is that in the new structure the shares are inextricably bound

to each other through provisions in the articles of association and are to be considered as

one. It is not possible to hold a share in URENCO Holding NV without simultaneously

holding a share in URENCO Holding Ltd. and a share in URENCO Holding GmbH. A listing

on a stock exchange is in this structure not possible.

When converting the former structure into the new structure, the share ownership of

the existing shareholders will change as well. The Netherlands, for instance, will no

longer indirectly, via UCN NV, hold 33 1/3% of the shares in URENCO Ltd., but rather 33

1/3% of the units that represent a 33 1/3% shareholding in URENCO Holding Ltd., a 33

1/3% shareholding in URENCO Holding NV, and a 33 1/3% shareholding in URENCO

Holding GmbH. Whether this 33 1/3% stake in the units is directly held by the traditional

shareholders or indirectly via a holding like UCN NV, EHL Ltd., or Uranit GmbH, will be at

the discretion of the original shareholders. Next, the existing original shareholders may

resolve to sell or keep (part of) the interest in the units, subject to the restrictions

imposed in this legislative proposal.

Lastly, it must be noted that the designated enterprise and its ancillary companies get

to choose the names for the legal entities, so that the names may ultimately differ from

the provisional ones given in this explanatory memorandum.

3.2.3 Legal framework of the new structure

3.2.3.1 Structure

In light of the intricate structure of the URENCO group and the considerations

underlying it, the legislative proposal provides for a number of specific elements that are

directly related to the set-up and protection of this structure.

First of all, it is made clear which enterprise is brought under the scope of this

legislative proposal. By way of a designation order pursuant to Article 2, in the new

structure URENCO Holding NV will be brought, as designated enterprise, under the scope

of the legislative proposal. By doing this by way of a designation order by the Minister, it

is avoided that even a change of name will already require an amendment of the Act. In

addition, it offers flexibility that allows taking into account future restructurings and

divisions of the URENCO group. Furthermore, in the current situation – if the Contracting

States to the Treaty of Cardiff so desire – ETC Holding may be designated and brought

under the scope of the legislative proposal as well. Finally, the Dutch subsidiary of ETC

Holding (ETC Nederland BV in Almelo) may be designated.

In addition, the legislative proposal takes into account the existence of two other –

equivalent – legal entities in addition to the designated enterprise URENCO Holding NV,

which are controlled by the two other Contracting States. This explains the introduction

of the definition of ‘ancillary company’ and of ‘the competent authority of the Federal

Republic of Germany’ and ‘the competent authority of the United Kingdom.’ The present

URENCO Ltd. is referred to in the legislative proposal as ‘jointly managed company’. The

terms ‘ancillary companies’ and ‘competent authorities’ are of particular importance in

connection with the various decision-making procedures provided for in the legislative

proposal (see paragraph 3.2.3.2).

As has been shown above, the effective operation of the structure requires cross-held

preference shares in the three legal entities. These cross-held shares are necessary in

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order to have decisions taken in one legal entity have effect in the other two legal

entities as well. For instance, if the British government instructs the ancillary company

URENCO Holding Ltd. to suspend the control of a shareholder, this will also have effect on

URENCO Holding NV through the preference share URENCO Holding Ltd. holds in the

designated enterprise URENCO Holding NV and will furthermore result in the suspension

of the shareholder’s rights.

In order to ensure that this cross-effect is guaranteed for all powers the three

Contracting States deem necessary, this legislative proposal regulates in Article 6 that

the articles of association of the designated enterprise may grant certain powers to

corporate bodies or ancillary companies of the designated enterprise or that under the

articles of association the shareholder may be held to fulfil certain obligations, failing

which its rights may be suspended. The articles of association also provide for instance in

which instances such suspension may be imposed. These possibilities are partially

derived from the flexibility the Dutch Civil Code presently offers to the private company

(see Article 2:192 of the Dutch Civil Code). Lastly, this process also ensures that the

three legal entities will not be able to take decisions that differ substantively from each

other. This will be prevented by the formulation of the objects of the articles of

association of each of the three legal entities and the careful approval of decision-making

procedures in each of the three legal persons.

3.2.3.2 Relationship between the structure and the decision-making

procedures

The structure set forth in paragraph 3.2.2 above entails that the governments of each

of the three Contracting States will be given powers vis-à-vis the legal entity (top

holding) that is established in its own Contracting State. Since the three connected legal

entities (the designated enterprise and its ancillary companies) are in fact one company,

the decision-making procedures and special shares are aligned in this legislative proposal

to prevent the company from being confronted with different and possibly contradicting

procedures and decisions of the various governments. To this end, the legislative

proposal includes a number of procedural provisions that stipulate how the decision-

making procedure is to take place.

The legislative proposal distinguishes four types of procedures, each expressing in a

different manner how the involvement of the competent authorities of the other

Contracting States is shared:

1. The most demanding procedure requires unanimity and approval of all three

Contracting States. This means that any decision taken by the Minister will only enter

into effect after the other two competent authorities have adopted the same decision.

This procedure is applied in Articles 3 and 4, concerning changes in the structure of the

designated enterprise, and in Article 35, concerning investments related to the

establishment or commissioning of a production facility outside the territory of the three

Contracting States.

2. The second and most commonly applied procedure is based on the notion that

following consultations between the three Contracting States, one of the Contracting

States will decide whether or not a declaration of no objection or exemption may be

granted. However, if the competent authority that is initially responsible for assessing the

request intends to decide favourably on the request and grant the declaration of no

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objection or the exemption, the competent authorities of the other two Contracting

States will have a right of veto. Exercising this right of veto effectively means that

another authority will take over the assessment of the request, and will take a

substantive decision vis-à-vis the applicant. This procedure is for instance applied in

connection with the appointment of executive and non-executive directors and the

assessment of shareholders, divestments and certain investments, the formation,

termination or amendment of the terms of a joint venture, and the first nuclear

management plan.

3. The third procedure is comparable with the first. In the third procedure the Minister

has the authority to impose a ban (sometimes on the basis of a notification), make a

request, or give a designation order. However, as in the first procedure, unanimity of all

three Contracting States is required in this procedure as well. Thus, the Minister’s

decision will only enter into effect after the other two competent authorities have

adopted the same decision. This procedure must for instance be followed in Article 34,

instruction of the designated enterprise to suspend performance of an already concluded

sale and supply agreement for enriched uranium due to the risk this may cause to the

public interests.

4. The fourth procedure concerns the power of the Minister to issue a designation

order or instruction to the designated enterprise. The legislative proposal takes into

account the impact the decisions of the competent authorities of the Federal Republic of

Germany and the United Kingdom will have on the ancillary companies arising from their

special shares. The designated enterprise is obliged to observe these instructions as well.

This procedure is for instance required when instructing the enterprise, by way of a

designation order, to enrich uranium or produce precursors for the benefit of energy

production or for medical use (see Article 72(1)).

These procedures are discussed in more detail in the explanation given of each Article

separately.

3.2.3.3 Changes in the structure

Article 3 of the legislative proposal grants the Minister the power to approve any

change in the structure or to block changes if necessary. This relates to amendments to

the articles of association or terms and conditions of administration, dissolution, merger,

demerger, conversion of a designated enterprise, or relocation of the registered office or

head office of a designated enterprise. This power is necessary to ensure the efficacy of

the supervision by the three Contracting States. Simple changes, such as changes in

name, will not raise objections, but changes that may affect the relationship between the

three related holding companies and the relationship with the jointly managed company

URENCO Ltd., will be critically assessed. The same holds for changes in the terms and

conditions of administration which are applicable to the management of the shares in the

ancillary companies by the trust office.

Although it is true that the power of the Minister only extends to the designated

enterprise URENCO Holding NV, due to the cross-held shares and the provisions of the

articles of association no change in this top holding structure is possible in all three

vehicles without the consent of the Minister (see Article 3(1)). Given the interests all

three Contracting States share in this structure, it is provided that the competent

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authorities of the Contracting States must approve any change in the structure before it

may be implemented (see Articles 3(2) and 3(3), and Article 4).

In addition to this power of the Minister (and the comparable powers of the other

Contracting States in the ancillary companies URENCO Holding Ltd. and URENCO Holding

GmbH, on the basis of the special shares the British and German authorities hold in these

legal entities), the legislative proposal imposes on the designated enterprise the

obligation to ensure that its subsidiaries comply with the obligations imposed on the

designated enterprise as well (Article 5(1)). Thus, the designated company URENCO

Holding NV will share responsibility that URENCO Ltd. and all subsidiaries like URENCO

Nederland BV will act in accordance with the obligations imposed by the Contracting

States.

In order to avoid legal uncertainty or conflicts, Article 5(2) provides that the articles of

association of subsidiaries shall provide that the obligations vested under or pursuant to

this Act in the designated enterprise or its subsidiaries shall be implemented.

A restriction is attached to both the obligation of Article 5(1) and the obligation of

Article 5(2): the obligations apply only in so far as the law applicable to the subsidiary in

question allows such an obligation.

3.3 Executive and non-executive directors; other officers

3.3.1 Assessment procedure

The legislative proposal grants the Minister the power to assess the appointment of

executive and non-executive directors of the designated enterprise prior to their

appointment on any risks they pose to the public interest. The executive and non-

executive directors are screened because the strategy and policy of the enterprise are

principally developed and implemented by the board. In addition, the board is the point

of contact of the enterprise, both internally for its employees and externally for its

shareholders and customers and for the supervisors. The board of the top holdings of the

URENCO group (URENCO Holding NV and its ancillary companies) furthermore has an

important coordinating task, since URENCO presently has production facilities in four

different countries and works together with Areva in the field of technology in the ETC

joint venture.

This power of the Minister is based on practice in the past forty years. To date, each

executive and non-executive director has been screened by one of the three Contracting

States prior to their appointment. In accordance with the security and classification policy

laid down in Schedule II to the Treaty of Almelo, only people who have been screened at

a certain level may be granted access to information for which they are cleared on the

ground of the position they hold. Consequently, this also applies to the executive and

non-executive directors of the designated enterprise, who have access to certain

sensitive and classified information on the basis of their capacity as such. In addition, it

is contemplated whether the relevant person possesses the competences required by a

director of the designated enterprise – e.g. experience in the nuclear industry.

The legislative proposal provides that the designated enterprise must notify the

Minister of any intention to appoint an executive or non-executive director (see Article

7(1)). The Articles of Association of the British ancillary company URENCO Holding Ltd.

and the articles of association of the German ancillary company URENCO Holding GmbH

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provide that the competent authorities of the Federal Republic of Germany and of the

United Kingdom are notified likewise, thus ensuring that all three competent authorities

are notified of this intention and are involved in the assessment of the trustworthiness

and suitability of the prospective executive or non-executive director.

Next – following mutual consultation, which is also the case at present – only one of

the Contracting States will invite the designated enterprise to initiate a formal procedure

for assessing the prospective director.

If the Minister takes the responsibility for assessing the proposed executive or non-

executive director, the legislative proposal grants the Minister the power to instruct the

designated enterprise to apply for a statement of no objection (Article 7(2)). The

assessment as regulated in Article 7 will only take place after the designated enterprise

has received this instruction. If the Minister does not give such an instruction, the

procedure as laid down in the articles of association of the German ancillary company

URENCO Holding GmbH or the British ancillary company URENCO Holding Ltd., will be

followed. The competent authority of the Federal Republic of Germany and or the United

Kingdom, respectively, will in that event assess the proposed appointment.

The question as to which Contracting State will take the responsibility to assess the

prospective director is based on working arrangements between the Contracting States,

whereby the Contracting State that possesses or is able to obtain the most information

about the executive or non-executive director, will be the responsible Contracting State.

In short, , if a prospective executive or non-executive director is Dutch or a foreigner

who has lived in the Netherlands for years, it stands to reason that the Minister takes the

responsibility for screening this candidate.

The principle adhered to regarding foreigners who have not lived for any extended

period of time in one of the three Contracting States is that one of the Contracting States

assumes the responsibility for screening the candidate in this instance as well. Which

Contracting State will do so, will be determined on the basis of the information a

Contracting State possesses about this person or may obtain this information most

readily from the relevant agencies in the prospect’s country. If it is not possible to obtain

sufficient information, the unavoidable conclusion must be that no statement of no

objection may be issued and that the proposed director cannot be appointed.

The decision to have only one Contracting State bear the formal responsibility and to

execute legal powers corresponds with the fourth premise described in paragraph 2.2.

This will prevent jurisdiction conflicts and a triplication of procedures and potential

conflicts between the Contracting States. Since more than 40 years of experience have

taught that an assessment conducted by one Contracting State offers sufficient

guarantees, it has been decided to retain this practice.

However – just as in the current practice – a right of veto is introduced for each of the

Contracting States to block a prospective executive or non-executive director who has

been assessed by the competent authority of another Contracting State before the

competent authority of that Contracting State issues the declaration of no objection (see

Article 8(1)(a), if the Minister makes use of the right of veto and Article 8(1)(b) if a

competent authority of another Contracting State makes use of the right of veto). The

reason for this right of veto is to be found in the fact that a Contracting State may come

into the possession of information that it is unable to share with the other Contracting

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States, but which information is of such significance, from a security point of view, that it

prevents the prospective executive or non-executive director from being appointed and

consequently that no declaration of no objection should be issued. To allow this right of

veto while simultaneously preserving the principle that the prospective executive or non-

executive director and the enterprise are faced with only one decision, the request

submitted to the Minister for a declaration of no objection will not be considered further

(Article 7(6)) and the procedure concerning the declaration of no objection will be

terminated if the right of veto is exercised by the competent authority of one of the other

Contracting States.

3.3.2 Assessment by the Minister on the merits

If the Minister takes responsibility for screening a prospective executive or non-

executive director, the legislative proposal provides for a background check (Article

9(1)). The outcome of this check may compel the Minister to refuse to issue a statement

of no objection (Article 7(4)(a)). Pursuant to the Security Screening Act, background

checks in the Netherlands are conducted for all positions that are designated as a

confidential position within the meaning of Articles 1 and 3(1) of the Security Screening

Act.

Unlike a purely national situation involving a Dutch employee, on which the Security

Screening Act is based, the Treaty of Almelo recognises a shared responsibility of the

three Contracting States for the entire URENCO group. The responsibility for the

trustworthiness of executive and non-executive directors (among others) of the

designated enterprise has been regulated internationally via a security and classification

policy (see Schedule II to the Treaty of Almelo). A similar situation exists, mutatis

mutandis, in respect of the ETC Group under the Treaty of Cardiff.

Furthermore, given its multinational nature, executive and non-executive directors of

the designated enterprise may originate from anywhere. This will increase after one or

more of the current shareholders sell their shares entirely or in part to new private

shareholders, or if a stock exchange listing is obtained. As a result, the Netherlands

would not only be confronted with candidates who are not Dutch nationals or whose

place of residence is outside the Netherlands, but would also be faced with background

checks of these candidates conducted by the relevant competent authority of another

Contracting State. These background checks do not only come from the Federal Republic

of Germany or the United Kingdom (the other Contracting States to the Treaty of

Almelo), but also from the United States of America or France where relevant treaties are

in force.

In view of these specific characteristics in relation to the designated enterprise, the

Minister shall not fully apply the normal regime of the Security Screening Act to the

granting of a declaration of no objection pursuant to Article 7(3)(a), but a modified

regime as laid down in Article 13 of the Security Screening Act (see Article 9).

Article 13 of the Security Screening Act provides for a special regime for international

organisations that require an assessment of the trustworthiness of their (future) staff

members. This special regime was introduced because the question whether or not a

staff member may be employed was expressly left to the discretion of the international

organisation concerned (see Parliamentary Papers II, 1994/95, 24023, no. 3, pp 20-22).

Nor is it possible, in view of the status of international organisations, to comprehensively

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apply the requirements as regards form and content of the regular regime of the Security

Screening Act. Given the special status of the URENCO group and the ETC group under

the Treaties and the international context within which these enterprises operate. In view

of this, the legislative proposal tries to find common ground with the regime of Article 13

of the Security Screening Act.

The consequence of this choice is that the decision whether a director may be

appointed ultimately rests with the Minister, who relies for this decision on a relatively

form-free notification from the Minister of the Interior.

Apart from the trustworthiness, the Minister will also consider whether the public

interest may be put at risk as a result of the appointment. In this connection the overall

suitability of the candidate executive or non-executive director will be assessed. Relevant

factors in this regard include the question whether the candidate has a dubious track

record in the international business community, or has no relevant work experience in

the nuclear industry or in enterprises that produce or use dual-use goods.

3.3.3. Relieving executive and non-executive directors and officers of their

duties; suspension

The legislative proposal also provides for the power to suspend an executive or non-

executive director (Article 10(1)). The right to suspend may be exercised by any of the

Contracting States if a Contracting State comes into the possession of information that

raises doubt about the trustworthiness or suitability of the executive or non-executive

director concerned as a result of which it is feared that the public interest may be put at

risk (see article 10(1) and 10(2)(b)). Just as in the case of the right of veto set forth in

paragraph 3.3.1, it is desirable that each Contracting State has an independent right to

suspend, since it is conceivable that a Contracting State comes into possession of specific

information which in some instances may possibly not be shared but that nevertheless

compels it to suspend, given the fear that the public interest is put at risk. Naturally, the

Contracting States will still harmonise and consult in this event, and the information will

be shared in so far as is possible.

The possibility to suspend offers the Contracting States the certainty that it is possible

to effectively intervene at very short notice if information becomes available that gives

rise to a fear that a risk to the public interest exists, without having to immediately draw

final conclusions regarding the trustworthiness and suitability of the executive or non-

executive director. The effect of the suspension is that the executive or non-executive

director is still officially in office, but is not allowed to execute his tasks de facto or de

jure. He may no longer execute executive powers, nor does he have access to

information he formerly had access to, specifically as regards classified information.

Suspending an executive or non-executive director buys both the Contracting States

and the person concerned and the designated enterprise time to investigate the matter

or to prepare a proper defence. The suspension will end if it is shown that the

information was incorrect or if information comes to light that removes the potential risk.

Both the suspension and the termination of the suspension are subject to a decision of

the Minister, to which the normal legal protection under administrative law is available.

Both the executive or non-executive director concerned and the designated enterprise

may object to the decision or may ask the Minister to revoke the decision. Where a

suspension measure was taken by the competent authority of the Federal Republic of

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Germany or by the competent authority of the United Kingdom in respect of an executive

or non-executive director of the ancillary company, Article 10(2)(b) provides that the

designated enterprise is bound to such decision and must act on it.

The cornerstone of the powers of the Minister concerning the executive and non-

executive directors is his power to relieve the executive or non-executive director of his

duties (Article 10(3) and 10 (4)(a) and (c)). The executive or non-executive director will

subsequently be relieved of his duties as of the date on which the revocation of the

statement of no objection or a decision to that effect of the Minister has entered into

effect. The consequence of the exemption is that the executive or non-executive director

may no longer execute his (non-) executive duties, but it does not terminate any labour

law or contractual agreements between the (former) executive or non-executive director

and the designated enterprise. This relationship will be settled in accordance with the law

that governs this contractual relationship.

An executive or non-executive director of a designated enterprise is also relieved of

his duties if the competent authority of the Federal Republic of Germany or the

competent authority of the United Kingdom has relieved the executive or non-executive

director of the ancillary company of his duties (Article 10(4)(b) and (d). The designated

enterprise is obliged to comply with this decision in respect of the director concerned.

This is because there is an all-inclusive personal union of the board of the three ancillary

companies (see paragraph 3.2).

3.3.4 Other officers

Apart from executive and non-executive directors, the designated enterprise and its

subsidiaries also have key officers, to whom the powers set forth in Chapter 3 of this

legislative proposal may be declared applicable as well. These concern officers who are

able, in addition to executive and non-executive directors, to bind the designated

enterprise (e.g. because the officer is vested with certain powers under the articles of

association) or because these officers hold a security-sensitive position that directly

affects the safety and non-proliferation interests of the Contracting States. Such officers

may for instance be managers of a production facility, the head of security of the

production facility, the head of production of the production facility, or the corporate

secretary. Article 11 of the legislative proposal therefore offers the possibility (but not

the obligation) to bring these officers under the scope of Articles 7 to 10 inclusive, by or

pursuant to an order in council. This power will only be executed if the three Contracting

States deem this desirable.

3.4 Shareholders, shares, controlling rights and rights attached to shares

3.4.1 General

The Treaty of Almelo allows private shareholders to own shares in URENCO Ltd. Article

I(3) of the Treaty of Almelo provides that a Contracting State is not obliged to hold

shares - directly or indirectly - in the joint industrial enterprise itself, but that it may

designate and accept private parties instead. However, if a Contracting State does

designate such private party, it is responsible towards the other Contracting States for

the manner in which this party executes its (private) shareholding. In light of the

possible change in share ownership in URENCO Ltd., the legislative proposal together

with the new structure provides for an effective form of supervision of the share

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ownership in the URENCO group and sets out the responsibility the Netherlands has

under the Treaty of Almelo.

At the same time, it is necessary, in view of securing the public interest, to regulate

the share ownership in the joint industrial enterprise. Shareholders, specifically

shareholders holding a large number of shares, are able to exercise influence over an

enterprise and may impact its strategy, management and policy and even enforce

fundamental changes therein. For this reason, it is necessary to stipulate restrictions on

which parties may become shareholder and on the degree of influence certain

shareholders may exercise.

In addition, it is necessary to provide for effective procedures to assess shareholders

that wish to acquire a stake in the designated enterprise and to provide procedures to

suspend the influence shareholders may exercise in the designated enterprise in

situations in which the public interest may be at risk. If the situation should arise, it must

even be possible to force a shareholder to give up its shares in the designated enterprise

if the public interest is at risk due to his share ownership.

The legislative proposal provides rules both for the situation in which the designated

enterprise is an unlisted company and for the situation in which it is a listed company.

The situation may arise in the future that the URENCO group or its shareholders wish to

apply for a listing on a regulated market. This is currently not possible. Such a wish can

only be executed if the Minister, the competent authority of the Federal Republic of

Germany and of the United Kingdom have collectively approved the possibility of a listing

and approved the necessary changes to the articles of association in accordance with the

Article 3 and Article 4 of this Act.

3.4.2. Duty to disclose information

The legislative proposal distinguishes various obligations with which the designated

enterprise must comply, and which are aimed at supporting the Contracting States in

their assessment and supervision of the shareholders in the designated enterprise. This is

because the designated enterprise possesses the most information about the

shareholders of URENCO Holding NV and is furthermore able to retrieve information

about these shareholders. For one thing, an obligation exists for shareholders to register

prior to attending shareholders meetings (Article 119(2) and (3) of Book 2 of the Dutch

Civil Code). In addition, the designated enterprise already is able to obtain the identity of

shareholders by exercising the powers the enterprise has under Chapter 3a of the

Securities (Bank Giro Transactions) Act. The legislative proposal consequently imposes

several obligations on the designated enterprise to assist the Contracting States with

their assessment and supervision of the shareholders in the designated enterprise and

extends the possibilities for the designated enterprise to be aware of the identity of the

shareholders.

The designated enterprise is obliged, first of all (if it is a listed company), to forward

to the Minister any notifications it receives under Article 5:49(1) of the Act on Financial

Supervision (Article 13(1)). Shareholders are obliged by law to make these notifications if

the number of shares they hold or acquire reaches or exceeds a specific threshold, as

specified in Article 5:38(4), Article 5:39(3), Article 5:40 and Article 5:43(1) and (2) of

the Act on Financial Supervision; for instance if a shareholder owns 3% of the share

capital. By forwarding these notifications to the Minister, the Minister is able to form a

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clear picture of how the share capital in the designated enterprise is composed and will

be able to detect any changes that occur in the block of shares held by individual

shareholders.

Secondly, the designated enterprise is obliged to notify the Minister if it comes to the

designated enterprise’s attention that a holder of a share or of a controlling right holds

that share or controlling right in breach of the Act (Article 13(2)). This requirement

serves to prevent the designated enterprise, in the event it has knowledge of this

unlawful situation, from not pro-actively informing the Minister. The requirement does

not compel the designated enterprise to conduct an investigation itself (unless the

Minister or an ancillary company on the instructions of the Federal Republic of Germany

or the United Kingdom so requests), nor that the shareholders must be permanently

monitored.

Thirdly, this legislative proposal imposes in Article 13(3) a duty to notify on the

designated enterprise if the designated enterprise becomes aware that a holder of shares

intends to have the shares in the designated enterprise traded on a specific multilateral

trading facility within the meaning of Article 1:1 of the Act on Financial Supervision or on

a comparable specific system outside the European Economic Area. Examples of such

comparable facilities and systems include Alternext and The Order Machine. Such

facilities and systems are in fact alternative exchanges that are less well-regulated.

Given the effect trading the shares in the URENCO group on these facilities and

systems will have on the supervision of the shareholders as regulated in Section 4 of the

legislative proposal, the Minister must be notified as soon as the designated enterprise

becomes aware of such intention. This duty of the designated enterprise to notify is fed

by the notion that the designated enterprise is closer to the financial markets and

possesses more information about those of its shareholders that hold a large number of

shares and that might consider such a step. Besides, due to the relative ease and

freedom a shareholder has to have its own shares traded via such facility or such system,

there is a real risk that the shareholder concerned may be ignorant of the effects of the

obligations under this Act and does not report its intention as he is obliged to do under

Article 14(3). This prevents the Minister from exercising his power under Article 14(4) to

review this intention on the effects it has on the supervision as regulated in Section 4 of

this legislative proposal. By imposing this duty to notify on the designated enterprise,

this risk will be minimised.

Fourthly, the legislative proposal provides in Article 13(4) for the obligation on the

part of the designated enterprise to submit, further to a request from the Minister, free of

charge an extract from the shareholder’s register pertaining to the right to a share as

recorded in that register. This information may be material to the Minister, since it is

possible that someone who holds a right of usufruct or a right of pledge may exercise the

voting right and other rights attached to the share and thus exert influence on the

designated enterprise. This power to demand information allows the Minister to form a

better picture of the shareholdings in a designated enterprise. This is relevant for the

supervision, as it is the rights holder who may exercise influence and who must

consequently be assessed.

Fifthly and lastly, the legislative proposal provides that the designated enterprise

launches an investigation, at the Minister’s request, into the identity of a shareholder and

the ties it has with third parties (Article 13(5)). The Minister will make such a request if

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he suspects that a holder of shares or controlling rights has shares in the designated

enterprise in violation of this Act, or may pose a threat to the public interest. This

suspicion may for instance arise if articles are published in the financial press about how

an obscure shareholder who is domiciled in a tax haven holds shares in security-sensitive

companies such as the URENCO group or if the designated enterprise alerts the Minister

to odd behaviour manifested by a shareholder at the shareholders meeting, reflected for

example in voting behaviour or questions asked. A comparable investigation obligation

for the designated enterprise also comes about when the competent authority of the

Federal Republic of Germany or the United Kingdom orders an ancillary company to

initiate such an investigation (Article 13(5) (b)).

If the designated enterprise is a listed company, it may exercise the identification

powers regulated in this legislative proposal (Article 13(6)). These powers are derived

from Chapter 3a of the Securities (Bank Giro Transactions) Act, several provisions of

which have been declared applicable mutatis mutandis. Pursuant to Article 13(6)(a), the

designated enterprise may ask financial institutions such as banks that hold the shares

for the benefit of the shareholders to provide information about the identity of these

shareholders of the designated enterprise and their shares. These financial institutions

may in turn ask other financial institutions for additional information about the investors

behind this shareholder. The aim is to chart the chain of shareholders all the way to the

shareholder who ultimately controls the shares in the designated enterprise and may

exercise control in the designated enterprise. Pursuant to Article 13(7), financial

institutions are obliged to cooperate. This obligation may be enforced by imposing an

administrative fine (see Article 91(3) and Article 92(4)) or by applying Article 49e of the

Securities (Bank Giro Transactions) Act, so that it may be ensured that the various

financial institutions will actually cooperate in the investigation by the listed designated

enterprise.

The possibilities of the listed designated enterprise are additionally limited and the

designated enterprise will consequently have to take recourse to other sources, e.g.

public sources, or must contact the shareholders that directly own shares in the

designated enterprise to ask them for information about the identity of the shareholder.

3.4.3. Admitting the shares to trading on a regulated market

The legislative proposal takes the possibility into account that the designated

enterprise will want to apply for a listing on a regulated market or to trade the shares on

a multilateral trading facility or on a system that is comparable to a regulated market or

a multilateral trading facility in a country outside the European Economic Area. The

legislative proposal contains a number of provisions in the event this situation should

occur which are aimed at the situation that shares are listed. A listing, or trading the

shares on a multilateral trading facility, may, however, affect the possibilities of the

designated enterprise and of the Minister to obtain information about shareholders. Lack

of information may, in turn, reduce the possibilities for enforcing compliance with the

provisions of Chapter 4 of this legislative proposal. In addition, it may affect the

possibilities for suspending a shareholder or forcing him to sell shares. For this reason,

Article 14(1) of the legislative proposal provides that a designated enterprise must notify

the Minister of any intention to file an application for admission to trading on a specific

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regulated market, a specific multilateral trading facility or a specific system comparable

with this market or facility outside the European Economic Area.

The Minister will subsequently have the carefully phrased authority to block such

intention (Article 14(2)). The Minister may only prohibit such intention if it is clear that

the listing on the stock exchange in question will prevent or hinder the designated

enterprise from fulfilling its statutory obligations under Chapter 4 of this legislative

proposal. In addition, the Minister may prohibit such intention if he is unable or only

partially able to exercise his powers under or pursuant to Section 4 of this legislative

proposal. The Minister may not consider other reasons or interests in his decision. He

may only block a listing where such listing would undercut the effectiveness of the Act.

Whether a listing would be desirable in any case is a commercial matter, which the board

and shareholders of the designated enterprise must decide for themselves.

Providing this framework for the possibility of trading shares on a stock exchange also

encapsulates the possibility for a holder of shares in a designated enterprise that is a

listed company to trade its shares via a specific multilateral trading system. In that

situation, both the shareholder and the designated enterprise must notify the Minister to

enable the Minister to assess whether this will undermine the efficacy of the Act (See

Article 14(3) and (4)).

The competent authorities of the Federal Republic of Germany and the United

Kingdom have comparable powers. These powers have been laid down in the frameworks

applicable for the ancillary companies. Article 14(5) guarantees that decisions of these

competent authorities will have their effect on the holder of shares in the designated

enterprise.

3.4.4. Undesired persons as shareholders

The legislative proposal excludes a group of potential shareholders from the possibility

of acquiring or holding any share in the designated enterprise. As a result of the

prohibition included in Article 15 of this legislative proposal, these undesired persons are

categorically excluded from acquiring shares in the designated enterprise. Nor is there

any possibility of obtaining an exemption from this prohibition. The prohibition applies to

the designated enterprise both as a listed and as an unlisted company.

The category undesired persons who are shareholders is defined in Article 1 and

comprises the following groups of (potential) shareholders. The first group is formed by

natural persons, legal entities and other entities included in the sanctions list of the

United Nations, the European Union, or the Netherlands. An instance for this are persons

stated in Annex II to Council Regulation (EU) No 36/2012 of 18 January 2012 concerning

restrictive measures in view of the situation in Syria and repealing Regulation (EU) No

442/2011 (OJEU 2012, L 16). Pursuant to Article 14 of this Regulation these persons’

financial and economic assets have been frozen. That does not, however, alter the fact

that they are still the owner of these assets.

The effect of the freezing order is only that such a person is effectively prevented – for

as long as the sanctions are in place – from exercising control over his assets: he cannot

sell, move or benefit from his shares. In addition to this regime, it has been decided in

the legislative proposal to go one step further in respect of the share ownership in the

designated enterprise and to force such investors to sell their shares. Precisely in respect

of the URENCO group and the security-sensitive technology applied by this company, the

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effectiveness of the non-proliferation policy of the three Contracting States to the Treaty

of Almelo must be beyond any doubt. Moreover, the good reputation of the URENCO

group in the field of non-proliferation and security may be affected if shareholders that

are included on a sanctions list of the European Union have shares in the company, even

though these shares are frozen.

The second group consists of natural persons who are citizens or residents of a

country on which the United Nations or the European Union have imposed sanctions due

to violation of the Treaty on the Non-Proliferation of Nuclear Weapons (the Non-

Proliferation Treaty) or of an agreement on the implementation of Article III of the Treaty

on the Non-Proliferation of Nuclear Weapons (comprehensive safeguards). This group

furthermore includes legal entities having their registered office or central management

in a country on which sanctions are imposed.

These include for instance potential shareholders having North Korean nationality and

residing or having their registered office and central management in North Korea,

because Resolution 1718 (2006) was adopted by the Security Council of the United

Nations on 14 October 2006 with respect to North Korea and sanctions have been

announced in connection with a nuclear test explosion. In such an instance it is assumed

that the government of that country will be able to exert influence or put pressure on

that potential shareholder to do that government's bidding in his capacity as shareholder.

The cumulative requirement of nationality and residency or having the registered

office and central management in the country in question prevents undesirable ancillary

effects from occurring . It ensures, for instance, that a natural person having the Iranian

nationality but who fled Iran forty years ago and has lived as a political refugee in the

United States for the past 40 years is not an undesired person.

The third group consists of natural persons who are citizens and residents of a country

that has not signed and ratified two crucial instruments of the international nuclear non-

proliferation policy, the Treaty on the Non-Proliferation of Nuclear Weapons (the Non-

Proliferation Treaty) and an agreement for the implementation of the obligation of Article

III of breach of the Treaty on the Non-Proliferation of Nuclear Weapons (comprehensive

safeguards). What holds in respect of both of these international instruments is that they

constitute the foundation of all international safeguards against the proliferation of

nuclear weapons. Countries that are not a party to these international instruments have

not (yet) committed themselves to the international standards of non-proliferation and

international supervision.

The same assumption exists as in the case of the second group of investors: that if a

natural person is both a citizen and resident of such a country, or a legal entity has its

registered office in that country and its central management is situated in that country,

the government of that country will be able to exert influence or put pressure on that

potential shareholder to do that government's bidding in its capacity as shareholder.

This prohibition implies that at present investors from India, Israel, Pakistan, South

Sudan (which have not signed or ratified the Non-Proliferation Treaty) or from Benin,

Djibouti, Equatorial Guinea, Guinea, Guinea-Bissau, Eritrea, Cape Verde, Liberia,

Micronesia, Sao-Tomé & Principe, Somalia and Timor-Leste (no implementation

agreement re Article III Non-Proliferation Treaty) cannot legally acquire or possess

shares in the designated enterprise.

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3.4.5. Maximum permitted number of shares and voting rights of 3%

Apart from the prohibition on having undesired persons as shareholders, the

legislative proposal includes an additional restriction regarding certain investors that wish

to invest in the designated enterprise. These investors may only acquire up to 3% of the

shares. This group of investors is prohibited from maintaining shares that cause this

threshold to be reached or exceeded (Article 16). The substantive criterion that

determines whether investors may exceed this threshold is whether the state of which

the natural person is both a citizen and resident or in which the legal entity has its

registered office and its central management is situated, is a party to an additional

protocol on the implementation of the obligations under Article III of the Treaty on the

Non-Proliferation of Nuclear Weapons.

Pursuant to this prohibition investors from Algeria, Antigua, Argentina, the Bahamas,

Barbados, Belarus, Belize, Bhutan, Bolivia, Bosnia-Herzegovina, Brazil, Brunei,

Cambodia, Egypt, Ethiopia, Grenada, Guyana, Honduras, Ivory Coast, Yemen, Cameroon,

Kiribati, Laos, Lebanon, Liechtenstein, Malaysia, Maldives, Myanmar, Nauru, Nepal,

Oman, Papua New Guinea, Qatar, St Kitts, St Lucia, St Vincent, Samoa, Saudi Arabia,

Senegal, Servia, Sierra Leone, Solomon Islands, Sri Lanka, Sudan, Surinam, Thailand,

Tonga, Trinidad, Tunisia, Tuvalu, Venezuela, Zambia, and Zimbabwe presently cannot

acquire or hold 3% of the shares or more in the designated enterprise.

The reason for imposing this restriction is the importance of an additional protocol for

safeguarding compliance with the obligations by the Contracting States to the Treaty on

the Non-Proliferation of Nuclear Weapons. An additional protocol gives the IAEA extra

possibilities to carry out inspections and to ask questions about nuclear materials and

facilities, regardless of whether or not they have been formally reported to the IAEA. The

nature of the supervision carried out by the IAEA is different as well, namely its focus is

on quality, rather than on quantity.

Being a party to an additional protocol, however, is not an obligation under the Treaty

on the Non-Proliferation of Nuclear Weapons. This also explains the decision not to

include being a party to an additional protocol or not in the criteria that define the

category of undesired persons (see paragraph 3.4.4 above). Being a party to an

additional protocol or not is however relevant with respect to Article 16, because it is

desirable that when a shareholder possesses a number of shares allowing the

shareholder to actually exert relevant influence in the designated enterprise, there is a

measure of certainty that the state in which this investor is domiciled and of which the

investor is a citizen accepts the international standards regarding non-proliferation of

nuclear weapons and submits to international supervision.

The reason for opting for a threshold of 3% is based on the influence a shareholder

has if it has such number of shares, in combination with the possibility of being aware of

that stake in connection with the disclosure obligation under the Act on Financial

Supervision. In the event of a number of shares of 3% or more, a shareholder has a right

to put items on the agenda of the shareholders meeting (see Article 114a of Book 2 of

the Dutch Civil Code). This gives a shareholder the opportunity – albeit a limited one – to

exert influence on the shareholders meeting and consequently on the management of the


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A 3% threshold has been opted for because in the case of a listed designated

company such a threshold is in line with obligations under the Act on Financial

Supervision. Reaching the threshold of 3% signifies a substantial holding within the

meaning of Article 5:33(1)(f) of the Act on Financial Supervision, for which a duty of

disclosure exists. This makes it possible for the designated enterprise and the Minister to

be aware, pursuant to Article 13(1) of this legislative proposal, of shareholders holding

such influence.

3.4.6. Assessment Procedures

As already noted in paragraph 3.4.1 shareholders, specifically shareholders with a

large number of shares, exert influence in an enterprise and are able to influence

strategy, management and policy and even ultimately enforce fundamental changes

therein. Apart from the generic restrictions of Article 15 and Article 16 of this legislative

proposal, which apply to a specific group of shareholders, the legislative proposal also

provides for the screening of persons who wish to dispose of or acquire shares or

controlling rights in the designated enterprise. For this purpose, two different procedures

have been set up. One procedure for the situation in which the designated enterprise is

an unlisted company and one procedure for the situation in which the holders of shares

or controlling rights are screened within the context of an IPO, taking into account the

specific legal and factual characteristics of the marketability of shares on a stock

exchange.

3.4.6.1. Unlisted designated enterprise

Article 17 of the legislative proposal sets forth the procedure for assessing the

disposing of or granting of shares or deposing of the controlling rights in an unlisted

designated enterprise. In that event the shares are not traded on a stock exchange, but

depending on the applicable requirements, the shares and control are transferred by way

of a deed or an agreement. In this situation the possibility exists that more control or

voting rights are transferred than appear to be attached nominally to the shares to be

transferred. It is for instance possible to agree, via a “side letter”, that in certain

circumstances the acquirer of the shares will have additional controlling rights. The

possibility also exists that not only shares are transferred under an agreement, but also

the controlling rights attached to the shares that remain with the transferor. This means

that each intended transaction must be completely reviewed when assessing the disposal

of shares or controlling rights. After all, the transfer of even one share may already result

in a considerable shift in voting rights or control in the unlisted designated enterprise.

In view of these risks, Article 17(2) provides that the holder of a share or control in an

unlisted designated enterprise must notify the Minister of each and every intention to

dispose of or grant shares or dispose of control. This obligation applies also to the

designated enterprise itself, which either via the issue of shares to investors or granting

shares to directors or employees as part of a remuneration policy, may transfer voting

rights and other forms of control (Article 17 (1)).

Subsequently one of the three Contracting States will impose the obligation to submit

an application for a declaration of no objection and assess the disposal or granting (see

Article 17(3) and (4)). The competent authorities of the other Contracting States and the

Minister each have a right of veto regarding the granting of a declaration of no objection

(Article 18). The procedure used for this is comparable to the procedure for the intended

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appointment of executive and non-executive directors. The Minister only refuses a

declaration of no objection if the public interests may be threatened by the disposal or

granting of the shares or the disposal of the controlling rights (Article 17(6)(a)). Where

this is the case, the assessment criteria are discussed in more detail in paragraph 3.4.7.

In addition, the Minister refuses a declaration of no objection if it becomes apparent that

the investor is an undesired person as defined in this legislative proposal (Article

17(6)(b)). Moreover, the Minister will refuse a declaration of no objection if on account of

this the applicant acts in violation of Article 16.

3.4.6.2. Listed designated enterprise

If the designated enterprise were to become a listed company, it has been opted for to

only ex ante assess the holding, acquiring or increasing of an extensive shareholding that

involves substantial amounts of control. After all, if the designated enterprise is a listed

company, each marketable share represents in principle one vote as well as all other

rights usually attached to a share. The risk that more than the normal voting rights and

control are transferred upon the disposal of shares is consequently considerably less than

in the case where the designated enterprise is an unlisted company. On the other hand,

listed shares are liquid and many transactions may occur within a very short period of

time, as a result of which the shares may change hands many times. Stock exchanges

themselves make sure that no collusion takes place between shareholders and attempt to

prevent market manipulation.

With a view to this, any party who holds an equity interest or intends to acquire or

increase an equity interest as a result of which a threshold in a listed enterprise is

reached or exceeded, is obliged to notify the Minister of this (Article 19 (1)).

Subsequently one of the three Contracting States – as is the case with an unlisted

designated enterprise – will impose on one of the three Contracting States an obligation

to submit an application for a declaration of no objection and to assess the holding,

acquiring or increasing of the equity interest exceeding a threshold value (see Article

19(2) and (3)). With respect to the granting of a declaration of no objection, the

competent authorities of the other Contracting States and the Minister each have a right

of veto (Article 20). The procedure used for this is comparable to the procedure for the

intended appointment of executive and non-executive directors. The Minister only refuses

a declaration of no objection if the public interest may be threatened by the holding,

acquiring or increasing of the equity interest (Article 19(5)(c)). Where this is the case,

the assessment criteria are discussed in more detail in paragraph 3.4.7. In addition, the

Minister refuses a declaration of no objection if it becomes apparent that the investor is

an undesired person as defined in this legislative proposal (Article 19(5)(a)). Moreover,

the Minister will refuse a declaration of no objection if on account of this the applicant

acts in violation of Article 16.

Two parameters have been considered when determining which thresholds require an

ex ante review: 1) precedents in the financial sector and 2) the degree of control of the

special rights that the size of a particular shareholding will create according to company

law. In addition, some additional thresholds are the result of negotiations with the

Contracting States to the Treaty of Almelo.

Article 22 of Directive 2013/36/EU of the European Parliament and of the Council of

26 June 2013 on access to the activity of credit institutions and the prudential

supervision of credit institutions and investment firms to amend Directive 2002/87/EG

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and to withdraw Directives 2006/48/EG and 2006/49/EG (OJEU 2013, L 176) provides

that if a natural person or legal entity wishes to directly or indirectly acquire a

shareholding in a credit institution that would reach or exceed a threshold of 20%, 30%

or 50%, or have the credit institution become a subsidiary, the proposed acquisition

must be reviewed by the regulator of the bank concerned. Thus, European legislators

decided that these thresholds represent relevant levels of influence and control and that

in the interest of the stability of the financial system an ex ante review is required. In the

legislative proposal these percentages are therefore adopted as relevant thresholds,

since in the designated enterprise the influence related to a shareholding of 20%, 30% or

50% also requires a consideration in order to protect the public interest as defined in this

legislative proposal.

In addition, the level of control or the special rights involved in the size of a specific

shareholding is considered. Pursuant to Article 114a of Book 2 of the Dutch Civil Code a

shareholder holding 3% or more of the shares may have items placed on the agenda of

the general meeting. Since Article 16 of this legislative proposal already provides the

same threshold, however, and this already ensures an assessment of potential

shareholders and limits the level of influence, it has been decided not to prescribe an ex

ante review for this threshold.

Subsequently, it was considered whether the threshold of 10% would be a relevant

threshold to prescribe the ex ante assessment. Article 2:110 of the Dutch Civil Code

provides that a shareholder (or group of shareholders) holding 10% of the share capital

may ask the court to authorise it to convene a general meeting. Given this right of

shareholders holding 10% of the shares, it has been decided to apply the threshold of

10% as relevant threshold; if this threshold is reached or exceeded, a declaration of no

objection from the Minister is required. This choice is furthermore supported by the

circumstance that both in the Netherlands and in the Federal Republic of Germany and

the United Kingdom, banks and other financial institutions apply, in accordance with

Community law, this threshold for the ex ante assessment of a shareholding of 10%.

Applying this threshold is also justified in the event of a 10% shareholding in a non-

financial enterprise, given the public interest at stake at the designated enterprise.

As regards the thresholds of 20% and 30%, reference is made, in addition to the

directive cited above, to the letter to the Lower House from the Minister dated 10 June

2014 in which the acquisition of a predominant control in designated Dutch legal entities

with vital telecommunication infrastructure will require a declaration of no objection

(Parliamentary Papers II 2013/14, 24095, no. 368). It should be noted in that respect

that if a shareholding of 30% is acquired in a listed company, the obligation exists to

make a public offer (Article 5:70 of the Act on Financial Supervision). This adds weight to

this threshold, for if this threshold is reached, an investor may obtain – provided there is

sufficient interest – full control over the designated enterprise and thus over the URENCO

group. Lastly, it is noted in respect of the thresholds of 20% and 30% that generally

speaking about half of the shareholders of a listed company show up at the shareholders

meeting. This means that a shareholder who holds 20% or 30% of the shares may exert

considerable power in the shareholders meeting.

This also explains the application in this legislative proposal of the thresholds of 50%

and 95%: upon exceeding the threshold of 50%, a shareholder acquires control over the

designated enterprise and the designated enterprise may be included in the shareholder’s

consolidated balance sheet. Moreover, the shareholder will be able to outvote the other

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shareholders. Pursuant to Article 359c of Book 2 of the Dutch Civil Code, a shareholder

holding 95% of the shares may force the holders of the other 5% to sell their shares to

him. As a result, if a listed company is involved, the company will lose its listing and the

nature of the designated enterprise will change, as well as the rules that apply to its

share ownership. As regards the thresholds of 70% and 90%, it has been concluded that

these thresholds may be useful in an international context, also in light of the rules

arising from the own company law.

3.4.7. Assessment criteria

The same assessment criteria are applied in the assessment procedures regulated in

Article 17 and Article 19 of the legislative proposal, (see Article 17(7) and Article 19(6)):

the public interest may be threatened, the applicant is an undesired person or the

applicant acts in violation of Article 16.

Supplementary to this, Article 17(7) gives an exhaustive list of the assessment criteria

that the Minister considers in their mutual relationship in order to determine whether a

declaration of no objection should be refused because the public interest may be

threatened. ‘In their mutual relationship’ reflects that all assessment criteria listed will be

weighed and that a sole criterion does not automatically imply that the public interest

may be threatened. Vice versa, in some instances a sole criterion – in view of the specific

circumstances of the case – can be so important that the Minister will indeed refuse a

declaration of no objection on this ground.

When assessing whether the public interest may be put at risk, the decision - just like

other decisions pursuant to this bill and in accordance with the principles of Dutch

administrative law - will have to give a certain causality of the intended transaction on

the possible threat to the public interest. That is the reason that Article 17(7) contains

several assesment criteria regarding the qualities of the acquirer of the shares or control.

Further, the number of shares to be acquired and the related control are also relevant.

A decision concerning one and the same shareholder may be different for a large number

of shares and the related control than for a smaller number of shares. Also, if for

instance a number of shares are acquired that will provide control over the designated

enterprise, the related risk and consequences for the public interest will be scrutinised

more closely, since this may substantially alter the de facto and de jure situation within

the designated enterprise.

The refusal to issue a declaration of no objection does not require that the risk for the

public interest is demonstrated; what matters is whether the public interest may be put

at risk. The Minister will have to argue why he believes that there may be a risk for the

public interest if the intended share transfer or transfer of control were to take place. The

limitative assessment criteria offer the requisite basis to do so. If the Minister finds no

reason, on the basis of the assessment criteria, to refuse to issue the declaration of no

objection, he may not consider other arguments in his decision as yet. The assessment

criteria also constitute the relevant standard used by the Minister to decide to prohibit

exercising a right attached to a share or control or order the compulsory sale of shares or

control or a reduction or sale of the shareholding (Article 21(3) and Article 23(6), as

explained in paragraphs 3.4.8. and 3.4.9. below).

The assessment criteria of Article 17(7) were drawn up in consultation with the

Federal Republic of Germany and the United Kingdom since, in light of the joint

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responsibility under the Treaty of Almelo, the Contracting States must apply a

harmonised framework in their assessment of shareholders. The assessment criteria may

be divided into three categories.

The first and largest category includes criteria concerning the capacity, quality and

characteristics of the investor. Three examples of the criteria in this category:

1. the ownership structure and relations of the acquirer (Article 17(7)(a)): if these are

insufficiently transparent, it is not possible to properly assess who holds this de facto

control over the shares in the designated enterprise and whether this poses a risk for the

public interest. Consider for example in this context the legal forms that make it difficult

to trace the underlying parties or a structure of legal entities in various jurisdictions

layered to such an extent that it is not possible to ascertain who has control over the

acquirer.

2. the influence a third party is able to exert on the exercise by the acquirer of the rights

attached to his shares (Article 17(7)(b)): if a third party is able to exert control in such a

manner that it entirely or in part determines the way in which the shareholder exercises

his rights attached to the share and consequently may also exert influence on the policy

of the designated enterprise regarding for instance compliance with its statutory

obligations, this will be a major factor to consider when deciding whether the investor

concerned is acceptable as a shareholder. Such influence by a third party may for

example take the shape of a stake of this third party in the investor who wishes to

acquire shares in the designated enterprise. In Article 1(1)(f) of the Act on the

Prevention of Money Laundering and Terrorist Financing for example it is assumed that

such influence exists if the third party is a shareholder who may exercise more than 25%

of the voting rights in the general meeting of the shareholder. Such influence may also

be assumed if that third party may exert de facto control over a shareholder, for example

because the board of the shareholder is appointed by this third party or a shareholders’

agreement applies that grants such influence. Influence also exists if this third party, for

example based on contractual agreements, has the right to appoint one or more directors

or if by means of commercial contractual agreements between the third party and the

shareholder in the designated enterprise, influence on the conduct or the activities of this

shareholder has been obtained. Financing agreements with financial institutions may

provide these institutions with a say in the manner in which the control related to the

shares in the designated enterprise will be exercised by the shareholder.

There is always a risk that as a result of legal or actual (coercive) government

measures a shareholder may effectively lose its autonomy. It is assumed in this

connection that a natural person who invests in shares in the designated enterprise, is

under the influence of the state of which he is a national as well as a resident. A similar

assumption is made for legal entities that have their registered office and central

management in such state. With the introduction of the criterion of Article 17(7)(b), the

Minister is able to take this into account. The criterion is general and factual in nature, in

order to avoid that any specific legal or factual situation is overlooked. At the same time,

a further specification is given in those instances in which such influence is opaque or

inappropriate: the other factors mentioned in Article 17(7) provide the Minister with a

handle when making this assessment.

Lastly, it should be noted that the assessment criterion laid down in Article 17(7)(b),

must be distinguished from the other assessment criteria that pertain to the ties the

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acquirer has with third parties. An assessment criterion is, for example: the ties an

acquirer has with a natural person, legal entity or a not-state entity subjected to

sanctions of the United Nations (Article 17 (7) (d)). Contrary to (b), this involves having

the ties in question and not the exercise of influence by this person or non-state entity

on the conduct of the acquirer in so far as he were to be shareholder of the designated

enterprise.

3. The acquirer’s record in respect of security, nuclear safety, securing non-proliferation

and compliance with the statutory requirements (Article 17(7)(c): this criterion offers the

possibility to take the acquirer’s record in the security-sensitive nuclear industry into

account.

The second category is composed of criteria regarding the country of which the

investor is a citizen or resident, or where he has his registered office. Two examples:

1. The security situation in the country where the proposed acquirer is established, or of

the neighbouring countries (Article 17(7)(g)): this criterion allows the Minister to take

into account whether the proposed acquirer – especially if that acquirer wishes to acquire

such a number of shares in the designated enterprise as to be able to exercise control –

is established in an unstable region, thus posing the risk that the acquirer will be unable,

if the instability increases, to exert normal control or will use its control in a manner that

differs from what was originally believed, as a result of a change in the regime that

controls the investor.

2. The existence of national or international nuclear guarantees or regulations in the

country of which the proposed investor is a resident or where the central management of

the proposed acquirer is situated, or the obligations of the country in question under

treaties, whereby treaties are in any event included to mean specific treaties or specific

international agreements concerning the designated enterprise (Article 17(7)(q)). This

criterion will ensure that the Minister may take into account to what extent he expects

the proposed acquirer to take into account the nuclear guarantees, regulations and

treaties that apply to the designated enterprise. If the country where the investor is

domiciled also has these types of requirements in place, this will increase the likelihood

that the acquirer will respect these guarantees and regulations in respect of the

designated enterprise and its subsidiaries. This will especially be the case if specific

treaties or international agreements have been concluded with the country in question in

respect of the designated enterprise. For instance the exchange of memoranda that has

taken place with Brazil concerning the export of uranium enriched using URENCO’s ultra-

centrifuge process (Parliamentary Papers II 1977/78, 14 261, no. 37) or a treaty such as

the Treaty of Washington.

The third category of criteria refers to the situation in which there are insufficient ties

between the three Contracting States and the country of which the investor is a citizen or

a resident or where he has his registered office. For instance if there is insufficient

information available about the proposed acquirer or there are no or only limited

possibilities to directly verify information about the proposed acquirer in a country,

unless it is possible, within the context of a collaboration relationship with the state in

which the proposed acquirer is domiciled, to obtain information and verification of the

information by that state (Article 17(7)(o)): this criterion is in line with the criterion

regarding opacity of the ownership structure of the proposed acquirer. One mitigating

factor for this (possibly initial) opacity is the possibility to request the state of origin of

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the proposed acquirer to provide relevant information or to verify information already

obtained.

3.4.8. Prohibition to be imposed on exercising controlling rights or rights

attached to shares

In addition to the ex ante review of the disposal of shares in the designated enterprise,

the legislative proposal also provides for ex post inspection. The Minister may make use

of two instruments, should he decide that the public interest may be at risk as a result of

the relevant shareholder owning shares. The first instrument is the possibility to prohibit

the shareholder from exercising the rights attached to its shares and control (Articles

21(1) and 22). The second instrument is imposing the compulsory sale of shares (see

Articles 23 to 27 inclusive, and paragraph 3.4.9. below).

By prohibiting the exercise of the rights attached to a share and control, the Minister

has the possibility to (temporarily) remove, in a relatively simple manner, any immediate

security and non-proliferation risks posed by a specific shareholder. The basis for

imposing such prohibition is that the public interest may be put at risk if the holder of a

share or control were to normally exercise the rights attached to his shares and control.

This instrument is eminently suited for use in events in which a change of

circumstances occur, as a result of which it is no longer possible, given the new

circumstances, to maintain the initially positive assessment of a shareholder, or that

forces a reassessment of the shareholder. Uncertainty about a shareholder or difficulties

in obtaining information about a shareholder may also give cause to impose this

prohibition. As a result of the prohibition from exercising the rights attached to a share or

from exercising control, a shareholder will for instance no longer receive information from

the designated enterprise and may no longer attend the shareholders meetings.

A shareholder on whom a prohibition is imposed will continue to receive dividend (and

other comparable distributions from the reserves). It may well be conceivable that the

risks to the public interest have increased due to altered circumstances beyond the

control of the shareholder. It would be unreasonable to deny the right to dividend, since

this right does not pose immediate risks to the public interest. Nor does the prohibition

on exercising the rights attached to the share and on exercising control affect the

marketability of the share. A shareholder is entitled to transfer his shares, provided the

restrictions and procedures of this legislative proposal are complied with. Here, the

legislative proposal departs from the provisions regarding the freezing of assets in the

Sanctions Act. If a shareholder transfers his assets, the prohibition against exercising the

rights attached to a share and against the exercise of control will have become without

object and has consequently lost effect, since the prohibition is linked to the holder of the

share or of the control and not to the share or the control itself which then would be in

other hands.

In view of its nature, the prohibition from exercising the rights attached to shares and

control is only temporary, as such prohibition will alter the voting proportions in the

general meeting and this may affect the strategy and policy of the designated enterprise.

Furthermore, it would lead to an undesirable situation if the other shareholders and the

board of the designated enterprise are in permanent uncertainty as to whether or not a

shareholder – especially if that holder has a large number of shares – may continue to

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act as a strategic partner in the designated enterprise. A more permanent solution is

found in the legislative proposal in the power of the Minister to order a compulsory sale.

The power to prohibit the shareholder from exercising the rights attached to the

shares depends on whether the shareholder’s identity can be known. Only then will it be

possible to properly assess the risk posed to the public interest and to impose the ban.

If, in respect of a listed designated enterprise, the identity of a holder of an equity

interest cannot be established with certainty through an investigation as referred to in

Article 13(5) and (6), nor in any other way, the legislative proposal provides in Article

21(4) that the last person who can be identified will be deemed to be the holder and

owner of the equity interest.

The risk of not being able to trace the identity exists in particular if there is a very

long chain of securities accounts in which various intermediaries are multi-tiered co-

owner of a securities account of another financial institution on behalf of an underlying

client. Ultimately such a chain ends with a natural person who or legal entity that holds

the shares in a listed designated enterprise for his or its own account and risk. The

investigation a designated enterprise institutes at the request of the Minister pursuant to

Article 13(5) of this legislative proposal may fail for example on account of post office

box companies that fail to respond or parties that, in view of the legal framework that

applies to them, are prohibited from providing information. Pursuant to Article 21(4), if

the Minister is unable to trace the identity in any other way, the last party in the chain

who can be identified will be considered as the holder and owner of the equity interest.

In that event the prohibition provided for in Article 21(1) may be imposed on this party.

This way it is no longer possible for underlying parties present in a chain after this last-

identified party to exert influence in the listed designated enterprise, because these

rights are no longer vested in the last-identified party, who is not permitted to exercise

them pursuant to Article 21(1) and (2). This will also increase the cooperation of financial

institutions in the custodial chain of the shares in the listed designated enterprise in

identifying the shareholder. They have an incentive to cooperate in order to avoid

becoming the target of this ban themselves.

If the Minister (or a competent authority of the Federal Republic of Germany or the

United Kingdom) makes use of this power, this is stated explicitly in the decision in which

the prohibition is imposed (see Article 21(5)). This avoids a party from not having any

defence against such an assumption by the Minister. The person in question can then in

response to this state who the real shareholder is.

Lastly, Article 21(6) provides for an obligation for the financial parties who administer

the securities accounts in which shares in the listed designated enterprise are held, to

refrain from actions by which a holder of shares or controlling rights may exercise a right

attached to a share or a controlling right in violation of a prohibition. This obligation to

refrain from such actions results from the role these parties fulfil in granting control to a

shareholder in so far as shares are held as book-entries. If a shareholder wishes to

attend a general meeting of shareholders, he is often obliged to pass on this wish to the

party administering his securities account. Subsequently this party will ensure providing

the relevant information to the listed designated company, to the effect that the

shareholder is registered for participation in the general meeting of shareholders and that

he also has the authorisation required for this. In view of this role, the obligation of

Article 21(6) contributes to the effective implementation of the prohibition to exercise

rights attached to shares. In so far as these financial parties have been informed of the

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prohibition, they may be expected not to carry out any active actions that may result in

the shareholder on whom the prohibition has been imposed to still get a chance to

exercise rights attached to his shares.

The actual enforcement of the ban will require efforts on the part of the designated

enterprise (Article 22(1)). The designated enterprise has to comply with the prohibition

imposed pursuant to Article 21(1) or (2). Although the prohibition is imposed on the

shareholder, the designated enterprise has various possibilities to ensure that the

prohibition is indeed effective. For example, the designated enterprise can deny a

shareholder on whom the prohibition has been imposed access to the general meeting of

shareholders or refuse to register him for participation in the general meeting of

shareholders. Because of the obligation of Article 22(1) it is guaranteed that the

designated enterprise will indeed take these measures.

If the designated enterprise is listed on a stock exchange the cooperation of financial

institutions with the listed designated enterprise may be required in order to actually and

effectively enforce the ban. As described above, financial institutions may contribute to

the effectiveness of the ban imposed on a shareholder, for example by not facilitating the

registration of the shareholder in question for participation in the general meeting of

shareholders. By means of the obligation to cooperate in Article 22(2), these parties are

encouraged to cooperate with the listed designated enterprise.

If such cooperation however is not forthcoming, then the listed designated enterprise

is obliged to notify the Minister of this lack of cooperation. The Minister may then make

use of the power laid down in Article 22(4) and determine which party in the chain was

the last to cooperate. Article 22(6) provides who may be regarded as shareholder in this

situation. The ban on exercising rights attached to shares will then apply to this party

(see Article 22(6)). This way it is no longer possible either for underlying parties present

in a chain after this last-identified party to exert influence in the listed designated

enterprise. This will also increase the cooperation of financial institutions in the custodial

chain of the equity share in the listed designated enterprise. They have an incentive to

avoid being affected by this assumption by the Minister.

3.4.9. Compulsory sale

3.4.9.1. Imposing an order to sell

The legislative proposal grants the Minister two types of power to order shareholders

to dispose of their shares or controlling rights or to reduce their shareholding to below a

specific threshold value. The first type of power involves the power of the Minister to put

a stop to violations of the statutory restrictions and procedures regarding holding shares

in the designated enterprise (Article 23(1) to (4) inclusive). The second type of power

involves the Minister’s power in situations not provided for in Article 23(1) to (4)

inclusive, to instruct a compulsory sale if the continued share ownership or the continued

size of the share ownership in the designated enterprise may put the public interest at

risk (Article 23(5)).

Article 23(1) provides for the obligation of the Minister to order the sale of the shares

or controlling rights if the shares (or controlling rights) are in the hands of an undesired

person in an unlisted or listed designated enterprise. Article 23(2) provides the same

power if the threshold mentioned in Article 16(1) is exceeded. In these events the

Minister will instruct the holder to dispose of the shareholding or controlling rights or to

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reduce his stake to less than the threshold value. In neither of these situations does the

Minister have discretionary power to consider whether or not to impose this order on the

shareholder. The Minister is obliged to enforce the prohibition by ordering a sale.

Article 23(3) and (4) provide for the power – but not the obligation – of the Minister to

order a shareholder to dispose of his shares or controlling rights or to dispose of or

reduce his stake to below a specific threshold value. Article 23(3) offers a possibility to

take action in the event of violations of the prohibition against disposing of shares and

controlling rights in an unlisted designated enterprise (Article 17(4) and Article 18(1)).

Article 23(4) sets out a comparable power for a listed designated enterprise. However,

the Minister may decide, instead of ordering a compulsory sale, to invite the shareholder

in question to apply for a declaration of no objection as yet.

This flexibility is especially important in respect of a listed designated enterprise, since

the system of thresholds is applied. A shareholder may – for reasons beyond his control

– exceed a threshold, for instance because the designated enterprise has bought back

shares. To avoid the shareholder being forced to sell, the Minister must have the power

to offer him the possibility to apply for a declaration of no objection in respect of

attaining and exceeding the relevant threshold value as yet.

The Minister may only exercise his power pursuant to Article 23(5) to instruct

shareholders to sell their shares or controlling rights in an unlisted designated enterprise

or to dispose of or reduce a stake in a listed designated enterprise to below a specific

threshold value if he makes a plausible case for such risk to the public interest and

provides reasons why the continued share ownership in the designated enterprise or

maintaining it at the existing level can pose a threat to the public interest. When

exercising this power the Minister will apply the assessment criteria of Article 17(7) when

considering whether or not a compulsory sale is required (Article 23(6).

In the decision in which the order is imposed the Minister will offer the shareholder a

reasonable period within which to dispose of his shares, controlling rights or

shareholding. There are three reasons for this. First, the possibility to simply sell shares

strongly depends on whether the designated enterprise is a listed or an unlisted

company. If the designated enterprise is a listed company, there will be a liquid market

on which buyers will always be found for shares that are offered for sale. If the

designated enterprise is an unlisted company, however, there will be no such liquid

market, and an active search must be carried out to find a possible buyer, who must

furthermore be able to obtain a declaration of no objection within the meaning of Article

17(3). This requires more time.

Secondly, the number of shares, or the extent of the controlling rights to be disposed

of is relevant. If a large number of shares is to be sold in a designated enterprise that is

a listed company, ample time must be taken in order not to disrupt the market, as this

might result in loss of value for the selling shareholder. Therefore, together with

stipulating a reasonable period, it may also be stipulated that the number of shares be

reduced in several steps, taking also into account the market circumstances. The

problem if the designated enterprise is an unlisted company is that a large block of

shares represents a considerable value and that only a limited number of potential

buyers exist to take over such a large amount of shares.

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Thirdly, the sale may be frustrated by market circumstances. It will be harder to sell a

large block of shares in times of economic crisis and the risk of loss of value is

considerable. To provide for these factors, the Minister is obliged to offer a reasonable

period – based on existing facts and circumstances – when ordering a sale of shares.

Exercising the power to instruct the shareholder to sell his shares or part of them

depends on whether the identity of the shareholder is known, for only based on the

(possibility to know the) identity will it be possible to properly assess the risk posed to

the public interest and may a specific order to sell be given. If, however, it is not possible

to accurately establish the identity of a holder of an equity interest in a listed designated

enterprise by way of an investigation as referred to in Article 13(5), nor in any other

manner, Article 23(11) provides for the possibility of the last person identified in the

investigation being deemed to be the holder and owner of the equity interest in a listed

designated enterprise. Similarly as with the ban on exercising the rights attached to the

shares (see paragraph 3.4.8.), this provision allows for the possibility to consider a post

office box company behind which the actual but untraceable shareholder hides as the

shareholder and to force that company to sell the shares, or part of them. If this

possibility is exercised, this will be explicitly stated in the imposed order (Article 23(12).

Lastly, it should be emphasised that the order to sell a share or controlling interest or

to reduce an equity interest in URENCO Holding NV will automatically lead to the disposal

of the share in URENCO Holding Ltd. and of the shares in German URENCO Holding

GmbH. For it is not possible to hold a share in URENCO Holding NV without

simultaneously holding the share in URENCO Holding Ltd. and a share in the German

URENCO Holding GmbH, given the statutory linking of the shares and the holding and

trading of the linked shares. In view of the selected structure and the linking of the

shares, it is consequently impossible for a shareholder to sell his share in URENCO

Holding NV, further to an order imposed by the Minister, while continuing to hold a share

in URENCO Holding Ltd. and a share in URENCO Holding GmbH.

3.4.9.2. Enforcement of order to sell in case of failure by the shareholder to

carry out order

The legislative proposal takes into account the possibility that a shareholder – despite

the order and related statutory obligation – refuses to sell the shares or controlling rights

or reduce the shareholding. Where this situation arises, the legislative proposal provides

for a set of powers and rules that allows the designated enterprise to effect the

compulsory sales as instructed by the Minister or by a competent authority of the Federal

Republic of Germany or the United Kingdom (Articles 24 to 27 inclusive).

In order to actually execute the compulsory sale, the designated enterprise is

exclusively and irrevocably authorised to proceed to sell the shares, controlling rights or

shareholding on behalf of and for the account of the holder thereof (Article 24(1)(a)).

The designated enterprise will subsequently be obliged to sell the shares on behalf of and

for the account of the holder of those shares, controlling rights, or the equity interest

(Article 24(1)(b)). The proceeds of that sale will subsequently accrue to the (former)

holder of the shares, controlling rights or equity interest.

The actual effect of this can be subjected to further rules provided by way of or

pursuant to an order in council (Article 24(2)). In this context it can for example be

regulated what will happen to the proceeds of a sale if the shareholder is unable to

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receive the money or himself is subjected to sanctions that make financial traffic

impossible. In these further rules it may be provided that the proceeds will be held in

escrow or on consignment until such time that the proceeds can be paid.

If the designated enterprise is an unlisted company, it will be relatively easy to sell the

relevant (registered) shares. If the designated enterprise is a listed company, the

cooperation of financial intermediaries will be required to enable the enterprise to

actually and effectively execute the compulsory sale order.

The listed designated enterprise will submit a request to the financial intermediary

where the holder of the shares maintains his securities account, in which it refers to the

statutory power and obligation to sell the shares on behalf of and for the account of the

holder. By way of the obligation to cooperate stipulated in Article 24(4), which may be

enforced with administrative fines, it is ensured that the various financial intermediaries

lend their cooperation.

A situation may arise, however, where a financial intermediary is unwilling or unable

to cooperate with a listed designated enterprise to actually and effectively execute the

compulsory sale. This might for instance be the case if the financial intermediary where

the holder of the shares maintains his securities account is not allowed, under the laws of

its country of establishment, to directly cooperate with the compulsory sale of the equity

interest by the designated enterprise. If the cooperation prescribed in Article 24(4) is not

offered, the listed designated enterprise is obliged to notify the Minister of this lack of

cooperation (Article 25(1)). The Minister may subsequently exercise the power laid down

in Article 25(2) and instruct the listed designated enterprise to make a request for

delivery in accordance with Article 26(1). The competent authorities of the Federal

Republic of Germany and the United Kingdom have comparable powers (see Article

25(4)). After receiving the instruction, the listed designated enterprise is obliged to

implement the procedure for the delivery of shares set out in Article 26.

A listed designated enterprise can also follow the procedure set out in Article 26

without a designation order having been issued. A designated enterprise may for instance

do so if the enterprise believes that the application of the procedure as set out in Article

26 will lead to a more effective and rapid implementation of the statutory instruction for

an enforced sale. In view of this, Article 26(1) provides that the listed designated

enterprise is irrevocably authorised to issue a request for delivery of the equity interest

from the deposits (i.e. the securities accounts held by financial parties) of the financial

intermediaries. Subsequently the financial intermediary is obliged to grant this request

and to deliver the equity interest from its deposit to the listed designated enterprise and

to reduce the deposit by the number to be sold (Article 26(2)). However, it may occur

that the identified shareholder, whose equity interest has to be sold or reduced, does not

directly hold his shares in the deposit of the financial intermediary to which the listed

designated enterprise's request for delivery is addressed, but that another financial

intermediary does this for him. In such a situation, the financial intermediary who has

received the request for delivery from the listed designated enterprise, will have to pass

on this order to reduce to one or more other financial intermediaries in the custodial

chain of shares so that these will reduce their deposit at the expense of the identified

holder of the equity interest (Article 26(2) and (3)).

The ultimate objective of this delivery is to enter the equity interest into the

shareholders’ register and in this context to register it in the name of the shareholder to

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whom the order to sell was addressed (Article 26(4)). The entry in the shareholders’

register lastly makes it possible to sell the equity interest, using the procedure laid down

in Article 24 . The entry can be invoked against any party in the custodial chain and this

ensures that the listed designated enterprise can transfer the shares in a legally valid

way without other (new) entitled parties being able to oppose this (see Article 26(5)).

The situation may occur that a financial intermediary in the chain refuses to cooperate

with the delivery of the equity interest. The listed designated enterprise is obliged to

notify the Minister of such lack of cooperation (Article 27(1)). The Minister may then

make use of the power in Article 27(2) and designate which party is the last in the chain.

The competent authorities of the Federal Republic of Germany and the United Kingdom

have comparable powers (see Article 27(4)). Article 27(5) subsequently regulates who

will be considered the shareholder in that situation, i.e. the person who is a participant in

the relevant deposit of a financial intermediary and of which the holder of the deposit

was the last to cooperate. Thereupon the equity interest may be disposed of or reduced

on behalf and for the account of that shareholder, in accordance with Article 24. This

article increases the cooperation of financial intermediaries in the custodial chain of the

shares in the listed designated enterprise in identifying the shareholder, since it has an

incentive to avoid being affected by this assumption.

3.4.9.3. Re-acquiring shares or controlling rights by a shareholder after a

compulsory sale

The final stage of the system of compulsory sale as provided for in Articles 23 to 27

inclusive, is the treatment of a (former) shareholder who wishes to acquire shares in the

designated enterprise or to increase his shareholding again, whereas previously a

compulsory sale order pursuant to Article 23 was imposed on him. In these instances,

the re-acquisition of shares will be expressly assessed by the Minister or by the other

competent authorities. With a view to this, Article 28 and Article 29 provide for a regime

that is equivalent to Articles 17 to 20 inclusive. This means that any party on whom an

order was ever imposed must notify the Minister of any intention to acquire shares or

controlling rights. Subsequently, one of the three Contracting States will impose the

obligation to submit an application for a declaration of no objection, and assess such

intention (Article 28(2) and (3)). As far as granting a declaration of no objection is

concerned, the competent authorities of the other Contracting States and the Minister

each have a right of veto (Article 29). The assessment criteria and procedures are the

same as those for Articles 17 to 20 inclusive.

The objective of this regime is to prevent an accumulation of compulsory sales by a

specific shareholder. In the absence of additional statutory rules a (former) shareholder

whose shares have just been compulsorily sold might immediately thereafter again

acquire shares. If this takes place in violation of the law, a new compulsory sale order

may be imposed which, if necessary may again be actually executed by the designated

enterprise by means of Article 24 and Article 26. To prevent this from happening, Article

28 and Article 29 provide for a procedure as a result of which this (former) shareholder

will first have to submit a request for a declaration of no objection before being able to

acquire shares or controlling rights. If this declaration is issued pursuant to Article 28,

the procedure of Article 28 and Article 29 will no longer apply, in addition to the approval

for the acquisition of the specific number of shares or controlling rights to which the

declaration of no objection pertains, to the acquiring in the future of shares by the

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shareholder in question. The shareholder in question will then receive the same

treatment as the other shareholders (Article 28(10)).

3.4.10. Statutory prohibitions against exercising control and rights attached to

a share

Lastly, several statutory prohibitions have been laid down in Article 30 with respect to

exercising rights attached to a share. In the situations described in this Article it is

certain that the public interest is threatened and in view of this it is proposed to prohibit

exercising rights attached to a share by law, whereas in Article 21 this can only be the

case if the Minister has taken a decision to that effect.

In the first place, an undesired person who has in some way or other obtained shares

anyway, is prohibited from exercising any rights attached to the shares (Article 30(1)).

Even if a shareholder has a number of shares that cause the 3% threshold to be

exceeded, he is prohibited from exercising any right attached to the shares, with the

exception of the right to dividend (Article 30(2)). This only involves the rights arising

from the shares and controlling rights in excess of the threshold value. For reasons of

proportionality it is decided - in departure from the regime for undesired persons - to

maintain the right to dividend. After all, it is conceivable that the shareholder has

exceeded the threshold unintentionally, due to the designated enterprise purchasing and

cancelling own shares, causing the block of shares held by the shareholder concerned to

relatively increase. In that case it would be unreasonable to suspend the right to

dividend.

In the event an obligation is imposed on the shareholder pursuant to Article 23(3),

(4), (5), or (7) to sell his shares or controlling rights, Article 30(3) provides for the

immediate cessation of the exercise of those rights and control - precisely because the

forced sale serves to prevent the exercise of rights attached to shares that may result in

the public interests being threatened. This prohibition does not, however, apply to the

right to dividend and payments from the reserves. The reason for this is that a

shareholder can be obliged to sell his shares for reasons through no fault of his own and

beyond his control, for example due to instability in the country where the shareholder

has his registered office and central management. An absolute prohibition would be

disproportionate under such circumstances.

After all, when a shareholder has acquired shares or controlling rights in breach of the

obligations of Article 17(4) or Article 18(1) without a declaration of no objection, the

shareholder is also prohibited from exercising rights and control attached to a share. The

same applies to the shareholder of a listed enterprise if the shareholder holds shares in

breach of Article 19(3) without a declaration of no objection (Article 30(4)).

3.5 Activities

3.5.1 General

Chapter 5 of the legislative proposal – together with Chapter 6 (joint ventures) and

Chapter 10 (information) – regulates the manner in which the Minister supervises the

activities of the URENCO group (and, mutatis mutandis, the ETC group). These Chapters

also set forth the terms and conditions as well as the procedures subject to which these

activities may take place.

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The notion behind the restrictions and conditions of Chapter 5 is that only activities

that involve a specific proliferation or security risk should be subjected to restrictions. In

order to objectively make this demarcation, Council Regulation (EC) no. 428/2009 of 5

May 2009 setting up a Community regime for the control of exports, transfer, brokering

and transit of assets for dual use (OJEU 2009, L 134 (hereinafter referred to as:

Regulation 428/2009), the Strategic Services Act and the Strategic Assets Decree. Only

the assets for dual use, intellectual property rights, business secrets or services for which

an export permit would be required pursuant to Regulation 428/2009, the Strategic

Services Act and the Strategic Assets Decree, fall within the scope of application of the

regime of Section 5. In addition, the legislative proposal finds common cause with the

method and implementation practice of the Contracting States to the Treaty of Almelo

and of the Joint Committee of the URENCO group to all possible extent.

This chapter contains, in Articles 31 to 34 inclusive, rules for negotiating on and

concluding contracts of sale and the transfer (without sale) of assets for dual use,

intellectual property rights, business secrets or services by the URENCO group (and

mutatis mutandis the ETC group). Articles 31 to 34 inclusive, additionally provide rules

for the de facto making available of assets for dual use, intellectual property rights or

business secrets or services. Lastly, the scope of application of Articles 31 to 34 inclusive,

includes the entering into joint ventures (with the exception of durable joint ventures

that fall under the scope of application of Chapter 6) which may result in the transfer or

de facto making available of assets for dual use, intellectual property rights or business

secrets or services to a third party.

Articles 35 to 37 inclusive, provide rules applicable to the opening of new or the

considerable extension of existing production facilities. Article 38 and Article 39 regulate

the purchase by the URENCO group of assets for dual use, intellectual property rights or

business secrets or services that do not form part of the normal business activities.

Article 40 and Article 41 regulate the regime for divestments. Article 43 and Article 44 list

activities that are absolutely prohibited, as well as a duty of care in respect of non-

proliferation.

The provisions of Chapter 5 do not replace already existing statutory frameworks, like

the rules concerning expert control or security rules and prohibitions laid down in the

Nuclear Energy Act, These provisions are intended to establish the frameworks in the

Treaty of Almelo and the supervision by the Joint Committee as effectively as possible

and are effective in addition to these frameworks.

3.5.2 Sale contracts and transfers

Articles 31 to 34 inclusive, of the legislative proposal offer the possibility for an ex

ante review of each sale contract, transfer or (de facto) making available of an asset for

dual use, intellectual property right, business secret or service (Article 31) and for an ex

post suspension or prohibition of the performance of these agreements (Article 34). The

scope of application of these powers is restricted to goods or services that carry a specific

nuclear non-proliferation risk. In order to properly identify and demarcate this risk,

common ground is found with Regulation 429/2008, the Strategic Services Act, and the

Strategic Assets Decree: where in this Regulation and legislation assets for dual use,

intellectual property rights, business secrets or services are identified as requiring a

permit if export were to take place, the powers of Articles 31 to 34, inclusive, apply to

these goods or services irrespective of whether an export is anticipated.

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The restrictions and powers of Article 31 and Article 32 apply to the pre-trajectory of

negotiations on and concluding the agreements that ultimately may result in the physical

delivery or de facto making available. The restrictions and powers of Article 31 and

Article 32 consequently do not apply to the export itself, since the export itself is already

subject to the supervision and procedures regulated in Regulation 428/2009, the

Strategic Services Act, and the Strategic Assets Decree.

Article 31(1) and (2) impose a general ban on the designated enterprise and its

subsidiaries. First of all, there is the ban on negotiating or concluding agreements for the

sale of assets for dual use, intellectual property rights, business secrets or services that

are subject to a licence requirement pursuant to Regulation 428/2009, the Strategic

Services Act, or the Strategic Assets Decree (Article 31 (1)). Article 31(2) provides for

the situation where there is no sale but in which the assets for dual use, intellectual

property rights, business secrets or services are nevertheless transferred or (de facto)

made available. Furthermore, a designated enterprise or subsidiary may enter into a

form of cooperation with a third party that may result in such transfer of (de facto)

making available. Pursuant to Article 31(2)(c) such cooperation is prohibited as well.

When formulating Article 31, the risk that by creating security rights or rights of use a

(physical) transfer of an asset, an intellectual property right or business secret will

ultimately be effected, has also been taken into account. For this reason it is explicitly

provided that the regime as laid down in Article 31(2) is also applicable to agreements

creating such rights (Article 31(2)(d)).

Article 31(4)(a) additionally offers the possibility to bring other assets for dual use,

intellectual property rights, business secrets or services under the scope of this ban by

way of or pursuant to an order in council. This possibility is needed, since amending

Regulation 428/2009 can be very time-consuming and it may be necessary, from a

safety or non-proliferation point of view, to quickly broaden the ban and the related

supervision to those assets, intellectual property rights, business secrets, or services that

create a new safety risk. This is for instance the case if the guidelines of the Nuclear

Suppliers Group are updated.

The scope of application of the prohibition of Articles 31(1) and (2) is restricted by

various articles.

Firstly, pursuant to Article 42 the prohibition does not apply to negotiations on or

concluding a contract with a contract party that is a Contracting State to the Treaty of

Almelo. This is also in line with Article III(b) of the Treaty of Almelo. This generic

exception is furthermore necessary to avoid conflict with any instructions imposed

pursuant to Chapter 8 of this legislative proposal. Moreover, these negotiations and

contracts do not carry a large risk, given the agreement laid down in the Treaty of

Almelo.

Secondly, pursuant to Article 31(3) the prohibition does not apply if the sale, transfer,

making available, or creation of security rights or rights of use takes place within the

URENCO group. A transfer of an asset for dual use is for instance not subject to the

prohibition of Article 31(1) where the asset is transferred from one subsidiary of the

URENCO group to another, of which the shares are directly or indirectly held by the

designated enterprise. Without this exemption the conduct of the URENCO group’s

business would be severely hindered. This exception is also justified in view of securing

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the public interests, since the URENCO group itself applies strict safeguards to such

transfers and the asset will not fall into the hands of a third party.

Thirdly, Article 31(4)(b) offers the possibility to deviate, by or pursuant to an order in

council, from the prohibition of Article 26(1), (2) and (3) and any obligations arising from

the order in council. By or pursuant to order in council may designate parties or

categories of parties with whom negotiations are being conducted or agreements are

concluded, to which the prohibition does not apply. The content and determination of

such order in council will be coordinated with the other Contracting States, who will adopt

a similar exception to the prohibition for their legal entities.

It is anticipated that an exception will be made that at least effectively benefits the

URENCO group’s existing customers and export destinations. Negotiations for and

concluding (follow-up) agreements with the existing – already approved customers – will

for instance be excluded from the prohibition. The same holds for (potential) customers

in the territory of Euratom Member States, the US, Japan, and South Korea. It is also

provided that certain transfers to specific suppliers of the URENCO group will fall under

the scope of the order in council.

Lastly, the legislative proposal offers the possibility of the Minister granting individual

exemption (Article 32) for activities that are prohibited under Article 31. This possibility

grants the designated enterprise the opportunity to contract new customers or find new

suppliers without the Contracting States being immediately forced to make a generic

decision regarding the acceptability of this (potential) customer or its country of

destination for supplies by the URENCO group. It is for instance conceivable that entering

into a contract of sale for the supply of enriched uranium to a customer in a third country

is in a generic sense undesirable, because the supervision of the reactors is not entirely

in accordance with the requirements of the IAEA. However, if it is established that a

specific customer is considered by the IAEA as acting in accordance with the IAEA

requirements, this may be cause for granting an exemption for this customer, further to

a request from the designated enterprise, and if necessary to make this contingent on

certain requirements. The possibility for granting exemption may also pertain to a

research project the designated enterprise wishes to carry out with a group of suppliers

and partners. In that event assets for dual use or business secrets may possibly de facto

be made available, in combination with entering some form of cooperation. Exemption

may also be granted for a generic activity that carries only a very limited proliferation

risk and whereby assets for dual use may be de facto made available as well. In other

words, the possibility for granting exemption may exist for both carefully demarcated

situations – e.g. specific agreements or projects – and for more widely demarcated

activities.

Article 31 and Article 32 provide for the ex ante incorporation and review of the

proposed negotiations or proposed conclusion of contracts, transfer or (de facto) making

available. Next, Article 34 provides for the situation that during the performance of the

contract it emerges that the public interest is put at risk, for instance because the safety

situation in the customer’s country has deteriorated as a result of civil unrest or a

military conflict. In these instances the Minister has the option to instruct the designated

enterprise to suspend and prohibit the performance of the contract.

The instruction to suspend the performance of a contract is preferable, since it would

leave the contract, in principle, in force, so that the commercial relationship is not

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fundamentally severed. On the other hand, it cannot be ruled out that in some instances

the situation in respect of a customer changes so drastically that the grounds for the

exemption no longer exist. In that case, it stands to reason to impose a ban on the

execution, as this would correspond with the ban of Article 31(1) or (2).

A suspension or ban will only enter into effect if the competent authorities of the

Federal Republic of Germany and the United Kingdom impose equivalent measures on

the ancillary companies (see Article 34(7)). There are two reasons underlying this

restriction on the exercise of power. On the one hand, consensus between the

Contracting States provides a firmer ground for intervention in long-term, high-value

contracts. This will prevent another Contracting State – also in view of its own export

control policy – from making a different decision nevertheless, creating tension between

the various production facilities of the URENCO group. On the other hand, consensus will

ensure that diplomatic consequences will not only affect the Contracting State that

imposed the measure, but the other Contracting States as well. Breaking into long-term

supply contracts in particular hits the heart of the URENCO group’s business model and,

because of the dependence of some customers, this will clearly interact with the

importance of security of supply on the part of the customer and the supplier’s country of

residence.

3.5.3. Investments in production facilities

The legislative proposal provides a layered system for assessing the investment in and

commissioning of new production facilities or a considerable extension of existing

production facilities. Investing in and commissioning production facilities carries inherent

proliferation risks. The presence of an enrichment facility in its territory greatly increases

the “break out” capacities of a country. It will considerably increase the possibility of

building capacity to produce nuclear weapons in the short term.

For this reason, the creation of production facilities in countries other than the

Contracting States to the Treaty of Almelo has always been approached with due care

within the context of the Treaty of Almelo. Investing in a new production plant outside

the territory of one of the three Contracting States – i.e. in a third country - may only

take place if all three Contracting States are in agreement. Furthermore, it is required

that a treaty has entered into force with the third country in question, laying down

various safeguards concerning the security, safety and use of the production facility.

Examples include the Treaty of Washington that was concluded in connection with

building the URENCO group’s production facility in New Mexico (USA).

Article 35 of this legislative proposal codifies this practice: an investment in a new

production facility in a third country requires the unanimous approval of the Minister and

of the competent authorities of the Federal Republic of Germany and of the United

Kingdom (see Article 35(1) and (3)). In addition, the existence of a treaty also forms a

requirement for obtaining approval (see Article 35(2)).

In addition to the regime of Article 35, a review is provided for of considerable

extensions of the production capacity in an existing production facility established in a

third country or opening an entirely new production facility within the territory of one of

the three Contracting States to the Treaty of Almelo. A considerable extension of the

production capacity may create proliferation risks, especially if the production capacity

and facility are used for different purposes than originally anticipated. In order to assess

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the underlying reasons for such an extension, Article 36 imposes the obligation on the

designated enterprise to give notification of the proposed investments in this respect as

well (Article 36(1)). Unlike an entirely new production facility in a third country with

which no treaty has yet been concluded, safeguards are already in place in this instance

and experience is gained in collaborating with that country. After all, in such a situation a

treaty comparable to the Treaty of Washington will already have been concluded

regulating the safeguards in respect of this production facility or the new production

facility will fall under the Treaty of Almelo. All this justifies a ‘lighter’ procedure: Article

36 is based on the notion that solely one of the three Contracting States will impose the

obligation to submit a request for a declaration of no objection (see Article 36(2)) and

will subsequently consider such request (see Article 36(3). The competent authorities of

the other Contracting States and the Minister, will each have a right of veto (see Article

37).

3.5.4. Other investments

The activities of the designated enterprise are safeguarded through the frameworks

included in this legislative proposal. Where new production facilities are created or

existing facilities are extended through investment, Articles 35 to 37 inclusive, provide

for the requisite supervision. Article 38 provides for the possibility of the Minister to

assess whether certain investments that do not form part of the normal business

activities of the designated enterprise may create a risk to the public interest.

This may concern the purchase of assets for dual use, intellectual property rights,

business secrets, or services that are not related to enrichment activities, but that are

intended for use in other nuclear activities, e.g. the construction of a nuclear reactor or

the production of fuel rods. Ordinarily, these assets and the activities of the URENCO

group in this field do not pose a problem, in light of the safeguards that apply to the

designated enterprise. This legislative proposal anticipates the possible diversification of

activities by the designated enterprise, for instance by not only letting the rules be

applicable to the enrichment of uranium, but also to the production of radioactive

substances.

The power provided by Article 38 is intended to allow the assessment of the motives

for and the application of the proposed investment. In order to assess the underlying

reasons for the investment, Article 38 provides an obligation for the designated

enterprise to submit an intended investment for approval in these instances as well

(Article 38(1)). Subsequently, one of the three Contracting States will impose the


will subsequently consider such request (see Article 38(3)). The competent authorities of

the other Contracting States and the Minister will each have a right of veto (Article 39).

Pursuant to Article 38(8), the procedure does not have to be followed in respect of

certain intercompany investments such as investments by a designated enterprise in its

full subsidiaries or in the jointly managed company or between fully owned subsidiaries

that are directly or indirectly fully owned by the designated enterprise and of which the

parent company and subsidiaries have their registered offices and central management in

one of the Contracting States of the Treaty of Almelo, the Treaty of Cardiff, the Treaty of

Washington, the Treaty of Paris, or a treaty with a similar purport. In these instances,

the intercompany investments do not require additional supervision.

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3.5.5. Divestments

Article 1 defines divestments as a) disposal of a subsidiary or the sale of shares in a

subsidiary or a joint venture, b) the issue of shares in a subsidiary, or c) activities

designated by general order in council. Each of these types of divestment may present a

risk for the public interest.

The fact is that divesting a subsidiary may result in a production facility falling into the

hands of third parties and the supervision pursuant to the Treaty of Almelo and this

legislative proposal being undermined. Risks may furthermore be created if shares in a

subsidiary are sold without a prior review by the three Contracting States. Via these

shares a third party will obtain influence – no matter how limited - in a subsidiary and

thus in the URENCO group.

The possibility is provided for that by or pursuant to an order in council disinvestments

may be designated to which the prohibition of making a disinvestment without a

declaration of no objection does not apply. This may, for example, involve selling shares

in or disposing of subsidiaries that are not the owners, rights holders, or de facto holders

of assets for dual use, intellectual property rights, or business secrets, or that do not

have such financial ties with the other elements of the URENCO group that Article 71 of

this legislative proposal will be violated.

The sale of shares in a joint venture also creates a risk to the public interest. Joint

ventures are defined in Article 1 as a collaboration, whether or not having legal

personality, in which a designated enterprise or subsidiary has a durable cooperation with

another entity or person with regard to the enrichment of uranium, the production of

radioactive substances or the development and use of technology for one of the activities

of enrichment or production. These activities carry a proliferation and security risk and

careful attention must be paid as to who will enter the joint venture through a sale of

shares. This is all the more so if the joint venture falls under multinational supervision

set up by way of a treaty (e.g. the Treaty of Cardiff). The Contracting States must have

the possibility to review, for instance, the entire or partial sale by the URENCO group of

the shares in ETC Holding and where necessary to prohibit this.

Article 40 of the legislative proposal grants the Minister the power to review

divestments on the risks they pose to the public interest. In order to allow these reviews,

Article 40 provides for imposing an obligation on the designated enterprise to report an

intended divestment in these instances as well (see Article 40(1)). Thereupon, one of the

three Contracting States will impose the obligation to submit a request for a declaration

of no objection (see Article 40(2)) and will consider this request (see Article 40(3)). The

competent authorities of the other Contracting States and the Minister will each have a

right of veto (Article 41). In other words, the procedure to be followed by the designated

enterprise corresponds with the procedure for the issue of a declaration of no objection in

the event of share transactions concerning shares in the designated enterprise.

3.5.6. Prohibited activities and duty of care

The prohibition in Article 43 of this legislative proposal arises from Article VI(2) of the

Treaty of Almelo and Article IV(2) of the Treaty of Cardiff. The prohibition is worded

slightly differently from the provision in the Treaty in order to take possible future

activities of the designated enterprise into account. The ban basically prohibits the

designated enterprise and its subsidiaries from enriching or producing uranium to an

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enrichment level required for making nuclear weapons or other nuclear explosive devices

(e.g. a “dirty bomb”), (Article 43, preamble and under a). The prohibition is

supplemented with a prohibition imposed on the designated enterprise and its

subsidiaries from enriching or producing substances other than uranium with the aim to

produce nuclear weapons or other explosive devices.

Article 44 of this legislative proposal imposes a duty of care on the designated

enterprise, in addition to the prohibition of Article 43. This duty of care arises from Article

VI(1) of the Treaty of Almelo and Article IV(1) of the Treaty of Cardiff. In both treaties

the duty of care rests on the Contracting States. This legislative proposal and the

requirements and procedures thereof are also intended to comply with this duty of care.

In order to be sure that the Contracting States comply with all elements of this duty of

care, Article 44 provides for the passing on of this duty of care, as laid down in the two

treaties, to the designated enterprise and its subsidiaries.

The duty of care comes down to the designated enterprise and its subsidiaries having

a duty to prevent information, technology, equipment, uranium, enriched uranium or

other radioactive substances in their possession from being used for or contributing to or

stimulating a non-nuclear power in producing or processing nuclear weapons or other

nuclear explosives or from getting these in their control. A non-nuclear power is a state

that has not manufactured or detonated a nuclear weapon or other nuclear explosive

device prior to 1 January 1967. Thus, the duty of care specifies the general obligation to

prevent the proliferation of nuclear weapons and the technology for making them.

3.6 Joint Ventures

Chapter 6 of the legislative proposal regulates the obligations imposed on, and the

supervision of, the designated enterprise when entering into or performing a durable

joint venture, in so far as such joint venture pertains to the enrichment of uranium, the

production of radioactive substances, or the development and use of the related

technology by the joint venture. It is possible for a third party, via such joint venture, to

obtain access to security-sensitive technology, materials or knowhow, and to obtain a

certain amount of influence on the URENCO group. In view of these risks, it has been

decided to regulate such joint ventures as well. Not every joint venture is affected by the

statutory regime of Chapter 6 nor is an incidental cooperation with a supplier to develop

a new mechanical part of the equipment. For instance, organising an industrial summit

together within the context of the Nuclear Security Summit does not fall under the scope

of Chapter 6. The ETC joint venture, on the other hand, naturally does fall under the

scope of this chapter as does any comparable future joint venture.

The regulation has a number of points of application. The first point of application is

the joint venture itself (Article 45 and Article 46). The intention to form the joint venture,

to amend the terms or to terminate the joint venture must be reported to the Minister

(Article 45(1)). Subsequently, one of the three Contracting States will impose the


will consider this request (see Article 45(3)). The competent authorities of the other

Contracting States and the Minister will each have a right of veto (Article 46). Thus, this

first point of application pertains to the legal and formal structure of a joint venture.

The second point of application pertains to the staff and the board of the joint

venture. In a joint venture involving security-sensitive technology, materials or

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knowledge, the board or staff of the joint venture play a crucial role in preventing

security and non-proliferation risks. Article 47 therefore provides for an obligation of the

designated enterprise to adopt the procedure prescribed for its own executive and non-

executive directors for certain positions in the joint venture as well (see paragraph 3.3.

for an explanation of this procedure). However, this obligation is limited to the

designated enterprise and only pertains to positions in respect of which the designated

enterprise is entitled to recommend or appoint persons, and to agree with these

appointments, for instance members of the Board of Management of the joint venture.

The positions are designated by an order in council. Examples of such positions are that

of Chief Executive Officer of the joint venture or the head of security.

In departure from the regime of Chapter 3, these powers do not directly affect officers.

For instance, the Minister will not be able to directly suspend an officer in a joint venture.

This is because the joint venture is not necessarily established on Dutch territory or

subjected to Dutch law in other ways. The only influence that may be exerted on the

joint venture is via the influence and rights the designated enterprise may exercise

towards the joint venture. Article 47(2) therefore provides that it is up to the designated

enterprise to ensure that a person is suspended.

The third point of application pertains to the activities undertaken by the joint venture.

The legislative proposal provides for the power to enforce certain obligations that the

designated enterprise, its subsidiaries, or a joint venture must observe by or pursuant to

this Act and to give a designation in this regard (Article 48(1)). The best example for this

is the ETC group, on which rests a number of obligations pursuant to the Treaty of

Cardiff. By using this power the Minister is able – via the rights and influence the

URENCO group may exercise towards ETC – to effectuate the responsibilities the

Netherlands has assumed as Contracting State of the Treaty of Cardiff and the Treaty of

Paris by enforcing compliance with the obligations of this Act. This power does not

encompass the discretion of the Minister to impose new standards or obligations on the

URENCO group at his discretion in order to subsequently declare these applicable to the

joint venture as well.

Changes in or preserving the intellectual property rights or trade secrets, controlling

rights or the ownership of shares may give a partner in the joint venture too much

influence, or give a third party influence in the joint venture, which might be deemed

undesirable from a safety or non-proliferation point of view. The legislative proposal

gives the Minister also in these situations the possibility to instruct the designated

enterprise to exercise the rights or powers it has by virtue of its shares, controlling

rights, agreement or in another manner, to secure the public interest (Article 48(2)).

The possibility offered to the Minister under Article 48(1) or (2) to instruct the

designated enterprise to exercise its rights or powers, may for instance result in the

Minister finding himself forced to require the designated enterprise to block invoking

certain clauses in licensing agreements or on the contrary require compliance with them.

It may also result in the Minister requiring the URENCO group to acquire the shares or

the control of the other partner in the joint venture, or part of them where it intends to

dispose of the shares. This authority will be exercised to prevent them from ending up in

undesirable hands in situations in which other powers and actions have lost their effect.

It may even entail that the Minister requires the designated enterprise, pursuant to

Article 48(1)(a), to renegotiate agreements within the context of the joint venture.

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The fourth point of application concerns the contractual relationships between the

designated enterprise or its subsidiaries and the joint venture. Some agreements

between the designated enterprise and the joint venture may be of considerable

significance for the protection of the technology and preventing the proliferation of

knowledge. Article 49 provides for the possibility to designate these agreements by

Ministerial decree. Any change, termination, or rescission of such designated agreement

will subsequently be subject to review by the Minister or by the competent authority of

the Federal Republic of Germany or of the United Kingdom (see Article 49(3) and (4)).

Further to a notification made by the designated enterprise (see Article 49(2)), one of

the three Contracting States will impose the obligation to submit a request for a

declaration of no objection (see Article 49(3)) and will consider this request (see Article

49(4)). The competent authorities of the other Contracting States and the Minister will

each have a right of veto (Article 50).

In view of the potentially huge financial consequences for the designated enterprise,

the legislative proposal explicitly provides for the possibility, in accordance with the

Dutch principles of proper administration and the protection of the right to the peaceful

enjoyment of possession as laid down in Article 1 of the First Protocol to the ECHR, to

provide compensation in the form of payment of the costs. This payment pertains to all

costs incurred in the execution of the instruction imposed pursuant to Article 48(1)(b)

and (2)(a) or (c).

3.7 Financial management

3.7.1. General

The legislative proposal in Chapter 7 provides for specific rules for the financial

management of the designated enterprise and its subsidiaries with an eye to securing the

public interest. Without these specific rules a financial situation may come about in which

necessary safety investments are dispensed with or a prudent acquisition policy is

abandoned. It is also possible that financial risks come about, the nature of which is such

that the continuity of the designated enterprise is put at risk. In order to preventatively

limit these kinds of risks, the legislative proposal contains various rules of conduct for the

designated enterprise and its subsidiaries.

The nature of these rules is twofold. First, rules are prescribed for the financial

management of the URENCO group. These pertain to the obligation to maintain a

minimum credit rating and to protect the designated enterprise and its subsidiaries

against external financial risks. These rules are comparable with rules prescribed for the

financial management of network managers in the Electricity & Gas Acts (see Article

17(3) and Article 18a Electricity Act 1998 and Article 10b(3) and Article 10e of the Gas

Act).

Secondly, rules are prescribed for funding and providing financial security for the

decommissioning costs of the various production facilities and offices after termination of

the activities of the enterprise at these locations. These rules also prescribe having

sufficient funds at one’s disposal to bear the costs of treating, converting, processing and

clearing up the radioactive waste resulting from the production. These rules are related

to the rules provided in the Nuclear Energy Act with regard to financial cover of the costs

of decommissioning for nuclear establishments (see Article 15f of the Nuclear Energy

Act). The rules seek to limit the financial risks for the Treasury of each of the three

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Contracting States, for if the designated enterprise itself is unable to pay these costs,

they will ultimately be borne by the state.

A tiered approach is opted for, whereby in the first place a tier of hard minimum

requirements applies, non-compliance with which automatically has consequences. Such

a case involves non-compliance with the rules of sound financial management as laid

down in this legislative proposal. Such non-compliance will result in a more stringent

supervision by the Minister and the competent authorities of the Federal Republic of

Germany and the United Kingdom.

Then there is a preventive tier: this includes the additional provision of information by

the designated enterprise if there is a threat of risk to compliance with the above-

mentioned hard minimum requirements by the designated enterprise. Such a case

involves a risk of non-compliance. By providing the information these risks become

immediately apparent to the three Contracting States, enabling the designated enterprise

under supervision of three Contracting States to take measures timely to stop the

financial decline of the enterprise and to prevent non-compliance with the statutory

minimum requirements.

Specifically, based on the legislative proposal and the corresponding regulations,

URENCO group will have to meet the following statutory minimum requirements:

• the creditworthiness of the URENCO group will have to be maintained at such a level

that the creditworthiness is rated by at least two accredited external rating agencies at a

rating to be determined by Order in Council of at least BBB minus (or comparable

financial risks);

• the URENCO group will refrain from performing actions that can jeopardise this

minimum credit rating;

• the URENCO group will provide for a nuclear management plan for financing the

strategy for – among other things – the dismantling and treatment of the facilities and

substances, including one or more funds at the level of the designated enterprise or at

the level of the subsidiaries.

Non-compliance with the rules of financial management or the rules on funding and

financial security is involved if:

● the URENCO group is rated BBB minus with “negative watch” (or comparable) by

at least two accredited external credit rating agencies;

● the URENCO group is rated lower than BBB minus by at least two accredited

external credit rating agencies or meets financial ratios that are comparable to

this rating;

● the URENCO group performs actions that will foreseeably result in a lowering of

the credit rating below the statutory minimum;

● the three Contracting States are informed by the designated enterprise that one

of the above events will take place;

● the designated enterprise informs the Minister that non-compliance with the

statutory requirements concerning the minimum credit rating is unavoidable.

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● the designated enterprise has made no provisions for a nuclear management plan

for financing the strategy for – among other things – the dismantling and

treatment of the facilities and substances, including an independent, autonomous

fund at the level of the designated enterprise or at the level of the subsidiaries

● the three Contracting States jointly decide, based on independent expert advice,

that the nuclear management plan is insufficient to meet the nuclear financial

liabilities.

3.7.2.1. Credit rating

The requirements for financial management serve to force the designated enterprise to

maintain a healthy financial buffer to cushion any financial setbacks. This is intended to

prevent financial setbacks from being at the expense of, for example, investments

necessary to guarantee the public interest. By imposing a mandatory minimum rating on

the URENCO group and the obligation that the designated enterprise is not permitted to

execute any acts of which it may be expected that they will result in a reduction of the

credit rating of the URENCO group to less than this required statutory minimum, this

buffer is guaranteed. The legislative proposal includes the setting and the procedure of

setting of the required minimum rating by way of or pursuant to an order in council (see

Article 51(1)(a) and (3)). In view of the technical nature it is decided to regulate this at

this level. This order in council provides for imposing a mandatory minimum rating of

BBB minus. The order in council will also specify which specific part of the URENCO group

will be subjected to a credit rating, in order to meet the statutory minimum rating for the

entire URENCO group.

Moreover, the designated enterprise is obliged to annually report to the Minister and

the competent authorities of the Federal Republic of Germany and United Kingdom on the

rating (Article 51(2)). It will be specified in the order in council that reporting is to take

place on the basis of the information that has been provided to the accredited external

rating agencies and the assessment of this information by these rating agencies (Article

51(3)). If the designated enterprise no longer meets or is likely to no longer meet the

required minimum rating, the Minister just as the competent authorities of the Federal

Republic of Germany and the United Kingdom are to be informed (Article 52).

No longer having a minimum rating of BBB minus – for example because the URENCO

group is rated BBB minus with a “negative watch” – constitutes non-compliance with the

statutory minimum rating. Non-compliance will result in a cash lock-up (Article 53(1)).

This means that the designated enterprise is not allowed to distribute dividend or make

payments from the reserves to shareholders. In such a situation it is, for example, not

permitted to repurchase own shares. Nor can any financial loans be raised or certain

investments be made by group companies belonging to the URENCO group that exceed

the normal business activities.

If the designated enterprise in deviation of the cash lock-up pursuant to Article 53(1)

nevertheless wishes to carry out certain actions, the designated enterprise can report

this to the Minister. Subsequently one of the three Contracting States will offer the

possibility to apply for exemption and to subsequently assess whether an exemption from

the prohibition in Article 53(1) may be granted (Article 54 and Article 55).

3.7.2.2. Non-compliance of the credit rating requirements

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If the designated enterprise fails to meet the credit rating requirements or pursuant to

Article 52 has reported that it is unavoidable that it will not meet these requirements, the

designated enterprise is obliged to prepare a recovery plan in order to turn the situation

around as quickly as possible (Article 56(1) and (2)). Subsequently one of the three

Contracting States will impose the obligation to submit an application for a declaration of

no objection and assess the recovery plan (Article 56(4) and (5)). The competent

authorities of the other Contracting States and the Minister each have a right of veto

(Article 57). The procedure to be applied for this is comparable with the procedure for

the intended appointment of executive and non-executive directors. The designated

enterprise is obliged to implement the plan accordingly. As and when necessary the

designated enterprise may propose amended recovery plans during the period in which

the enterprise is making efforts to remedy the credit rating. Such amended recovery

plans, like the initial recovery plan, can only be implemented if a declaration of no

objection has been obtained.

In so far as the board fails to submit a recovery plan, or to do so timely, submit a

qualitatively poor recovery plan, or fail to carry out the recovery plan, the Minister and

the competent authorities of the Federal Republic of Germany and the United Kingdom

can each decide to remove an executive or non-executive director of a designated

enterprise from office (Article 58). In this way the cash lock-up and the possible personal

consequences in the event of non-compliance will give the executive and non-executive

directors a strong incentive to observe a wide margin that ensures that the credit rating

of the enterprise is unlikely to rapidly fall below this minimum on account of endogenous

factors of the designated enterprise.

Complementary to this, the legislative proposal provides for a system to detect

financial problems at the earliest possible stage and to intervene if there is a risk of non-

compliance (see Article 59). Losing the current rating level may for instance constitute an

important element for determining whether a risk of non-compliance exists. This will at

least give cause for further questions from the Contracting States about the (future)

financial soundness of the designated enterprise. If it is apparent that it is likely that the

statutorily prescribed minimum credit rating pursuant to Article 51(1) will not be met in

the next three years, it is assumed that there is a risk of non-compliance (Article 59(1)).

This will be determined on the basis of the annual rating outlook prepared by at least two

accredited rating agencies and on the basis of an assessment of the financial economic

ratios. The designated enterprise is obliged to disclose this information to the Contracting

States (Article 51(2) and Article 79). If, based on this information, a risk of non-

compliance is shown to be involved, the designated enterprise will, at the request of the

Minister, submit an implementation plan containing a strategy and measures to meet the

prescribed minimum credit rating and in this way to remove the risk of non-compliance

(Article 59(1) and (3)). In this context the designated enterprise is entitled to adjust an

implementation plan, for example due to changing market conditions.

The designated enterprise can be at risk of non-compliance for no more than three

years. After three years the three Contracting States – after having sought independent

advice from a third party in accordance with Article 59(10) – may determine that either

the risk is distorted and will not materialise anyway, or the risk is realistic to such an

extent that in effect a situation is involved that is equivalent to non-compliance (Article

59(6)). This assessment will be made by amongst others considering to what extent the

risk will still continue to exist in the coming twelve months after the end of the three-

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year period. In the latter case the designated enterprise comes under the regime that

applies to a non-compliance situation in the event that the minimum credit rating is

breached (Article 59(9)). Because of this, the restrictions of Article 53 apply. This

assessment is to be repeated each subsequent year (Article 59(7)) and the Minister can

each time extend the decision to determine the situation by one year. If after one year it

is established that the designated enterprise will without doubt satisfy the minimum

credit rating requirement for the next year, the regime that applies in the event of

breach will no longer apply, nor will the obligation apply any longer to prepare and

submit an implementation plan.

It goes without saying that in the event that the designated enterprise does not

prepare an implementation plan, nor executes this plan in good faith or properly, the

three Contracting States will not have any confidence in the board of the designated

enterprise. In such a situation the Minister can relieve the executive or non-executive

director of his duties (Article 59(4)).

3.7.3. Providing financial security

3.7.3.1. Nuclear management plan

Under the legislative proposal the designated enterprise is obliged to have a nuclear

management plan in place for the entire URENCO group, outlining a strategy for the

conversion of substances, the permanent storage of substances, the decommissioning,

dismantling, and the security, disposal, destruction or adjustments of installations,

equipment, data carriers and materials used or that may be used in the enrichment of

uranium, the production of radioactive substances, or in the development or use of

technology for that purpose (Article 61(1)). This nuclear management plan does not

replace the obligations that apply to the local production facilities to prepare dismantling

plans and to have these approved by a competent administrative body. The nuclear

management plan incorporates these plans for the production facilities and aggregates

the obligations and related costs for the entire URENCO group.

The rules pertaining to the nuclear management plan therefore are of a supplementary

nature compared to the obligations and regulations that apply pursuant to the regulatory

framework of the country of establishment of the production facilities of the designated

enterprise. The nuclear management plan and its funding at any rate include the financial

cover of these obligations and is supplementary to what the three Contracting States

cumulatively consider necessary. Conversely, the rules as envisioned in this legislative

proposal also focus on the specific characteristics of the URENCO group and the activities

of uranium enrichment which fundamentally differ from power generation in nuclear

power plants, whereby radioactive waste with a long half-life is produced.

The designated enterprise will furthermore be required to ensure that it has sufficient

funding to implement the strategy outlined in the nuclear management plan (Article

61(2)). In order to assess whether the designated enterprise does indeed ensure that it

has sufficient funding, Article 61(3) requires that the nuclear management plan

demonstrates that this is indeed the case. The following elements of the nuclear

management plan are material in this regard. First of all, the nuclear management plan

must contain an estimate of the costs involved in implementing the strategy (Article

61(4)(a)). In addition, the plan must give an estimate of the funding necessary to cover

the costs arising from implementing the strategy (Article 61(4)(b)). In order to estimate

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the funding necessary to cover the costs, recourse must at any rate be had to the cash

flow generated by the designated enterprise and its subsidiaries. This means that also

future distributions from dismantling funds, and other sources may be used in estimating

the funding. In other words, there is no obligation to cover the costs of implementing the

strategy solely with future distributions from dismantling funds or solely with the cash

flow. A proper mix between the various sources is expressly allowed.

Another element of the plan is that the designated enterprise or its subsidiaries have

access to one or more funds containing ring-fenced capital that will not be included in the

assets of the designated enterprise or its subsidiaries in the event of bankruptcy, in so

far as is possible under bankruptcy and corporation law that applies to the fund

concerned (Article 61(4)(c)). This obligation will ensure that there is at all times capital

(partially) available for funding the strategy, even if the URENCO group is declared

bankrupt in its entirety. The obligation therefore does not prevent any form of

consolidation, provided that it is guaranteed that – in so far as is allowed by law – the

capital of these funds is not included in the assets of the bankrupt designated enterprise

or its subsidiaries.

In addition, the legislative proposal prescribes that the nuclear management plan must

indicate how the plan is to be fleshed out (Article 61(4)(d)). This means mainly that it

explains and represents the financial parameters and other elements that are applied by

the designated enterprise when phrasing the strategy, estimating the costs and the

funding thereof. In addition, it must show which funds are available and how these are

set up and how they may contribute to the implementation of the strategy. Lastly, it is

prescribed that the nuclear management plan must be implemented by the designated

enterprise (Article 61(6)).

3.7.3.2. Assessment of the nuclear management plan

The initial integral nuclear management plan is to be submitted in full to the Minister

and the competent authorities of the Federal Republic of Germany and the United

Kingdom. Subsequently, one of the three Contracting States will impose the obligation to

submit an application for a declaration of no objection and assess the initial integral

nuclear management plan (see Article 62(2) and (3)). The competent authorities of the

other Contracting States and the Minister each have a right of veto (Article 63). The

procedure to be applied is the same as that applied to the proposed appointment of

executive and non-executive directors. The decision to have the integral nuclear

management plan assessed in its entirety, unlike the subsequent amendments of this

management plan, is based on the notion that the first plan will serve as a guideline and

benchmark for consecutive plans, which may or may not diverge from the initial plan.

Subsequent nuclear management plans are submitted each year to the three

Contracting States (Article 64(1)). Each annual plan follows on from the nuclear

management plan of the previous year. Each plan must specify the elements listed in

Article 61(1) to (4) inclusive. Article 61(4), items (a) to (c) inclusive, are of a

methodological nature and are less prone to fluctuations every year. Item (d) on the

other hand on account of its nature is more fluid (this involves e.g. the inflation figure to

be used). The distinction is relevant because the way in which the three Contracting

States assess the annual nuclear management plan depends to which item of the

amendment of the plan pertains.

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In so far as the annual nuclear management plan shows a change of the model or the

methodology compared to the previous plan, one of the three Contracting States will

impose the obligation to submit an application for a declaration of no objection and

assess the amendment of the plan (see Article 64(2) and (3)). The competent authorities

of the other Contracting States and the Minister each have a right of veto (Article 65).

This makes the decision-making procedure comparable to the procedure for the

assessment of the initial integral nuclear management plan and the screening of

executive and non-executive directors. Because the model and the methodology are of a

more fundamental nature for guaranteeing the public interest, there is no reason to

deviate from the most frequently applied procedure in this legislative proposal that one

Contracting State will assess whether a declaration of no objection can be granted and

that the other two Contracting States have a right of veto.

The three Contracting States may prohibit the implementation of the annual nuclear

management plan . However, the Minister and the competent authorities of the Federal

Republic of Germany and the United Kingdom must object to the implementation of the

nuclear management plan unanimously in order for the plan to be prohibited from being

implemented (Article 66). This decision-making procedure has been opted for because

the designated enterprise has to be relatively free to determine the allocation over

sources of funding as efficiently as possible and must also be able to arrange for a

commercially sound implementation. If the Contracting States were each separately to

have the possibility of unilaterally imposing obligations on these more commercial and

operational aspects, the designated enterprise might find itself faced with conflicting

requirements from the Contracting States that may have major consequences for the

business operations.

3.7.3.3. Non-compliance

In the event the designated enterprise does not have a nuclear management plan, fails

to implement it, is unable to do so, implements the initial integral nuclear plan without a

declaration of no objection, changes the nuclear management plan without a declaration

of no objection or contrary to a prohibition pursuant to Article 66 implements a nuclear

management plan, this also constitutes non-compliance comparable with non-compliance

with the obligations regarding financial management (see Article 68(2)). The

consequences of this non-compliance, however, are different. Firstly, although a

“dividend lock-up” is indeed involved: the designated enterprise can no longer distribute

dividends, purchase own shares or make payments from the reserves, but the enterprise

is still able to provide loans and make investments.

This difference with the effects of a violation of the obligations of financial control is

found in the urgency of the problem: in respect of downgrading of the credit rating the

financing costs of the enterprise are directly affected and a negative, self-accelerating

financial spiral may be created. If the obligation to provide sufficient financial means for

covering the decommissioning costs is violated, this does not create an acute risk. For

this reason it is wise not to restrict the regular investments and the business activities,

since these investments are required and in turn can generate income. Distributions of

dividend, on the other hand, only reduce the available capital that could also have been

applied, for example, to make good deficits in the estimated decommissioning costs.

Secondly, there is a difference between the types of non-compliance: if the designated

enterprise acts in breach of the nuclear management plan the “dividend lock-up” is

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absolute. If the conflict is, however, caused by the three Contracting States not having

granted a declaration of no objection for specific non-methodological elements of the

nuclear management plan, the “dividend lock-up” only applies up to an amount of the

sum of what is necessary to secure the current and future costs for, for instance, the

conversion of substances and decommissioning and for the fund (Article 68(2)). In

essence this “lock-up” amounts to a prohibition on making distributions to shareholders

by the designated enterprise as long as there is still a funding shortfall for hedging of the

current and future costs for the execution of the strategy and for the contribution to one

or more funds. Whether such a funding shortfall is involved will be assessed by the three

Contracting States in response to the annually sent nuclear management plan in

accordance with Article 64(1), and on the basis of the power referred to in Article

66(1)(d).

Article 68(4) expressly states, for clarification purposes, that no contributions may be

made to the fund and that making these contributions will consequently be suspended if

the designated enterprise would lose its statutory minimum credit rating as a result of

making such contributions. In effect, this situation can only occur within one and the

same financial year. For subsequent years the nuclear management plan will be amended

and approved in such a way that the payment frequency to the funds has been adjusted

in order to prevent the credit rating being jeopardised under simultaneous changes of the

enterprise’s dividend and investment policy to regain a sufficient buffer in excess of the

statutory minimum credit rating.

If the designated enterprise contrary to the “dividend lock-up” pursuant to Article

68(1) still wishes to carry out certain actions, then the designated enterprise can report

this to the Minister. Subsequently, one of the three Contracting States will assess

whether an exemption from this prohibition may be granted (Article 69 and Article 70).

3.7.4. Other restrictions

Naturally, it is impossible to maintain a financial buffer that will meet all risks.

Therefore, additional restrictions are imposed on the financial arrangements, loans etc.

that can be entered into and taken out by the designated enterprise and its subsidiaries.

After all, irrespective of the size of the financial buffer, for instance financial loans,

derivatives and guarantees can suddenly wipe out this buffer resulting in losing the

minimum rating. In view of this, Article 71(1) prohibits the provision by the designated

enterprise and its subsidiaries of collateral or to act as guarantor for third parties or for

the performance of obligations of third parties.

Two important exceptions to the scope of this prohibition apply. The prohibition does

not apply to security or a guarantee in the context of activities directly related to the

normal business operations of the designated enterprise and its subsidiaries. An order in

council will clarify what this means (see Article 71(1)(a)). It would for example be

obvious for a subsidiary of the designated enterprise to provide security to a bank that

prefinances the construction of a new production facility. This fits in with the regular

business operations of an enterprise such as the URENCO group. This may also include

certain guarantees related to the supply of enriched uranium. In addition, Article

71(1)(b) provides that meeting statutory obligations by means of security and

guarantees is not covered by the prohibition. Consider for example in this context

security or guarantees provided by the designated enterprise to the tax authorities in the

context of paying an assessment.

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Article 71(2)(a) provides that the designated enterprise and its subsidiaries are

prohibited from furnishing financial loans to third parties, i.e. parties that are not part of

the URENCO group. The second paragraph also prohibits entering into “cross default”

obligations towards third parties outside the group (Article 71(2)(b)) and from

conducting transactions with parties other than subsidiaries or ancillary companies at

conditions that are more favourable than is common on the relevant market (Article

71(2)(c)).

Lastly, Article 71(3) provides for the possibility of the Minister granting an exemption

from the prohibitions in the first and second paragraphs. This offers the flexibility in

special circumstances to allow the designated enterprise and its subsidiaries to enter into

such a transaction anyway. The same applies to the possibility of designating by or

pursuant to an order in council financial transactions for which the prohibitions do not

apply (see Article 71(6)).

3.8. Powers of intervention

The essence of the articles of Chapter 8 is that the Contracting States are authorised

to instruct the designated enterprise to perform certain activities. This power may be

divided into four categories: 1) the power to impose enrichment of uranium and

production of radio-active substances and precursors; 2) the power to order investment

to increase the security or safety; 3) the power to impose security requirements in

respect of the production facilities in third countries; and 4) the power to compel the

URENCO group to offer technical support to Euratom or the IAEA in the form of training,

advice or other types of assistance.

3.8.1. Production and delivery

The principal power is the possibility to instruct the designated enterprise to enrich

uranium, produce radioactive substances of precursors within a reasonable period of time

or to make the requisite production facilities or equipment available. This power may only

be used for compelling reasons of general interest and will only be used in exceptional

circumstances. Apart from the public interest as defined in Article 1 of this legislative

proposal, compelling reasons of general interest include the security of supply, the public

health, or obligations under the Euratom Treaty or the United Nations Charter may be

interests that constitute grounds for a designation of the Minister. This is expressly

provided in Article 72(1). This power is meant as a safeguard, to ensure that, if

necessary, the designated enterprise may ultimately be required to enrich uranium or

produce radioactive substances or precursors or to make the requisite production

facilities or equipment available. It is expected that in most instances the designated

enterprise will be prepared to honour such requests voluntarily and at arm’s length basis.

Should this not be the case, the power of Article 72(1) may be invoked.

More specifically, it may be said that the URENCO group, due to its large market share

on the global market for enriched uranium, its unique activities in the field of stable

isotopes and its high reliability as supplier, plays or is able to play a crucial role in the

realisation of the public interest mentioned in Article 72(1).

In the first place the importance of the security of supply must be noted: in several

countries nuclear energy forms an essential part of the energy supply. The fuel these

power plants use is enriched uranium. The URENCO group is one of the suppliers who, in

the event of disruption of supply, may step in to guarantee the security of supply. This is

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also in line with Article III(1)(b) of the Treaty of Almelo. The power to give instructions

as contemplated in Article 72(1) may, where the situation so arises, also be invoked to

implement decisions regarding the provision under Article 72 and Article 76 of the

Euratom Treaty.

In the second place the URENCO group may contribute towards “fuel bank initiatives”

and other types of supply guarantees intended to protect the security of supply and to

protect the public interest of non-proliferation. These initiatives are supported by the

IAEA and the United Nations. These initiatives and guarantees may ensure that certain

countries will not create their own uranium enrichment capacity, provided they can be

certain of a guaranteed supply. The URENCO group has the advantage of being a

multinational enterprise having production plants in four different countries, which makes

it less vulnerable to disruptions in the supply chain.

In the third place, the subsidiary within the URENCO group that is engaged in the

production of stable isotopes plays an important part in supplying the medical world with

diagnostic substances, by producing stable precursors (e.g. zinc-68 and zinc-67 as

precursor for gallium-67, which in turn is used in gamma cameras). This URENCO

subsidiary furthermore produces precursors for radioactive substances for brachytherapy

and other types of cancer treatment. This justifies the possibility to compel the URENCO

group (if necessary), in the interest of the public health, to continue the supply of these

precursors.

If the Minister invokes this power, an obligation is in place to compensate the

designated enterprise the direct costs involved in acting on the instruction (see Article

72(6)). These costs include the costs for (raw) material, the deployment of personnel,

energy costs and correctly allocated relevant overhead costs. In addition, the

compensation provides for a reasonable profit margin for the designated enterprise. In so

far as following the instruction results in a substantial expansion of a production facility

being required or even in a new production facility having to be built, the compensation

will also include the costs for such expansion or new building. Lastly, the compensation of

the costs and the profit margin will take into account the proceeds the designated

enterprise enjoys by executing the instruction. In connection with this, the market value

of the expanded or new production capacity may for example be taken into account in so

far as this can also be used for other activities than following the instruction.

3.8.2. Investments in security and safety

Article 72(2)(a) concerns more permanent adjustments at the URENCO group in order

to increase the safety and security. This may concern for instance the security of sites,

products or knowhow or measures, for example, to increase the safety of the

surrounding area of the designated enterprise. An instruction may for instance be

required due to noted shortcomings, increased international standards, or increased

external threats. It is not expected that this power will have to be invoked in respect of

existing production facilities of the URENCO group, in light of the strict statutory

frameworks already in place for them. However, it is conceivable that a production

facility will also be opened in a third country sometime in the future, which turns out to

require additional investment. Pursuant to Article 72(2)(a) the Minister may demand that

these investments be made, if necessary.

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No provision is made for compensation of the costs incurred in respect of these

investments. These investments are in the interests of the designated enterprise itself

and also serve to comply with the duty of care of this enterprise under Article 44 of this

legislative proposal. If the designated enterprise knowingly and willingly fails to make

such investments, this power to give instructions may ensure (apart from any

enforcement measures) that the investments are made anyway. To prevent the

designated enterprise from assuming diverging investment obligations, a requirement of

unanimity is in place: only when all three of the Contracting States come to the shared

conclusion that an investment in safety and security is necessary will the designated

enterprise be required to follow that instruction (see Article 72(3)). This will also leave

the authority of the Contracting States to impose own safety and security norms on the

production facilities located on their own territory unimpaired. The requirements arising

from the Nuclear Energy Act, the Nuclear Energy (Secrecy) Decree, the regulations

Application Nuclear Act (Secrecy) Act (Government Gazette 1971, 187 and Government

Gazette, 1989, 52) and the Safety of Nuclear Institutions and Fissile Materials

Regulation, apply to the application of and supervision of compliance with the safety

requirements that are applicable to the subsidiary URENCO Nederland BV. These

frameworks apply unconditionally and are currently supervised by the Minister for

Infrastructure and the Environment, specifically the Nuclear Safety and Radiation

Protection Authority of the Ministry for Infrastructure and the Environment. In the future,

the supervision will be charged to the Nuclear Security and Radiation Protection Authority

(ANVS).

3.8.3. Security requirements

Production facilities, storage facilities, or other business locations of a designated

enterprise in third countries must comply with the locally applicable laws and regulations,

including the legislation concerning the security of the facilities or business locations.

Sometimes, these security standards are less strict than those applied by the three

Contracting States. In that event it is desirable that the Contracting States have the

possibility to require of the designated enterprise that it applies the stricter security

standard (Article 72(2)(b)). This is in line with the joint security and classification policy

as set forth in Schedule II to the Treaty of Almelo. Article 72(6) does not provide for

compensation of the costs incurred because any investments necessary to comply with

the security requirements are made in the designated enterprise’s own interests and also

serve to comply with the duty of care that rests on this enterprise pursuant to Article 44

of this legislative proposal.

3.8.4. Technical support Euratom and IAEA

The URENCO group regularly offers support to the IAEA for the training of “safeguards”

inspectors and by doing so contributes towards maintaining Euratom’s inspection

capacity and quality. As a result, the URENCO group’s contribution has become a major

element of the international non-proliferation policy. Up until now the URENCO group

offers the IAEA assistance each time the IAEA so requests. When this is the case,

understanding is reached with the IAEA on the pre-conditions subject to which the

assistance is rendered, including concerning compensating the costs and protecting the

commercial interests of the URENCO group. It is expected that the URENCO group will

continue to respond favourably to such requests from the IAEA in the future as well.

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In order to ensure however that the URENCO group will continue to offer this support

in the future to IAEA and Euratom as well, the Minister has the power to issue an

instruction in this respect (See Article 72(2)(c)). This power may however only be

exercised if this support of the IAEA or Euratom is necessary in a specific situation, in the

Minister’s opinion, in order to protect the public interest. Also in the event that the

Minister issues a designation order will agreement have to be reached between the

URENCO group and the IAEA or Euratom on the pre-conditions subject to which such

assistance will be rendered, where such designation order does not provide any

guidelines for this.

If the Minister invokes this power, and the IAEA or Euratom themselves do not provide

for adequate compensation of the costs, an obligation is in place for the Minister to

compensate the designated enterprise the direct costs involved in acting on the

instruction, plus a reasonable profit margin. The compensation of all costs incurred and a

reasonable profit margin will also take into account the proceeds the designated

enterprise enjoys from acting on the instruction (see Article 72(6)).

3.9. Moratorium, bankruptcy and continuity

The legislative proposal includes a number of specific provisions aimed at securing the

public interest in the event of extraordinary circumstances in respect of the designated

enterprise and its subsidiaries. This pertains to the following situations:

- a suspension of payments or bankruptcy of the designated enterprise or a

subsidiary in the Netherlands or a situation in which suspension of payments or

bankruptcy is virtually unavoidable;

- a serious breach of the safety of the production facilities or offices in the

Netherlands or a risk of such breach in connection with the threatened continuity

of the production facilities or other business locations situated in the Netherlands;

- the complete absence of a board of the designated enterprise or a board that - for

instance on account of suspension - is no longer able to fulfil the management

function.

Although the rules on financial management laid down in Chapter 7 only result in

minimal risk of these situations occurring, a suspension of payments or bankruptcy

cannot be ruled out. The URENCO group is a commercial enterprise that competes with

other providers. New enrichment technology or the structural phasing out of nuclear

energy as a major component of the energy mix can result in the continuity being

jeopardised in the long run. Ultimately this may result in a suspension of payments or

bankruptcy. In addition, potential negative effects on the public interest may occur,

which is acknowledged by the three Contracting States. The United Kingdom has

confirmed in this context that it has several specific powers under applicable British

nuclear energy legislation to secure the public interest in such situations. The Federal

Republic of Germany has stated also to have several special powers with regard to the

facilities situated in the Federal Republic of Germany.

As far as the Netherlands is concerned, the Nuclear Energy Act (and the permit for the

URENCO group’s production facilities in Almelo based on this Act) guarantees that in the

event of a suspension of payments or bankruptcy the radioactive substances are safely

managed and, if required, transferred to suitable depositories. The requirements

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concerning the security of proliferation sensitive information and technology pursuant to

the Nuclear Energy (Secrecy) Decree remain fully in force as well. On the other hand, the

Nuclear Energy Act does not provide any specific rules on how an administrator or

bankruptcy trustee is to act in the course of a suspension of payments or bankruptcy. For

this reason the legislative proposal provides for several special statutory frameworks in

the event of a suspension of payments or bankruptcy of the designated enterprise or its

subsidiaries in the Netherlands.

In order to hedge the potential risks in the event of a suspension of payments or

bankruptcy, the legislative proposal in the first place provides for the possibility of

appointing a special administrator before a suspension of payments or bankruptcy has

been declared. This pertains to the situation in which it is apparent from the financial and

commercial situation that a suspension of payments or bankruptcy is virtually

unavoidable (Article 73). This provision was prompted by Article 13a of the Electricity Act

1998 and Article 5a of the Gas Act. By means of this power, the Minister can ensure that

certain steps are taken to prepare for a situation of suspension of payments or

bankruptcy by, for example, having the administrator give instructions to the board to

provide additional protection for information, to deplete stocks, etc. This type of measure

is to be taken on the basis of operational information and specific knowledge and

evaluations on the spot. Therefore, the possibility of appointing an administrator who is

able to obtain this knowledge on site in the enterprise and evaluate it, and based on this

give targeted instructions, has been provided for.

The object of this power is to take the necessary measures at the operational level

within the designated enterprise to limit the risks to the public interest in the event of

suspension of payments or bankruptcy. It is not possible to use this power from the

perspective of commercial or industrial policy interests, nor does this power intend to

prepare a “pre-pack” of the bankruptcy with a possible view to a relaunch. Such a choice

is not up to the Minister, but to the shareholders, directors and creditors of the


If the suspension of payments or bankruptcy is declared, the legislative proposal

provides for the obligation for the court to solely appoint an administrator or bankruptcy

trustee who has also been subjected to Dutch screening (Article 74 and Article 76). This

obligation is motivated by the far-reaching powers an administrator or bankruptcy

trustee has within a designated enterprise and the access he has to information and

facilities. In this respect an administrator or bankruptcy trustee can be put on a par with

a director.

The legislative proposal expressly provides that an administrator bankruptcy trustee is

fully bound to the obligations, designations, restrictions, and rules laid down in the

legislative proposal (Article 75 and Article 76). An administrator or bankruptcy trustee

will therefore have to implement decisions of the Minister in so far as these decisions

pertain to the performance of duties as administrator or receiver of the designated

enterprise or its subsidiaries. Although it can be argued that also an administrator or

receiver is held to comply with the law, it is desirable to avoid any lack of clarity and to

avoid the risk of legal disputes by laying down the obligations for an administrator or

bankruptcy trustee very explicitly.

In addition to binding the administrator and bankruptcy trustee to this Act, a possibility

has also been provided for to apply the protection that is linked to the qualification

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“prohibited location” as regulated in the Protection of State Secrets Act. Article 77 gives

the Minister the power to designate production facilities and offices in the Netherlands as

prohibited location. Such a designation is only possible if the continuity of the production

facilities or offices in the Netherlands are in danger for reasons of business operations, if

a bankruptcy of a subsidiary situated in the Netherlands is involved, or if serious

impairment of the protection of production facility or office is involved (Article 77(1)).

The effect of a designation as a prohibited location is that the access to these facilities

or offices is drastically restricted to only persons who have the necessary authorisation to

be determined by the government. Persons who act in breach of this commit a serious

offence if they have the intention of obtaining intelligence, objects or data or to possess

these without being authorised to do so. This involves data, intelligence and objects that

are kept secret in the interests of the State and its allies (Article 98c(1) under 2 and 3

and Article 98c(2) and Article 98 Criminal Code). A person who finds himself at or in a

prohibited location without being authorised to do so, is in breach of the public policy and

may be punished with a maximum prison sentence of six months or a fine of the third

category (Article 429quinquies Criminal Code).

The URENCO group (and where applicable the Dutch subsidiary of the ETC group) does

not fall under the Protection of State Secrets Act. These enterprises are not state-run

enterprises, but the interests relating to the security of the State and its allies with

respect to these enterprises are comparable to such an extent with the interests served

by the Protection of State Secrets Act that application by analogy of the regime of the

prohibited location is logical.

In conclusion Article 78 regulates in what way a temporary new board is installed if the

directors either are no longer in office, or are no longer able to discharge their duties,

because all the directors have been suspended or dismissed. Ordinarily in such a case the

solution according to Article 134(4) of Book 2 of the Dutch Civil Code would be found in

the articles of association, for this statutory provision states that the articles of

association determine in what way the board of the company is temporarily provided for

in the event of the absence or inability to act of the directors.

In consultation with the other Contracting States it has been established that this

arrangement in the articles of association provides insufficient clarity and insufficiently

takes into account the special international context in which URENCO Holding NV and the

ancillary companies operate. In order to, on the one hand, prevent the suspension and

dismissal powers of the Contracting States with regard to the board from being

ineffective for fear of there no longer being a board when these powers are used, and, on

the other hand, respecting the interests of the commercial shareholders, it has been

decided by the Contracting States and current shareholders to opt for the involvement of

the Enterprise Chamber of the Court of Appeal of Amsterdam.

Article 78 provides for the possibility of the interested parties – listed in the Article –

each submitting an application to the Enterprise Chamber to temporarily provide for the

management board. When submitting such an application the interested party must

inform the Minister and the competent authority of the Federal Republic of Germany and

of the United Kingdom, under penalty of having the requested being deemed null and

void.

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The possibility that the whole board is no longer operational exists for instance if on

account of the actions of the Minister or the competent authority of the Federal Republic

of Germany or the United Kingdom the entire board (including, if applicable, the non-

executive directors) has suspended or dismissed the board.

The Enterprise Chamber will hear the request as soon as possible. In this context the

Enterprise Chamber will hear all the interested parties who have submitted an application

and, in addition, will offer the employee representative body of the designated enterprise

an opportunity to express its views. The Enterprise Chamber is also limited in the number

of candidates that can be appointed. Only persons who have been cleared or have

undergone a similar security screening by the German or British authorities can be

appointed. In addition, the quality requirements laid down in the articles of association

and that are applicable to executive and non-executive directors and other provisions in

the articles of association need to be observed.

If the Enterprise Chamber indeed provides for the temporary filling of the vacant seats

by appointing executive directors and non-executive directors, these persons will fulfil

their duties until a new board has been provided for in accordance with the articles of

association or until the date set by the Enterprise Chamber. After all, this involves a

temporary measure. Lastly, it should be emphasised that this role of the Enterprise

Chamber leaves unaffected the powers of the Minister and the powers of, respectively,

the competent authority of the Federal Republic of Germany and the competent authority

of the United Kingdom as far as the possibility of suspending or dismissing a director is

involved if the public interest is threatened (see Article 78(9), last sentence).

3.10 Information

3.10.1 Obligation to provide information

Chapter 10 of the legislative proposal regulates both the information the designated

enterprise is to provide to the Minister and the way in which the designated enterprise is

to treat classified information. In both cases this involves information for which the

Treaty of Almelo, the Treaty of Cardiff and the Treaty of Washington contain specific

provisions.

As far as the provision of information by the designated enterprise is concerned, the

Joint Committee has looked at the current supervisory practice, as well as at the flow of

information currently available for the Dutch government via the indirect government

shareholding of URENCO Ltd. Subsequently, it has been established what information the

Minister can obtain via the regular supervisory powers under the General Administrative

Law Act and the Economic Offences Act. The legislative proposal provides supplementary

provisions for the provision of information of the designated enterprise towards the

Minister in so far as this specifically follows from the Treaty of Almelo, the Treaty of

Cardiff and the Treaty of Washington and is not obtained already via the available regular

supervisory powers.

The objective of these obligations to provide information is to sufficiently inform the

Minister (and the competent authorities in the Federal Republic of Germany and the

United Kingdom) for the exercise of powers and supervision to guarantee the public

interest. This provision of information is explicitly not intended to promote commercial or

economic interests.

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The flow of information as this currently takes place in a regular and structured way

towards the three Contracting States represented in the Joint Committee is codified in

Article 79. The information is provided via a status report that is relatively free of any

prescribed form. In so far as required, it is possible to further specify how the content of

the status report is to be clarified and presented by order in council (see Article 79(6)).

The subjects covered in the status report correspond with the supervision as described in

the Treaty of Almelo (see Article II(5)) and the current supervisory practice by the Joint

Committee. The legislative proposal provides for the possibility of requesting an updated

status report (Article 79(4)(a)). This power will be invoked in particular if international

developments or market developments give rise to specific situations that give cause for

obtaining at short notice a picture of the URENCO group’s current situation and what

specific risks may occur with regard to the public interest.

The current practice of supervision offers the three Contracting States the possibility of

requesting a further written or oral explanation of the status report. This possibility will

now be included in Article 79(4)(b). Following on from this, the possibility of inviting an

executive or non-executive director to attend (part of) the meetings of the Joint

Committee will also be codified (see Article 80).

As far as the provision of information to the Minister and the competent authorities of

the two other Contracting States is concerned, the legislative proposal provides for one

additional obligation for the designated enterprise. The designated enterprise is to

provide information on the remuneration policy of, and the remuneration

recommendations within, a designated enterprise together with the minutes of the

remuneration committee (Article 81). The rationale behind this obligation is that the

remuneration policy can contain certain incentives that may promote the taking of risks

by board members or key officers and thus may create an increased risk to the public

interest. To keep a finger on the pulse, the legislative proposal provides for informing the

three Contracting States of the remuneration policy. Based on this, the three Contracting

States can consider introducing more stringent supervision. The obligation to provide

information with regard to the remuneration policy is explicitly not intended to have the

three Contracting States determine a reasonable remuneration policy from a normative

perspective. This is after all a commercial matter that concerns the board and the

shareholders of the designated enterprise.

3.10.2. Handling classified information

Articles 82, 83 and 84 of the legislative proposal regulate the obligations the

designated enterprise and its subsidiaries must observe with regard to classified

information. Article 82 obliges the designated enterprise to take all appropriate measures

to protect classified information. The obligation basically comes down to the designated

enterprise taking all fitting measures required in order to prevent classified information

from falling into the wrong hands. This provision constitutes a codification of the current

implementation and supervisory practice and is directly traceable to the obligations laid

down in Article V of the Treaty of Almelo and Annex II to that treaty. In addition, this – in

so far as applicable – codifies the obligations of Articles VI and VII and Annex II to the

Treaty of Cardiff. Article 82(2) to (4) inclusive, provides for the possibility of imposing

instructions, if necessary, on the designated enterprise, to improve the protection and

classification of the classified information. This power to designate may only be exercised

in order to execute or enforce the security and classification policy as adopted and

updated by the Contracting States.

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Article 83(1) includes a prohibition for the designated enterprise and its subsidiaries on

sharing classified information with or providing it to persons who are unauthorised to

take cognisance of it. Such a prohibition also applies to sharing this information with or

providing it to the holders of shares or controlling rights in a designated enterprise.

Article 83(2) makes clear that even if the person in question is authorised to take

cognisance of the classified information, he is only permitted to receive the information

necessary for fulfilling the person in question’s duties. This constitutes the “need-to-

know” principle. It involves a classic form of information protection that ensures that

information is compartmentalised and thus is less easy to distribute and use. Article

83(3) makes clear that these prohibitions do not apply to the transfer of information to

the relevant competent authorities of the three Contracting States. Naturally, in

accordance with Article V of the Treaty of Almelo, only persons authorised for this

purpose by the competent authorities of the three Contracting States may take

cognisance of this information. A comparable exception applies in respect of authorised

persons of the relevant competent authorities of the French Republic or of the United

States. This exception, however, is restricted by linking it explicitly to the Treaty of

Cardiff and the Treaty of Washington and the Treaty of Paris, respectively.

The final element of the way in which the designated enterprise is to handle

information is found in Article 84 of the legislative proposal. In order to effect the

effective and comprehensive transfer of the information the designated enterprise is

obliged to provide, Article 84 states that the documents and information that are shared

with the Minister and with the competent authorities pursuant to Article 79 and Article 80

are classified as well and are thus subject to the restrictions of Article 82 and Article 83.

In particular when specific security and proliferation risks occur, the designated

enterprise must be able to fully disclose the state of affairs to the three Contracting

States without this directly resulting in obligations to make this information available to

third parties or to make it public. This risk exists, for instance, if a listed designated

enterprise is involved. At the same time, this provision does not prohibit the sharing of

information that is already in the public domain with third parties, e.g. investors or credit

rating agencies.

3.11. Designating other enterprises

Within the context of securing the public interest in the future, the legislative proposal

provides for granting and imposing an extensive – and interlocked - set of powers and

obligations on a designated enterprise. First of these is the designation of the newly to be

incorporated URENCO Holding NV as designated enterprise. At the same time, it is

conceivable in which ETC Holding is designated as well, for instance in the event that the

French State ceases being a majority shareholder of Areva. In that event, it will be

necessary to ensure that the four Contracting States are able to exercise sufficient

influence on the ETC Group. A designation order in accordance with this legislative

proposal may be helpful in that event. Note that there is no reason at present to

contemplate such a designation. The influence Urenco NV exerts on the ETC Group may

be adequately controlled and influenced by applying the rules of Chapter 6, thus securing

also the public interest where the ETC Group is concerned, in combination with the

majority shareholding of the French State in Areva and the influence this provides it in

the ETC Group.

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Nor would such designation of ETC Holding be possible at present, since the holding

company ETC has its registered office in the United Kingdom. Furthermore, such

designation order could only take place if all Contracting States to the Treaty of Cardiff

agree. Still, it is important to consider the possibility. Chapter 11 of the legislative

proposal provides the basis for such designation order, including the necessary

(technical) adjustments or deviations of the provisions of the legislative proposal that

would be required in the event of a designation of ETC Holding (Article 86).

Another possibility is that of future changes in the existing integrated URENCO group

or in the ETC group, as a result of which it no longer functions as an integrated group, or

as a result of which problems may arise concerning the protection of the public interest

at the subsidiaries established in the Netherlands. In these instances, the public interest

must still be properly protected. Chapter 11 therefore also offers a basis for designating

the Dutch subsidiaries of the URENCO group or the ETC Group or to bring them directly

under the scope of the relevant elements of the legislative proposal, on the

understanding that the required technical adaptions of and deviations from a number of

articles of the Act are provided (Article 85). Nor is there any reason to use this basis for

the moment .

Paragraph 3.12 Enforcement

3.12.1 Introduction

As also stated in the conclusion to paragraph 3.1., the legislative proposal provides for

a combination of private-law, administrative-law, and criminal-law enforcement. When

deciding which type of enforcement is to be applied in the event of a breach of an

obligation or prohibition, a balance is struck between effectiveness and proportionality,

also depending on the question to whom the violation of the statutory requirements may

best be attributed and what legal relationship applies. When assessing the suitability and

effectiveness of the enforcement instruments the multinational nature of the URENCO

group will be taken into account, as well as the multitude of international parties that

may be involved in the activities of the URENCO group, also in the event that the

designated enterprise has a listing on a stock exchange. The government policy

document on the starting points for deciding the sanctions system (Parliamentary Papers

I 2008/09, 31 700 VI, D) (hereinafter referred to as: government policy document

sanctions system) was leading in this regard.

3.12.2 Enforcement under private law

The instrument of private-law enforcement is used in situations in which the

designated enterprise, a subsidiary, or for instance a shareholder by entering an

obligation or performing any other private-law act is in breach of this Act. In those

instances, it is explicitly stipulated that such transactions are null and void (see e.g.

Article 7(7)). This prevents the designated enterprise or the Minister or the competent

authority of the Federal Republic of Germany or of the United Kingdom from having to

take additional legal measures to reverse this unlawful obligation. A “tit-for-tat” approach

is applied to straightforward situations of breach of standards that do not require further

consideration.

Nullity will only be applied in those instances in which society is not confronted with an

undesirable ripple effect.

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Furthermore, the Dutch Civil Code offers sufficient leads for, for instance, the

shareholders to hold the board liable and if necessary to initiate proceedings before the

Enterprise Chamber due to mismanagement if the board of the designated enterprise has

knowingly and willingly violated the law. It should also be noted in this regard that if

certain events occur, there is every likelihood that the shareholders will force the board

members to resign. For instance, if the designated enterprise no longer meets the

statutory minimum criteria for creditworthiness. Given the serious consequences for the

designated enterprise (investment and spending stop) and the shareholders (dividend

lock-up), it is virtually certain that the position of some or all directors will be at stake.

3.12.3 Enforcement under administrative law

Apart from private-law enforcement, the possibility is offered of administrative-law

enforcement by way of imposing an administrative fine and an administrative

enforcement order (Article 91). The use of an administrative fine is specifically envisioned

in the event of violations of the statutory provisions by the designated enterprise itself,

or by financial parties that are directly involved in the book-entry securities transactions

in respect of a listed designated enterprise. The choice for an administrative fine is based

on four arguments. The first but by no means decisive argument is that the relationship

between the designated enterprise and the Minister is an enclosed one. This corresponds

with the starting point formulated in the government policy document sanction systems,

in which it is stated that in a private context – i.e. in the event of a specific legal

relationship between a government body and a citizen or a company, administrative

sanctions are acceptable. One example is entering into a contract of sale without having

obtained dispensation (Articles 31 ff).

As regards acting in breach of the provisions concerning share ownership and the

number of shares that may be held, administrative sanctions are provided for in respect

of (potential) shareholders as well. In many instances there will exist a specific

relationship between the Minister and the target group, i.e. in the sense that the

(potential) shareholder has a duty to disclose and is required in certain situations to file

an application for a declaration of no objection (see e.g. Article 17(4) and Article 19(3)).

The second argument is that in the instance in which the designated enterprise is in

violation, although it is the board that has acted, the actions must be attributed to the

designated enterprise. In that event it is effective to impose an administrative fine on the

designated enterprise and let the designated enterprise and the shareholders feel the

negative impact of the violation, rather than targeting the board. Another effect of such

measure is that the financial interests of the shareholders are directly hurt, since such a

fine will have a negative impact on the dividend. This may stimulate preventive action

and an active effort by these shareholders to let the designated enterprise comply with

its statutory obligations.

The third argument is that in the event of violation by financial parties that are directly

involved in the book-entry securities transactions in respect of the shares in a listed

designated enterprise – in view of their huge size and financial resources – only stiff

administrative fines will have a preventive and actually punitive effect (see Article 92(4)

for the amounts of the fines). Fines may for instance be imposed in the event of non-

cooperation when trying to establish the identity of shareholders, as described in Article

13(7) of this legislative proposal. Criminal enforcement will have insufficient effect in

these instances, because the level of criminal financial sanctions is limited.

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The fourth argument refers to the proportionality of the sanctions. Criminal

enforcement harbours a strong moral element, given the international context in which

the designated enterprise operates. The responses of foreign authorities or international

clients to criminal sentences may therefore create unintended side-effects. The

designated enterprise may for instance lose its permits or clients, and directors and

employees run the risk that their “clearance” is revoked, effectively preventing them

from being employed by the designated enterprise. In view of these unpredictable

unintended side-effects over which the Dutch authorities have no control because they

are caused by the authorities and clients in other countries, it is preferable to apply a

system of administrative sanctions.

When opting for administrative sanctions, it was considered to what extent non-

compliance with an obligation itself already had effect. In the event of non-compliance

with an obligation to notify, an administrative fine is deemed sufficient, given the limited

impact of the offence and the fact that the activities that are performed by the

designated enterprises following the notification (for instance the appointment of a

director without a declaration of no objection) is in breach of the law and may

consequently be enforced.

Administrative sanctions may be severe. This is necessary because society has a

serious interest in proper compliance. This is furthermore in line with the starting points

listed in the government policy paper on the sanction systems referred to earlier. The

maximum amount of the administrative fine is 100 million euro or 10% of the designated

enterprise’s turnover, depending on which is higher (Article 92(1)). This system is

borrowed from the fines the Consumer and Market Authority may presently impose in the

event of violations of competition law. The URENCO group is a multinational enterprise

that is jointly supervised by the three Contracting States. Within this international

context, the fine of 10% of the turnover is a familiar type of fine that is also imposed in

the competition law of the United Kingdom and the Federal Republic of Germany. The

amount of 100 million euro is based on the existing turnover of the URENCO group and is

intended as a deterrent.

Lastly, the broadening of the base on which the maximum administrative fine of 10%

of the turnover is calculated may be noted (in respect of some violations) (See Article

92(4)). This applies in those instances in which the financial parties that are directly

involved in the book-entry securities transactions concerning the shares in the listed

designated enterprise violate their statutory obligations to cooperate. In view of the huge

financial size of these parties and the circumstance that they are for the major part

registered in third countries, it is decided to take the global turnover of this group as

basis on which the maximum financial fine is calculated.

3.12.4. Criminal enforcement in addition to administrative enforcement

Article 93 provides for criminal enforcement. Criminal punishment is specifically applied

to those violations of the law in which natural persons are directly involved or for which

they are directly responsible. A good example of this is the disclosure of classified

information in violation of the prohibition of Article 83. In addition to the possibilities

available under administrative law, criminal law offers the best general and specific

prevention, given the risk of incarceration for directors or officers of the designated

enterprise.

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It also offers the possibility for effective prosecution via international assistance if the

suspect is outside Dutch territory. In this light, it may be useful, where appropriate, to

apply criminal enforcement as a final resort, should the administrative enforcement turn

out to lack efficacy. As regards criminal enforcement of the provisions mentioned in

Article 93, the desirability that criminal sanctions may be applied as a final resort if the

situation so requires plays a part as well.

The maximum punishment is based on comparable punishment in the event of a

violation of the Strategic Services Act and the Strategic Assets Decree. The Strategic

Services Act and the Strategic Assets Decree are also aimed at protecting the public

interest, in that legislation, by preventing the proliferation of weapons of mass

destruction inter alia by subjecting the export of assets for dual use to strict restrictions

and procedures. This legislative proposal secures the public interest and is aimed at

preventing the proliferation of the technology and knowhow for producing weapons of

mass destruction. By finding common ground with this sanction under the legislation

regarding strategic services, a consistent level of punishment for these types of offences

and violations is ensured. In respect of serious offences, this means a maximum prison

term of six years and a fine of the fifth category, while violations are punishable with a

maximum prison term of one year, or community service or a fine of the fourth category.

In respect of a large number of provisions, dual enforcement is provided for

(administrative and criminal). Given the public interest and the impact on society

violation of these provisions may have, it is desirable that various coercive measures and

sanctions may be applied. In this context the choice between both forms of enforcement

depends on the specific instance. Certain violations or shortcomings in the execution may

either be handled through administrative action, whereas other violations require criminal

sanctions. Providing this choice allows for a proper balancing of efficacy, proportionality,

legal protection and speed. It offers the possibility of customisation.

Lastly, the multinational nature of the designated enterprise needs to be considered.

The URENCO group has offices and production facilities in various countries. Given the

nature of the activities undertaken by these production facilities and the proneness to

proliferation of the knowledge present at the URENCO group, the offices and production

facilities will also be subjected to the relevant laws and regulations in force in the country

of establishment. Where a conflict may arise between the statutory obligations of the

designated enterprise and its subsidiaries pursuant to local laws and regulations, and the

obligations under this Act, any specifically deviating statutory obligations the designated

enterprise and its subsidiaries are subjected to will be taken into account when the

Minister adopts and enforces decisions and when enforcing the statutory obligations. This

does not involve only legislation and regulations, but also provisions attached to a permit

or instructions from a regulator. This may create a situation in which, although the

designated enterprise and its subsidiaries are under a specific obligation under this Act,

the designated enterprise or its subsidiaries are unable, or only to a limited extent able,

to comply with this obligation in view of the other statutory obligations that are

applicable to them.

When this situation arises, the Minister (and the other supervisors) will take these

circumstances into account when enforcing and imposing sanctions in accordance with

the principles of Dutch administrative law. Article 5:5 General Administrative Law Act, for

instance, provides that no administrative sanctions will be imposed if there was a ground

of justification for the violation. Article 5:41 General Administrative Law Act provides that

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no administrative fine shall be imposed if the violation cannot be blamed on the

perpetrator. Lastly, the obligation exists to act proportionally. The amount of the

administrative fine must be in proportion to the seriousness of the violation and the

degree of culpability (Article 5:46(2) of the General Administrative Law Act). The Minister

and the supervisors will rely on the assessment of the facts when they use information

obtained from the relevant other authorities in other countries and if necessary and

appropriate from the designated enterprise.

A comparable approach applies to those situations in which it is in fact impossible for

the designated enterprise to implement a request of the competent authority of the

Federal Republic of Germany or the United Kingdom. This will for instance be the case if

the designated enterprise conducts an investigation into the identity of a shareholder

(Article 13(5)). It is without question that the designated enterprise is obliged to obey

such requests, which means that this may also be enforced under administrative law. At

the same time, if it is altogether impossible for the designated enterprise to obey such a

request, this may naturally not result in the imposing of an enforcement measure.

4. Market effects and business effects

4.1. Market effects

The URENCO group concentrates on providing safe, cost-effective and reliable services

in respect of uranium enrichment, in combination with care for the community and the

environment and the safety for its employees. The URENCO group is a leading company

in the field of uranium enrichment and the production of stable isotopes. These products

are used, for instance, in the energy sector for the civil production of (nuclear) energy

and in the medical and industrial sectors. The enterprise has a strong commercial and

technological position based on a tried and tested, and cost-effective, gas-centrifuge

technology.

Competing technologies are still not fully developed or are less cost-effective. The

URENCO group realises an annual turnover of approximately EUR 1.5 billion and has a

sizeable market share (approximately 30%). The annual profit is approximately EUR 340

million. The URENCO group has production plants in the Federal Republic of Germany,

the Netherlands, the United Kingdom and the United States of America. The production

capacity of enriched uranium is around 18,000 tSW/year (the production capacity for

uranium enrichment is typically expressed as tons Separative Work Units, or tSW/year).

The URENCO group additionally has a 50% participating interest in the joint venture ETC.

The other 50% is held by Areva.

The URENCO group is active in a regulated international market. The technology the

URENCO group applies and the core of its business activities – the enrichment of uranium

– is subject to various statutory frameworks. For instance, the production plants of the

URENCO group are subject to the local laws and regulations, specifically the Nuclear

Energy Act. In addition, national and European export control rules apply to the physical

supply of assets for dual use. Lastly, the entire URENCO group is supervised by the Joint

Committee set up under the Treaty of Almelo.

The market in which the URENCO group operates is a professional market, not a

consumer market. The customers of the URENCO group (about 50) are to be found in 19

different countries, and with many of the customers long-term relationships exist and

long-term contracts have been concluded. The market in which the URENCO group

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operates is served by only a handful of companies. The principal competitors are (with

their respective market shares given between brackets): Areva (France, approximately

15%), Rosatom (Russia, approximately 30%), Centrus Energy Corporation (formerly

USEC United States, approximately 15%; USEC voluntarily filed for "Chapter 11

restructuring", after which it continued business under a new name. Centrus Energy

Corporation currently supplies low-enriched uranium from stock and obtains its enriched

uranium from Rosatom), and CNCC (China, approximately 10%), in addition to a number

of smaller parties. Of the French, Russian and Chinese competitors of the URENCO group,

a majority share is held by their respective states. The Urenco group’s order portfolio is

filled with orders amounting to € 16 billion and goes beyond 2025. The international

market for the enrichment of uranium and the trading in enriched uranium is currently

characterised by severe competition due to overcapacity and a surplus of enriched

uranium. This results in negative price pressure.

The demand for enriched uranium is mainly created by the existing and scheduled non-

military facilities for the production of (nuclear) energy and the medical and industrial

sectors, among other things for diagnosis and brachytherapy (internal irradiation). The

demand for enriched uranium is expected to increase, especially in Asia. It is unlikely

that the demand for or supply of enriched uranium or of stable isotopes will change as a

result of this legislative proposal. These are exogenous developments that are caused by

the increased share of nuclear energy in the energy supply in Asia in particular.

It is not expected that the legislative proposal will create any changes in the supply

and the development of the process in the global market, either. The methods, customer

loyalty and supply of services and products do not undergo any changes as a result of

this Act, since a major part of regulating the activities of the URENCO group constitutes a

codification of already existing conditions and of the supervision by the joint committee

set up under the Treaty of Almelo, which is already in place. It will, however, become

possible – albeit on a limited scale – to trade the shares of the designated enterprise.

The effects of the legislative proposal on the international market will be negligible.

4.2. Business effects

The business effects only need to be considered in the event of an enterprise to be

designated; for the time being only one enterprise is scheduled to be designated. The

new governance of the enterprise is future-proof, in order to secure the public interest,

also in the event of diversification of the services offered or a change in the production

facilities. The business effects are determined on the basis of the Minister’s own

assessment. The administrative burden will not significantly increase or decrease relative

to the existing situation. This mainly concerns the codification of the existing practice,

whereby the (international) frameworks arising from the obligations under the Treaty of

Almelo, the Treaty of Cardiff or the Treaty of Washington will be left intact. In so far as

the enterprise proceeeds to ame, with unanimous consent by the three treaty states, the

corporate structure following which a listing at a stock exchange would be possible, the

duty to disclose the identity of the shareholders in case of listing of the shares will

increase relative to the current situation, which will result in an increase in the

administrative burden to the enterprise with an amount of around EUR 300,000 in

addition to the normal costs the enterprise would incur for the realisation of a listing at a

stock exchange. The amendment of the corporate structure required for a listing at a

stock exchange is, however, currently not under discussion meanting that the decision to

list the shares on a stock exchange is not under discussion as well and bears no

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relationship to this legislative proposal.

The costs for compliance with this Act are not expected to be significantly high. These

costs are mainly related to disclosing additional information in the existing annual plans

and reports and their assessment by the Minister. However, this disclosure is already

taking place in practice: only the form will be different. The other business effects are a

number of prohibitions to be imposed on the designated enterprise, and requirements

regarding its financial management. Where the requirements regarding a minimum credit

rating are concerned, it may be stated that the enterprise already complies with them.

The additional costs are negligible and, where these are incurred, they are for the most

part staff costs.

The legislative proposal will have no direct foreseeable effect on the employment at the

various production facilities. The designated enterprise employs a total of 1,480 staff.

Recent and significant investments in and an increase in production at the production

facility in Almelo, which make it possible to produce both enriched uranium and stable

isotopes, make this a unique and efficient production facility, which is of vital importance

to the enterprise and which makes a significant contribution to its business results. These

investments allow the expansion of the capacity of this production facility to 5,500 tons

SW/year; a permit has been obtained to further increase the capacity to 6,200 tSW/year.

It is not likely that the employment at this production facility will be affected.

5. International law and Community law aspects

5.1. The specific treaties governing the enrichment of uranium and relevant

technology

5.1.1 The Treaty of Almelo

The legislative proposal does not affect the Treaty of Almelo and the Joint Committee

set up under that treaty. On the contrary, the legislative proposal aims to implement

those elements of the Treaty of Almelo that secure the public interest. The legislative

proposal does not intend to influence the commercial, financial and industrial interests

that the Treaty of Almelo also endeavours to protect. The legislative proposal is

concerned only with securing the public interest as defined in Article 1.

The drafting of the legislative proposal and the possible sale of one or more shares in

URENCO Ltd. will affect the structure of the joint industrial enterprise as it presently

exists. This change in structure is described in paragraph 3.2.2. This will give rise to a

further assessment of the new structure and of whether the legislative proposal is in

conformity with Article I(1) to (3) inclusive, of the Treaty of Almelo; it may be concluded

that this is the case. In this connection it may in the first place be noted that the

collaboration as envisioned in Article I(1) of the Treaty of Almelo will be continued. The

nature of the collaboration will change, however: securing the public interest will become

first and foremost.

Secondly, the joint industrial enterprise will continue to exist. The existing URENCO

Ltd. will continue to exist and operate in the new structure as described in paragraph

3.2.2. The only thing that will change is the top structure, which will be given a different

function and operation. However, this change will not affect the functioning of the joint

industrial enterprise. It will ensure, however, that the three Contracting States are able

to deliver on their responsibility under the Treaty of Almelo. Thus, Article I(2) of the

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Treaty of Almelo is respected as well.

Thirdly, the legislative proposal takes into account the possibility that all shares of the

joint industrial enterprise end up in the hands of private parties. Article I(3) of the Treaty

of Almelo provides for the possibility that one or more Contracting States will not directly

or indirectly hold shares in URENCO Ltd., but that they will designate and allow private

parties to do so. This legislative proposal corresponds with this, and with the proposed

new structure. The legislative proposal and the structure will support the tripartite

responsibility of the Contracting States: three legal entities each having their registered

office in a different contracting state and functioning as designated commercial bodies

participating in the joint industrial enterprise.

Fourthly, the new structure associated with this legislative proposal still provides for

three commercial bodies, i.e. URENCO Holding Ltd., URENCO Holding NV, and URENCO

Holding GmbH. Each of these bodies exerts equal influence and control over the joint

industrial enterprise URENCO Ltd. In addition, there is a tripartite division of the share

ownership: investors invest in a stapled stock, which consists of a share in URENCO

Holding Ltd., a share in URENCO Holding NV, and a share in URENCO Holding GmbH,

which are inextricably bound to each other.

Fifthly, the legislative proposal provides for the possibility that the shares in a

designated commercial body will be admitted to trading on a regulated market. The

decision whether a stock exchange listing is to be used has not been taken so far and

requires unanimous approval of the Contracting States. In the existing structure the

shares in Uranit GmbH are held by different legal entities. These other legal entities

(E.ON AG and RWE AG) are listed companies.

Lastly, it is noted that the legislative proposal implements several aspects of the treaty

obligations. Article 43, for instance, implements Article VI(2) of the Treaty of Almelo.

Where the Treaty of Almelo is explicitly implemented, this is elucidated in the preceding

paragraphs.

5.1.2. Treaty of Washington

The legislative proposal does not affect the Treaty of Washington and the safeguards it

contains, which were agreed between the Kingdom of the Netherlands, the Federal

Republic of Germany, and the United Kingdom on the one hand, and the United States of

America on the other. The Treaty of Washington regulates all relevant conditions related

to the transfer of ultra-centrifuge technology to the United States.

This has regard to both the safeguards that apply to the initial transfer of technology

and materials for the development and construction of the production facility (the

Louisiana Energy Services plant) and to the exchange of knowhow and materials between

this production plant of the URENCO group and the European production facilities in the

operation of the production plant. The exchange of accredited staff also takes place on

the basis of this treaty.

The essence of the safeguards is that the classified information must be secured and

classified at least in the same way as is the case under the Treaty of Almelo. In addition,

the protection of industrial property is regulated, as well as the possibility for the

URENCO group to share the classified information originating from the American

production plant with one or more production facilities in the Contracting States of the

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Treaty of Almelo, via a special procedure laid down in an annex to the treaty. Lastly, the

Treaty of Washington requires that the technology is applied to peaceful use in the

United States as well (Parliamentary Papers II 1992/93, 22 991, no. 3, pp. 3-4).

The Treaty of Washington takes the framework and supervisory practice as provided by

the Treaty of Almelo as a guideline. This framework and supervisory practice remain

unchanged. To a large extent, the legislative proposal codifies the supervisory practice of

the Joint Committee. In addition, the legislative proposal contains some specific

provisions that ensure the URENCO group’s compliance with the safeguards laid down in

the Treaty of Almelo and the Treaty of Washington.

Article 82(1) of the legislative proposal, for instance, provides that the designated

enterprise is to take all appropriate measures in order to secure the classified

information. The Minister may give instructions concerning the security and classification

of the classified information (Article 82, (2)). In the same way, the designated enterprise

is obliged to comply with comparable instructions given by the competent authorities of

the Federal Republic of Germany and of the United Kingdom for the execution and

enforcement of the security and classification policy as adopted and updated by the

Contracting States (Article 82(4)). Article 83(1) of the legislative proposal prohibit the

designated enterprise and its subsidiaries from sharing classified information with or

disclosing classified information to persons who are not authorised to receive this

information. Article 43 and Article 44 ensure that the enterprise does not directly

contribute to the proliferation of nuclear weapons and other nuclear explosives. The

frameworks of Chapters 3 and 4 of this legislative proposal furthermore ensure that

executive and non-executive directors, key officers and shareholders of the designated

enterprise will be screened.

The set of powers laid down in the legislative proposal (and the equivalent powers

included in the articles of association of URENCO Holding Ltd. and URENCO Holding

GmbH) enables the three Contracting States to fully comply with their obligations

towards the United States under the Treaty of Washington. As a result of these powers,

the United States, in turn, may rely on an effective and systematic supervision of the

URENCO group arising from the Treaty of Almelo. Thus, the Federal Republic of Germany,

the Netherlands and the United Kingdom may fully enforce compliance by the URENCO

group with the safeguards included in the Treaty of Washington.

5.1.3. Treaty of Cardiff

The Treaty of Cardiff regulates the collaboration between the Federal Republic of

Germany, the French Republic, the Netherlands, and the United Kingdom on ultra-

centrifuge technology. This Treaty gave France access, via Areva, to ultra-centrifuge

technology and enabled the formation of the joint venture ETC, in which URENCO and

Areva participate for 50% each. The objective of the Treaty is to force France to assume

the policy and its implementation concerning non-proliferation and the security of ultra-

centrifuge technology. As developed on the basis of the Treaty of Almelo (Parliamentary

Papers II, 2005/06, 30 340, A and no. 1, pp. 2-3).

Although the nature and the content of the obligations included in the Treaty of Cardiff

does not create any new obligations on the part of the three Contracting States of the

Treaty of Almelo (Parliamentary Papers II, 2005/06, 30 340, A and no. 1, p. 3, 2nd

paragraph), all Contracting States are obliged, under the Treaty of Cardiff, to ensure

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compliance by the ETC Group with the obligations under the Treaty of Cardiff.

This legislative proposal provides for the necessary relevant powers. Chapter 6 of this

legislative proposal includes various powers vested in the Minister that enable an

adequate supervision of the ETC Group through URENCO Ltd. as 50% shareholder of ETC

Holding. In addition, this legislative proposal provides for the possibility to designate ETC

Holding as designated enterprise, should the need to do so arise and the four Contracting

States of the Treaty of Cardiff consent to this. This would require, however, that the

registered office of ETC Holding is moved to the Netherlands (see paragraph 3.11. of

these explanatory notes).

Through the combination of the rules in Section 6 and the possibility to designate ETC

Holding as designated enterprise, the legislative proposal also offers sufficient guarantees

to impose and enforce the obligations under the Treaty of Cardiff and the Treaty of Paris.

5.2. EU law aspects

5.2.1. General

The legislative proposal includes a statutory regime to protect the public interest,

which is activated by the designation of one or more enterprises in accordance with

Article 2. Given the nature of the activities carried on by the URENCO group, the

compatibility of the legislative proposal with the Treaty establishing the European Atomic

Energy Community (the Euratom Treaty) will have to be addressed first of all. The

Euratom Treaty includes various requirements that are material for this legislative

proposal. It must be avoided that the legislative proposal breaches these requirements or

interferes with the effective operation thereof. In addition, the legislative proposal has

been reviewed for compliance with the Rome Treaty. According to the case law of the

Court of Justice of the European Union (ECJ), if the Euratom Treaty does not provide

specific objectives of frameworks, relevant provisions and grounds of the Rome Treaty

may apply (see judgment of the ECJ of 12 April 2005, Commission/United Kingdom, case

C-61/03, at 44). In addition, the provisions and secondary regulations based on the

Rome Treaty apply, in so far as they aim at a broader objective than the Euratom treaty

(see judgment ECJ of 6 September 2012, European Parliament/Council, case C-490/10,

at 80-85). This statutory regime touches on the provisions concerning the freedom of

movement in the internal market of the European Union as laid down in the Rome

Treaty. This concerns in particular the free movement of capital (Article 63 Rome

Treaty), the free movement of services (Article 56 Rome Treaty), the freedom of

establishment (Article 49 Rome Treaty) and to a limited extent the free movement of

goods (Article 34 Rome Treaty) and the free movement of labour (Article 45 Rome

Treaty). While the Euratom Treaty includes specific provisions concerning the common

market as regards nuclear energy (Chapter IV Euratom Treaty) and for third-party

relationships (Chapter X Euratom Treaty), these provisions are not exhaustive, nor offer

a comprehensive regulation of the internal market.

In addition, compatibility with European competition law is concerned, where powers

that involve that the acquisition of the effective control over the designated enterprise by

an investor or enterprise requires an ex ante review by the Minister pursuant to Article

17 or Article 19 of this legislative proposal. This concerns in particular the powers

regarding (potential) shareholders as regulated in Chapter 4 of the legislative proposal,

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and the sale of shares in subsidiaries and joint ventures (Articles 40 and Article 41 of the

legislative proposal).

It may generally be assumed in this regard that the powers included in this legislative

proposal may obstruct one or more freedoms under the Rome Treaty and for this reason

they must be justified, either by invoking an applicable exception under the Treaty, e.g.

public security, or by invoking one or more imperative reasons of overriding interest.

Economic or financial interests may not be invoked as imperative reasons. Article 1

defines public interest as: a) the essential interests of the State's security as referred

in Article 346(1)(a) Rome Treaty; b) the interest of public security as referred to in

Article 52(1) and Article 65(1)(b) Rome Treaty; and c) the international obligations and

regulation in relation to export of goods, services, rights of ownership, business

secrets or other information to promote non-proliferation and protect security

referred to in Articles 52(1) and 65(1)(b) Rome Treaty that are binding on the European

Union and its Member States. This definition demarcates and restricts the execution of

his powers by the Minister to those situations in which an interest is at risk as described

in the definition. It provides on what grounds the Minister may take decisions and

indicates which conditions the Minister may attach to his decisions.

This definition finds common ground with the European definitions of imperative

reasons of overriding interest (as regards public security see the judgments of the ECJ of

10 July 1984, Campus Oil, case 72/83, grounds 32-36 and of 13 May 1993,

Commission/Spain, case C-463/00, ground 71 and of 14 October 2004, Omega

Spielhallen, C-36/02, at 28; for safety of the State: Article 346(1)(a) Rome Treaty).

In addition to invoking imperative reasons of overriding interest or exemption under a

treaty, a justification of obstructing one of the freedoms of the internal market requires

an assessment of the proportionality of the obstruction. Two questions must be

addressed in this respect. Firstly, concerning the efficacy of the obstructing measure: is

the measure suited for realising the stated objective? Secondly concerning the

unavoidability of the measure: are there no other, less intrusive measures available for

realising the stated objective? The various powers granted to the Minister by this

legislative proposal will all have to be assessed on the basis of the specific public

interests that is served with it and in light of proportionality.

One specific detail should also be considered when assessing whether the legislative

proposal is compatible with EU law: Directive 2006/123/EC of the European Parliament

and the Council of 12 December 2006 on services in the internal market (OJ 2006, L

376; “Directive 2006/123/EC”) applies to the nuclear activities of URENCO, namely the

enrichment of uranium. By judgment of the ECJ of 12 September 2006, joined cases C-

123/04 and C-124/04 (Industrias Nucleares do Brasil SA), the ECJ ruled that Article 75

Euratom Treaty applies to the enrichment of uranium, since the enrichment of uranium is

a type of treatment or processing and not a type of manufacturing. If this treatment or

processing is carried out for an economic consideration, it is to be regarded as a service

within the meaning of Article 56 Rome Treaty and the Services Directive. The

compatibility with the Services Directive will be briefly discussed in this explanatory

memorandum.

5.2.2. Euratom Treaty

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The URENCO group enriches uranium and undertakes activities concerning goods and

products listed in Schedule IV, list A, to the Euratom Treaty. The activities of the

URENCO group therefore take place within the context of the common market for nuclear

energy as regulated by Chapter 9 of the Euratom Treaty. The legislative proposal have

been discussed at official level with the Euratom Agency. These discussions did not bring

any objections against the proposed framework to light and also in view of the fact that

some of the provisions are aimed at securing the security of supply.

When setting up their collaboration by way of the Treaty of Almelo the European

Commission confirmed, after having been notified of the draft agreement in accordance

with Article 103 Euratom Treaty, that this collaboration was compatible with the

objectives and frameworks of the Euratom Treaty. The Contracting States expressly left

the possibility open in this respect that other European countries might want to join the

collaboration or that collaboration with Euratom would take place (Parliamentary Papers

II 1969/70, 10 733, no. 3, p. 2-3, no. 7, p. 4 and p. 6; Parliamentary Papers I 1970/71,

10 733, no. 187a, p. 2-4). Nor did the European Commission express any objections in

respect of the Treaties of Washington and Paris after having been notified in accordance

with Article 103 Euratom Treaty (see Parliamentary Papers II 1992/93, 22 991, no. 3, p.

9 and Parliamentary Papers II 2011/12, 33 080, no. 1, p. 10, respectively).

This legislative proposal is based on the provisions of the Treaty of Almelo, the Treaty

of Washington, the Treaty of Cardiff and the Treaty of Paris and is intended to implement

the obligations under these treaties as well as the powers vested in the Joint Committees

mentioned in these treaties. The circumstance that the European Commission saw no

reason - in response to the notifications in accordance with Article 103 Euratom Treaty –

to make objections and even went so far, in respect of the Treaty of Almelo, as to state

that it concurred with the approach, offers a strong indication that the statutory

requirements aimed at implementing these treaties are compatible with the Euratom

Treaty.

If, when reviewing for compliance with Chapter 9 of the Euratom Treaty, it becomes

apparent that the statutory provisions contain several restrictions, these are justified in

light of the applicable provisions of the treaty, subject to the premise that this chapter is

solely the application, in a highly specific field, of the principles of the internal market as

set forth in the Rome Treaty (see the judgment of the ECJ in this vein of 14 November

1978, judgment 1/78, ground 15).

Bearing in mind this vision of the ECJ, it may suffice, in light of the compatibility of this

legislative proposal with general principles of the internal market (see paragraph 5.2.1),

to only conduct an additional review for compliance with those specific elements or

special provisions of the Euratom Treaty that are in addition to or that deviate from the

Rome Treaty.

In this connection, Article 93 Euratom Treaty must first be considered. This provision

prohibits the setting up or maintaining of customs duties or charges having equivalent

effect and any and all quantitative restrictions on imports and exports of products

included in the lists that form part of the Euratom Treaty. The legislative proposal does

not vest powers in the Minister to impose duties in any way or form. The legislative

proposal is not specifically aimed at the transfer of the products included in the lists, but

generically provides a regime for contracts of sale and transfer and the (de facto) making

available of assets for dual use, intellectual property rights, business secrets or services.

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Where, by application of Articles 31 to 34 inclusive, of the legislative proposal,

restrictions are imposed regarding the supply of such goods and services, the free

movement of goods may be said to be obstructed in the shape of a measure having

equivalent effect.

However, this obstruction may be justified by invoking the imperative reason of

overriding interest of public security as referred to in Article 36 Rome Treaty and

recognised in the case law of the ECJ (see judgment of the ECJ of 4 October 1991, case

C-367/89, Richardt). As regards the necessity and proportionality of these powers,

reference is made to paragraph 5.2.1.

Next, Article 96 Euratom Treaty must be considered. This prohibits any restrictions

based on nationality affecting the right of nationals of any Member State to take skilled

employment in the field of nuclear energy, subject to the limitations resulting from the

basic requirements of public policy, public security or public health.

The legislative proposal does not impose any nationality requirements on directors or

employees of the designated enterprise. The legislative proposal solely grants the

Minister the possibility to assess ex ante executive or non-executive directors of the

designated enterprise (Article 7) in order to establish whether there are any objections to

their appointment in view of the public interest. If such objections exist, the declaration

of no objection is refused and the executive or non-executive director may not be

appointed.

These objections will in particular exist in respect of natural persons maintaining ties

with countries or organisations that breach the rules of non-proliferation or in respect of

which it is suspected that they maintain ties with countries that attempt to develop or

acquire nuclear weapons or the technology for making such weapons. Thus, this ex ante

assessment is not linked to any nationality requirement. It is furthermore noted in this

respect that the assessment is necessary in view of the compelling reason of general

interest listed in Article 96, first paragraph, of the Euratom Treaty, which may give rise

to introduce obstructions to the appointment of a director as yet.

A comparable prohibition on discriminating based on nationality is included in Article 97

Euratom Treaty. No restrictions based on nationality may be applied to natural or legal

persons, whether public or private, under the jurisdiction of a Member State, where they

wish to participate in the construction of nuclear installations of a scientific or industrial

nature in the Community. Again, the legislative proposal does not contain any

discriminatory obstructions where participation in the construction of nuclear installations

by or in collaboration with the designated enterprise is concerned. The Minister does

have the power, within the context of the public interest, to refuse to allow the

collaboration by the designated enterprise with a third party, or to attach specific

conditions to such collaboration (Articles 31 to 34 inclusive, or Article 45). However, this

power is non-discriminatory. Furthermore, it is not expected that this power will be

readily applied, where a party that is established in the EU is concerned, given the

nuclear collaboration already in place between the Member States as laid down under the

Euratom Treaty.

The legislative proposal does not affect the obligation of Article 98 Euratom Treaty to

facilitate the conclusion of insurance contracts covering nuclear risks.

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As regards the free movement of capital for the industrial sectors listed in Schedule II

to the Euratom Treaty, it is noted that the European Commission has not made a

recommendation in accordance with Article 99 of the Euratom Treaty. In this regard, the

compatibility of the legislative proposal with the free movement of capital must primarily

be assessed on the ground of Article 63 Rome Treaty (see paragraph 5.2.1).

In conclusion, it is noted that the legislative proposal does not violate Chapter 6

(supplies) and Chapter 8 (property of ownership) of the Euratom Treaty. The property

regime concerning minerals, raw materials, and fissile materials are not affected by this

legislative proposal, nor are any powers of the Euratom Agency assumed. The power of

the Minister pursuant to Article 72 to have certain activities carried out by the designated

enterprise by giving an instruction, where this arises from international obligations or

contributes towards the security of supply, the public interest, or the public health, even

contributes towards the proper functioning of the Euratom Agency

5.2.3 Review for compliance with the freedoms under the Treaty

5.2.3.1. General provisions (Chapter 1)

The designation of an enterprise pursuant to Article 2 of the legislative proposal has no

significance in and of itself. All the designation does is to ensure that the statutory

limitations and procedures are applicable to the designated enterprise. The enterprise is

aware of this effect and legal protection against the decisions made by or pursuant to

this Act is available, with the exception of the instruction pursuant to Article 2. The

obstructions of the freedoms of the internal market are laid down in other chapters of the

legislative proposal and will be reviewed separately.

5.2.3.2. Structure and control mechanisms (Chapter 2)

The obligation of Article 3(1) for the designated enterprise to subject the intention to

amend the articles of association and the terms and conditions of administration,

dissolution, merger, demerger, conversion, or moving the registered office or central

management to approval constitutes an obstruction of the freedom of establishment and

the free movement of capital (see e.g. judgment of the ECJ of 10 November 2011,

Commission/Portugal, case C-212/09, grounds 50 and 61). The same applies to the prior

approval of or the cooperation of the designated enterprise with amendments to the

articles of association of the ancillary companies or of the jointly managed company, as

provided for in Article 4 of the legislative proposal. The obligation of obtaining approval

may obstruct both the designated enterprise and potential investors in making a strategic

decision concerning the continuation, conversion, or otherwise altering the group

structure (see judgment of the ECJ of 13 May 2003, case C-463/00, Commission/Spain,

grounds 77-80). This restriction may, however, be justified in light of the protection of

the public interest as defined in Article 1 of the legislative proposal.

Through amendments to articles of association and other changes in the group

structure it is possible to realise special controlling rights for the benefit of certain

commercial shareholders. It is furthermore possible to change the objectives of the

enterprise and the governance structure to such an extent that the governance becomes

opaque or it is difficult to hold the board liable, or that too much power is conferred on a

specific category of shareholders, or that the activities of the designated enterprise

extend to fields that increase the risk for the public interest as defined in the legislative

proposal. Each of these changes carries risks for the public interests.

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Lastly, the structure is necessary to effectively allow the multilateral supervision as

provided for in the Treaty of Almelo. This also explains why both the Minister and the

competent authorities of the Federal Republic of Germany and of the United Kingdom

must approve such changes. Each Contracting State needs this structure in order to

comply independently, and in line with its own sovereign responsibility, with the

obligations under the Treaty of Almelo.

The Minister may only refuse to grant approval if the amendment to the articles of

association or other changes in the structure creates a risk for the public interest. The

power is non-discriminatory. The power must be exercised in accordance with the

principles of Dutch administrative law. The Minister must give reasons for his decision

and must explain why a change in the structure may not be approved. The decision of

the Minister, either his refusal or his approval, is open to objection and appeal and may

be challenged before a Dutch administrative court.

It is not possible to protect the interests mentioned above in a less intrusive manner.

Where the public interest requires the blocking of an amendment to articles of

association or making it subject to conditions, it cannot be avoided that the enterprise

concerned submits the proposed amendment to the Minister, who may subsequently

prohibit the proposal or make it subject to conditions. An alternative in the form of a

power to annul comes down to the same thing, and has the added disadvantage of less

ex ante certainty for the enterprise, and the enterprise being confronted with ex post

annulled articles of association. This alternative would constitute an even larger

restriction of the freedom of establishment and the free movement of capital than the

proposed power of ex ante review of amendments to articles of association.

Nor is there an alternative available to secure the own authority under the own

national law of all three Contracting States vis-à-vis the designated enterprise. Each

amendment to the articles of association or change in the structure of the designated

enterprise may affect the authority of one or more Contracting States and obstruct the

State concerned in securing the public interest and the compliance with the provisions

under the Treaty.

5.2.3.3. Executive directors, non-executive directors and other officers (Chapter

3)

Pursuant to Article 7 the Minister is authorised to assess ex ante whether the

appointment of an executive or non-executive director meets with objections in light of

the public interest that needs protection. The prohibition of appointing an executive or

non-executive director without a declaration of no objection may constitute an

obstruction of the free movement of labour, the freedom of establishment, the free

movement of services and the free movement of capital (see e.g. judgments of the ECJ

of 23 October 2007, Commission/Germany (Volkswagen), case C-112/05, grounds 62-

66, of 6 December 2007, Federconsumatori, joined cases C-463/04 and C-464/04, and of

10 November 2011, Commission/Portugal, case C-212/09, grounds 51-53; of 4

December 1974, Van Duyn, case 41/74, ground 24). What applies in respect of each of

these cases is that this compulsory declaration of no objection may give investors pause

to invest in the designated enterprise. It may also scare off potential executive directors

to enter the employment or to accept a position as director of the designated enterprise.

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The nature of the designated enterprise requires, however, that to a high degree the

board is reliable and that it is possible to verify whether the background and the actions

of the executive or non-executive director give rise to doubt the reliability of the

executive or non-executive director. Strategy and policy of the designated enterprise are

primarily shaped and implemented by the board. In addition, the board is the point of

contact, both internally and externally, of the designated enterprise and has knowledge

of the designated enterprise’s functioning.

In view of these characteristics of the board, protection of the public interestrequires

that the executive directors and non-executive directors are assessed prior to their

appointment on reliability and suitability. The obligation is non-discriminatory and is

applicable to every (prospective) executive or non-executive director, regardless of his

nationality. The obligation also serves to realise the stated objective, because the

screening takes place prior to appointment, by the Minister, who will be able to decide,

on the basis of public and non-public information, whether or not the proposed board

member constitutes a security risk. The power only grants the possibility to block a

proposed appointment. The power may only be exercised in order to protect the public

interest . The power is exercised in accordance with the principles of Dutch

administrative law. The Minister must give reasons for his decision and must explain why

a board member may not be appointed, or only subject to specific conditions. The

decision of the Minister, either his refusal, or his approval (whether or not subject to

conditions), is open to objection and appeal and may be challenged before a Dutch

administrative court.

It is not possible to protect the interest mentioned above in a less intrusive manner.

Although it is possible to eliminate part of the risk by classifying information and

restricting access to information, access to information that is of strategic value for the

functioning, management and development of the designated enterprise is inherent to

the position of a board member of an enterprise. It is therefore unavoidable that a

director gains insight in certain strategic information that is confidential for security

reasons and which is open to abuse. In those instances EU law accepts that Member

States introduce powers and restrictions (see judgments of the ECJ of 4 December 1974,

Van Duyn, 41/74, grounds 24; 14 October 2004, Omega Spielhallen, case C-36/02,

grounds 30-31).

The power of the Minister to conduct an ex ante assessment of key staff members is

justified for the same reasons as set out above. Key staff members are officers who are

authorised to legally bind the designated enterprise or who have responsibility for the

operational execution of the production facilities of the designated enterprise. They

include the Chief Operating Officer and the head of security of a production facility. These

persons have access to proliferation-sensitive information and secured production

facilities, reason why an ex ante assessment of their reliability is justified.

Lastly, the system is completed by the power of the Minister to suspend executive and

non-executive directors or key officers, or to even relieve them of their duties. These

powers are justified from the point of view of the public interest, given the role of these

persons and the information they have access to. It must be possible for the Minister to

intervene if, after having granted ex ante the declaration of no objection, it emerges that

there are problems concerning the reliability of the executive or non-executive director or

key officer after all and the public interests is at stake.

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5.2.3.4. Shareholders, shares, controlling rights, and rights attached to shares

(Chapter 4)

Chapter 4 of the legislative proposal provides various restrictions for the possibility of

investors to acquire, hold or dispose of shares or controlling rights in the designated

enterprise. Article 15 contains an absolute prohibition for undesired persons to hold or

acquire shares or controlling rights in the designated enterprise. Article 16 contains a

restriction in respect of certain (types of) (prospective) investors. The practicality and

necessity of these restrictions have already been discussed in paragraphs 3.4.4. and

3.4.5. In addition, the legislative proposal provides the obligation to apply for a

declaration of no objection prior to disposing of or acquiring a share or to dispose of a

controlling right in the designated enterprise (Article 17 and Article 19). The legislative

proposal makes a distinction in this respect between the situation in which the

designated enterprise is a listed or an unlisted company. These procedures are explained

in paragraph 3.4.6.

According to permanent case law of the ECJ this obligation to obtain prior consent for

making direct investments from abroad constitute an obstruction of the free movement

of capital or of the freedom of establishment (judgments of the ECJ of 14 December

1995, Sanz de Lera et al, case C-163/94, C-165/94, C-250/94, grounds 24-25; and of 14

March 2000, Association Église de Scientologie, case C-54/99, grounds 14-16).

In view of the nature and activities of the designated enterprise, the public interest

may be put at risk by (even minor) investments of shareholders in the enterprise. This is

to an even larger extent the case when an attempt is made to gain material or even full

control over the designated enterprise. The restrictions imposed on share ownership in

Article 15 and Article 16, though discriminatory, are phrased objectively and are justified

on the ground of public security as phrased in Articles 52(1) and 65(1)(b) Rome Treaty.

The enforcement of these restrictions takes place objectively and transparently offers no

room for discretion. Furthermore, the restrictions in Articles 15 and 16 contribute

towards realising the objectives of joint safety policy of the European Union, and in this

way the European sanctions policy is followed up.

The procedures for obtaining a declaration of no objection are non-discriminatory and

may be known objectively. The assessment factors are phrased objectively and are

published (see Articles 17(6) and (7), 18(2), 19(6), 20(2)). The statutory regime of

Article 17 and Article 19 constitutes a suitable instrument, since the declaration of no

objection gives the Minister the possibility – at a point when an investor is about to

acquire relevant influence (e.g. because a threshold is reached or exceeded) – to verify

the background of the shareholder and the effect holding the shares or controlling rights

will have on the board of the enterprise and the influence the shareholder will have on

that board. If the declaration of no objection is refused, the shareholder is not allowed to

invest in the enterprise, or only up to the threshold beyond which the declaration of no

objection is refused. Thus, the shareholder acquiring the corresponding influence is

prevented.

The power must be exercised in accordance with the principles of Dutch administrative

law. The Minister must give reasons for his decision and must explain why a specific

shareholder may not be accepted, or only subject to specific conditions. The decision of

the Minister, either his refusal, or his approval (subject to conditions or not) is open to

objection and appeal and may be challenged before a Dutch administrative court.

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It is not possible to protect the interests mentioned above in a less intrusive manner. A

less intrusive alternative would include the possibility to force a shareholder to sell his

shares or part of them as soon as the Minister has an indication that there are certain

risks attached to that shareholding. The drawback of such alternative is that it offers the

shareholder less certainty whereas the risk for the public interest might already have

materialised before the Minister has any knowledge of it and can act on it. Preventive

verification whether the prospective shareholder does not present a risk adds to the

certainty for both the shareholder and the Minister.

In conclusion, the power of Article 14 to prohibit the implementation of the intention to

have the shares in a designated enterprise traded on a regulated stock exchange or

multilateral trading facility, or a system in a country outside the European Economic Area

that is comparable to such stock exchange must be considered. This power is highly

restricted and solely allows the Minister to prohibit the implementation of such intention

if it is clear that as a result of such listing the designated enterprise will only partially be

able to fulfil its statutory obligations that rest on it under Chapter 4 . In addition, the

Minister may prohibit such intention if he is not able, or only partially able, to exercise his

powers by or pursuant to Chapter 4 of this legislative proposal.

The necessity of this power is to be found in the need to be able to effectively apply

the statutory powers vis-à-vis the shareholders necessary to secure the public interest. If

these statutory provisions are not effective, the public interest will be put at risk. Article

4 of Council Directive 88/361 of 24 June 1988 for the implementation of Article 67 of the

Treaty (OJ 1988, L 361) provides that this liberalisation directive for the free movement

of capital does not affect the right of the Member States to take measures against

infringements of their laws and regulations or to lay down procedures for the declaration

of capital movements for purposes of administrative or statistical information. The

European Court of Justice has upheld this by decision of 24 June 1986, Case 157/85,

Luigi Brugnoni, legal grounds 21-25).

The power laid down in Article 14 contains a regime aimed at preventing infringements

of Chapter 4 of this legislative proposal and consequently complies with the standard of

Article 4 of the above-mentioned Directive and the case law of the ECJ. Nor does it

generally prohibit a stock exchange listing as such, or does it even hinder the capital

movements themselves. Article 14 is non-discriminatory and treats all shareholders and

potential trading platforms equally. The assessment criteria are sharply delineated and

the discretionary powers when making the assessment are strongly curtailed by

providing the Minister with only limited grounds on which he may impose a ban. The

procedure is furthermore proportional. An obligation to notify the intention applies,

whereupon the Minister may impose a ban within a certain period of time. If no ban is

imposed within that time, obtaining a listing on the relevant stock exchange or trading

facility will be allowed. This is in accordance with Article 9 and Article 13(4) of Council

Directive 2006/123.

5.2.3.5. Supervision over activities (Chapter 5)

Chapter 5 in combination with Chapter 10 (information obligations) provides the

Minister with various instruments to supervise the activities undertaken by the

enterprise. The effect of these instruments is explained in paragraph 3.5 and 3.10.

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Articles 31 to 34 inclusive, provide for an ex ante review of all contracts of sale and all

transfers of assets or the (de facto) making available of goods for dual use, intellectual

property rights or business secrets, or services and for the possibility of an ex post

suspension or prohibition of the performance of these contracts. The scope of application

of these powers is limited to those goods, property rights, trade secrets, or services that

carry a specific nuclear non-proliferation risk. In order to properly identify and define this

risk, common ground is found with Regulation (EG) no. 429/2008, the Strategic Services

Act and the Strategic Assets Decree: in so far as the goods for dual use, intellectual

property rights or business secrets or services are designated in this Regulation and

legislation as requiring an export permit, Articles 31 to 34 inclusive, apply.

These Articles are aimed at the pre-phase of supplying an asset or performing a

service and not to the export itself, since the export is already regulated by Regulation

428/2009, the Strategic Services Act and the Strategic Assets Decree. What is concerned

here are the negotiations for concluding a contract, for instance for the enrichment and

delivery of uranium. Enriched uranium and other proliferation-sensitive materials and

information as defined in Regulation 428/2009 constitute an inherent risk for the public

interest and justify the introduction of restrictions and power to control as envisioned in

Articles 31 to 34 inclusive. The restrictions and powers of these Articles are proportional.

Although Regulation 428/2009, the Strategic Services Act and the Strategic Assets

Decree prescribe that a licence is required for the actual supply of proliferation-sensitive

goods and services, Article 31 to Article 33, inclusive, ensure that the designated

enterprise will have certainty at a much earlier stage whether the goods and services

may be supplied. The order in council provided in Article 31(4)(b), and the exemption

pursuant to Article 32 for entering negotiations and concluding agreements in respect of

those goods and services is decisive for the application of Dutch, German and British

export control. In the event of export control, earlier considerations of the three

Contracting States will be taken into account. Regulation 428/2009 also does not provide

any guarantees for the export of materials from production facilities located outside the

European Union. Articles 31 to 34 inclusive, allow the Minister to influence transactions

and deliveries originating from, for example, the production facility in the United States.

The legislative proposal also includes the power to review investments in new

production facilities or considerable extension of existing ones (Articles 35 to 37

inclusive). In paragraph 3.5.3 the necessity of this power is explained. This power is

proportional: depending on the nature and the location of the production facility the

restrictions will be lighter and the possibilities for the Minister (and the competent

authorities of the Federal Republic of Germany and the United Kingdom) to review such

an investment will be more limited. Important to note in this respect as well is that this

power also extends to (proposed) production facilities in countries that are not

Contracting States to the Treaty of Almelo, the Treaty of Cardiff, of the Treaty of

Washington, for which additional safeguards are required in respect of non-proliferation,

security and safety.

The legislative proposal includes a regime to review whether a significant expansion of

an existing production facility located outside the territory of the three Contracting

States, a new production facility within the territory of the three Contracting States or

the acquisition of assets for dual use that do not form part of the ordinary business

activities will present an additional risk to the public interest (see Articles 36 and 38).

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The necessity for this power is explained in paragraph 3.5.4. This is a proportional

restriction that is not stricter than necessary.

The legislative proposal also grants the Minister a power to review certain divestments.

The necessity for this power is explained in paragraph 3.5.5. It is necessary to review the

divestments as defined in Article 1 in advance by the Minister in view of the safety and

proliferation risk attached to precisely those types of divestment.

Lastly, Article 43 prohibits the designated enterprise from actively contributing directly

to the production of (elements of) nuclear weapons or other nuclear explosives. This

corresponds with the prohibition stipulated in the Treaty of Almelo and contributes

towards preventing the proliferation of nuclear weapons and the related technology and

materials. The same holds for Article 44 of the legislative proposal, which provides a duty

of care in this regard. Both provisions are objective and transparent and may be known

to all. There is no other way to realise the stated objective. Inspection after the event is

too late: by that time the designated enterprise has already made the contribution or has

already cooperated with the production of a nuclear weapon or other nuclear explosive.

5.2.3.6. Joint ventures (Chapter 6)

Chapter 6 includes various provisions that cause a major part of the Minister’s powers

under this legislative proposal to be effectively applicable to the joint venture in which

the designated enterprise takes part also (see e.g. Article 47). The justification for having

these powers apply also in respect of joint ventures corresponds with the justification for

the powers laid down in the other chapters of the legislative proposal, as the joint

ventures envisioned and regulated in this chapter are of a permanent nature and concern

the enrichment of uranium, the production of radioactive substances and the

development and application of the technology for these activities. The forming,

changing, or discontinuation of these joint ventures therefore pose an inherent risk to the

public interest. This also explains the special powers of Article 48 of the legislative

proposal: the possibilities for the Minister to directly hold the joint venture liable are

limited, as the joint venture is not necessarily established in the Netherlands (both

factually and in the sense of not having its registered office there). This makes it

necessary to exert control over the joint venture via the designated enterprise.

5.2.3.7. Financial management (Chapter 7)

Essential in the obligations of the designated enterprise pursuant to Chapter 7 is the

requirement that the designated enterprise must be financially solid and have sufficient

means at its disposal to satisfy all decommissioning costs as and when they are due.

Both obligations do not directly restrict the execution by the designated enterprise of the

internal market freedoms.

Where making a nuclear management plan mandatory in order to cover the

decommissioning costs would constitute an obstruction, this obstruction is justified both

in order to protect the public interest (public security) and the environment and the

public health. It also satisfies the European ‘polluter pays’ principle.

The prohibition of Article 71 erects a ‘ring fence’ around the designated enterprise and

its subsidiaries and prevents that financial risks affect the securing of the public interest.

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The restrictions are proportional: financial transactions carried out within the context of

the normal business activities are still allowed. Exceptions to the ban are possible.

However, performing such financial transactions and services is not a core activity of the

URENCO Ltd. group and the enterprise will not be much affected by these restrictions.

5.2.3.8. Powers of intervention (Chapter 8)

For an explanation of Chapter 8 (Article 72), reference is made to paragraph 3.8. of

this explanatory memorandum The proportionality of the measures is also taken into

account. In addition, it is indicated in respect of the instructions the Minister may give

pursuant to Article 72 for executing certain activities, whether it concerns a public

procurement in the EU in accordance with the Public Procurement Directive. This is not

the case. No client-contractor relationship is created. It is a unilaterally imposed

obligation that does not create an onerous title. Nor are the Minister’s designations

automatically directed to activities to be carried out on behalf of the State. Offering

technical support to the IAEA is not an activity for the benefit of a State, but for the

benefit of an international organisation.

5.2.3.9. Chapters 9, 10, 12, 13 and 14

These chapters contain supporting powers and obligations for securing the public

interest and do not additionally restrict the freedoms of the internal market.

5.2.3.10. Reviewing the powers in their mutual relationship

In the preceding paragraphs, the powers of the Minister were reviewed individually for

compliance with the applicable provisions of the Rome Treaty and the relevant case law

of the ECJ. The various powers affect one another, which raises the question whether, in

view of other available powers, some (other) powers are justified. The mutual

relationship between the powers essentially raises the question of proportionality.

In this connection, it is first of all important to note that it has become apparent that

no power in and by itself offers sufficient safeguards for the protection of the public

interest or public order and safety. Of further note is that the statutory system of powers

laid down in this legislative proposal has only limited overlap. Where overlap might occur,

it has been endeavoured to clearly set them apart. The statutory system is furthermore

structured in such a manner that the autonomy of the designated enterprise and the

decisions of the board of the designated enterprise are respected to all possible extent.

Only where a certain element of the decision might carry a risk, will intervention follow,

but solely in respect of that specific element. This is, for instance, expressed in respect of

the investment policy of the designated enterprise that forms part of the normal business

activities.

In conclusion, it is noted as regards non-proliferation of enrichment technology and the

dissemination of fissile material that the European Union itself also applies a policy based

on the precaution principle and that assumes strong powers to counter the proliferation

of weapons of mass destruction. See in this connection considerations 14 and 15 of

Regulation 428/2009. The policy that the Contracting States follow with the Treaty of

Almelo and the Treaty of Cardiff and that finds its basis in this legislative proposal is

entirely in line with this. It may therefore be concluded that the proposed statutory

regime is necessary in its entirety in order to protect the public security and that it has

supplementary effect in relation to the European frameworks that already apply.

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5.2.3.11. The Services Directive

The Services Directive is applicable to this statutory framework (see paragraph 5.2.1,

conclusion). Articles 9, 14, 15 and 16 of the Services Directive in particular are relevant,

in combination with the requirements set for the licensing system by Chapter III of the

Services Directive. The public interest constitutes an imperative reason of overriding

interest of the public security, which may justify a breach of Article 16 of the Services

Directive. The reasons for justifying the various powers have already been given earlier

and need not be repeated here.

The effect of the applicability of the Services Directive is that requirements and permits

that are not directly related to performing a service activity or to market access to a

service, are subjected to the frameworks of the Services Directive. The Services Directive

imposes limits and restrictions on the possibilities a Member State has to regulate a

service provider, also where for instance the board of the service provider or the

shareholders of the service provider are concerned. Article 15(2)(c) of the Services

Directive stipulates that requirements concerning the shareholding of an enterprise must

be subjected to an assessment as prescribed in Article 15(1) and 15(3). The judgment of

the ECJ of 16 June 2015, Rina Services, case C-593/13, also bears out that for instance

requirements made of the registered office of a service providers are affected by the

restrictions of the Services Directive.

The requirements set for licensing systems in Chapter III of the Services Directive are

respected: the Services Act fully applies. It has been considered for each licensing

system separately whether it was necessary to depart from the principle of the licence

granted by operation of law as regulated in Article 28 of the Services Act and paragraph

4.1.3.3 of the General Administrative Law Act. The conclusion is that all decisions taken

on the basis of this legislative proposal must be excluded from the effects of paragraph

4.1.3.3 of the General Administrative Law Act. To this end an exception is included in

Article 96.

5.2.4. Competition Law

As regards the relationship with community competition law, it is noted that the

Minister’s power – in particular in the event where a shareholder gains control over the

designated enterprise – is compatible with Council Regulation (EC) no. 139/2004 of 20

January 2004 on the control of concentrations between undertakings (OJ 2004, L 24;

hereinafter referred to as: “EC Merger Regulation”).

Article 21(4) of this Regulation provides that within the context of a concentration,

Member States may take appropriate measures to protect legitimate interests other than

those taken into consideration by this Regulation. The measures the Member States may

take must, however, be compatible with the general principles and other provisions of

Community law. In addition, the Member States are obliged to submit the interests they

wish to protect for review by European Commission in advance (Article 20(4), third

paragraph, Merger Regulation.

There is one important exception to this obligation to report interests to be protected:

the interests of the protection of the public security, the pluriformity of the media and

the rules concerning supervision. In the present instance the interest of public security is

protected by means of supervision on the acquisition of shares. Thus, the Merger

Regulation does not prevent the introduction and exercise of this power.

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Lastly, it must be determined whether the possibility of granting compensation in

accordance with Article 48(5) and Article 72(6) of the legislative proposal constitutes a

form of state aid within the meaning of Article 107 Rome Treaty. The basis for offering

compensation in accordance with Article 48(5) is limited to the costs related to the

execution of the designation pursuant to Article 43(1) and Article 48(2)(a) or (c). In

these instances the designated enterprise is required by the State to execute certain acts

that may be harmful or inopportune from a business point of view and that force the

designated enterprise to incur costs it would not otherwise incur.

Article 72(6) provides for an obligation on the part of the Minister to provide for

compensation if an instruction given by the Minister is to be obeyed in accordance with

Article 58(1) and (2)(c). In these situations as well the enterprise is forced to incur costs

it would not otherwise incur. Also, these activities may put an extra burden on the

designated enterprise, since these activities (e.g. the enrichment of uranium further to

an instruction) constitute a direct intervention in its business operations. For this reason

it is appropriate that the compensation includes a reasonable profit margin.

Compensation of the costs or profit margin will also take into account the proceeds

realised by the designated enterprise with the execution of the order. This is in order to

avoid overcompensation.

Neither of these instances constitutes state aid. This may be inferred from the

precedents of the ECJ in those instances in which state intervention resulted in loss,

creating an obligation to compensate. No state aid is offered in the view of Community

case law (see judgment ECJ, joined cases 106/87 – 120/87, Asteris, grounds 23 and 24).

5.2.5. Charter of Fundamental Rights of the European Union

The definition of public interest in the legislative proposal contains a reference to the

grounds of justification of Articles 346(1)(a), 52(1), and 65(1)(b) Rome Treaty. Article

51(1) of the Charter of Fundamental Rights of the European Union (Charter of 7

December 2000, OJ EU 2000, no C 364, as amended on 12 December 2007, OJ EU 2007,

no C 303; “the Charter”) and the case law of the ECJ (judgments of the ECJ 17 July

1997, case C-28/95, Leur-Bloem, at 28-34, and 30 April 2014, case C-390/12, Pfleger, at

30-36) bear out that the Charter applies to these instances. A national regulation that

appears to obstruct the exercise of one or more fundamental freedoms safeguarded by

the Rome Treaty may only stipulate one of the exemptions under Community law for

justifying this obstruction in so far as this would be in accordance with the fundamental

rights the observance of which is ensured by the ECJ (see case C-390/12, Pfleger, under

36).

In light of this, two fundamental rights laid down in the Charter deserve special

mention. Article 17 of the Charter protects the right of ownership. The protection offered

by this provision corresponds with the protection offered by Article 1 of the First Protocol

to the ECHR (hereinafter referred to as: Article 1, First Protocol, ECHR) (see also the

explanation to Article 17 in the Explanatory Notes to the Charter, OJ 2007 no. C 303, p.

17 ff). Paragraph 5.3 extensively discusses the compatibility of the ECHR, specifically

Article 1, First Protocol, ECHR. This analysis applies by analogy to the compatibility with

Article 17 of the Charter.

Apart from Article 17 of the Charter, Article 16 deserves special mention. This

fundamental right protects the freedom of entrepreneurship. This right is not absolute:

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the State may intervene in this freedom in numerous ways by invoking the general

interest, by imposing restrictions on the exercise of the economic activity (judgment ECJ

28 November 2013, case C-348/12 P, Kala Naft, under 121-123). In the above-

mentioned paragraphs 5.1. to 5.2.4 inclusive, the compatibility of the legislative proposal

and the powers and obligations of the designated enterprise were discussed. In line with

the case law of the ECJ, a review of the statutory requirements against the requirements

of the free movement provisions of the Rome Treaty also constitutes an assessment of

the compatibility with Article 16 of the Charter (see the earlier-cited case C-390/12,

Pfleger, at 64). Thus, the legislative proposal is also compatible with Article 16 of the

Charter.

5.3. European Convention on the protection of human rights and fundamental

freedoms (ECHR)

5.3.1. General

The legislative proposal includes a large number of requirements and procedures that

embeds the functioning of the designated enterprise in a legal framework. The possible

risks of non-compatibility of this legislative proposal with the ECHR are to be found in the

protection of the entitlement to the peaceful enjoyment of possessions of Article 1, First

Protocol, ECHR. The measures described in the legislative proposal regulate the right to

peaceful enjoyment of possessions within the meaning of Article 1, First Protocol, ECHR

in a way that is permitted. After all, not every form of regulation constitutes an

infringement of the entitlements of Article 1, First Protocol, ECHR.

A certain degree of regulation of the designated enterprise and the activities it

undertakes is inextricably bound to the role of the government to let economic activities

take place in an orderly fashion, subject to and with due protection of the public interest

that may be jeopardised by them. The admissibility of rules creating a legal framework

for the designated enterprise and the activities it undertakes also depends on the

circumstance of each instance and on the nature and content of the regulation. For

instance, not every regulation will be contrary to Article 1, First Protocol, ECHR, nor

directly affect the peaceful enjoyment of possessions. This will only have to be

considered in respect of provisions and powers that clearly affect the peaceful enjoyment

of possessions.

Given this approach, the most drastic powers in the legislative proposal require special

attention: the provisions on shareholders and their shares (Articles 15 to 30 inclusive),

investments and divestments (Articles 35 to 42 inclusive), the powers concerning joint

ventures in which the designated enterprise partakes (specifically Article 48) and the

power to have certain activities carried out by the designated enterprise (Article 72).

These provisions give the Minister considerable powers to exert influence on the

operation of the designated enterprise. The board of the designated enterprise is

therefore not entirely free to decide the management, nor can it freely enjoy the

participating interests the designated enterprise has in joint ventures.

This may constitute a restriction of the peaceful enjoyment of possessions by the

designated enterprise. On the whole, the implementation of the legislation may, on the

grounds mentioned in the legislative proposal, cause the value (goodwill) of the

enterprise to drop. The European Court of Human Rights (hereinafter referred to as:

“ECtHR”) regards this as a restriction on possessions as well (ECtHR, judgment of 26

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June 1986 Van Marle v. the Netherlands).

At the same time, the ECtHR recognises that in order to protect the general interest,

regulating possessions and their use and subjecting them to restrictions may be

legitimate, provided that a number of conditions are met. According to the ECtHR, the

legislator has a wide margin of assessment in this regard. Violation of a property right is

justified if the property is regulated and it meets the requirements of legality, legitimacy,

and proportionality (”fair balance”).

The legality requirement entails that the regulation must be exact, accessible, and

foreseeable. The legitimacy requirement demands that the legislator aims at attaining a

general interest with the regulation of the use of property. Both the choice of the

objective, and the qualification “general interest” again grant the legislator a wide margin

of assessment. This margin is exceeded if the choice of the legislator is devoid of all

reason.

Paragraph 5.2.1 extensively discusses the public interest that is served with this

legislative proposal and the powers contained therein. In addition, it may be noted that

the restrictions and procedures have been codified and can be known to all who are

subjected to these frameworks. The discretionary powers of the Minister are regulated

and restricted by law. Furthermore, under administrative law, virtually all decisions taken

by the Minister under this Act is open to objection, to be lodged with the Minister, and to

appeal to the administrative court.

When considering whether a “fair balance” is struck in this legislative proposal, such

consideration must be made at two levels. First of all at the level of the statutory

regulation: is there a reasonable degree of proportionality between the applied

instruments and the intended objective; in other words, a “fair balance” at statutory level

between the protection of individual rights and the general interest; and secondly at

individual level: even if the legislator remained within the wide margin of assessment it is

entitled to, and thus there is a “fair balance” at the level of legislation, this still does not

mean that a “fair balance” is struck if an “individual and excessive burden” is placed on a

specific individual.

As regards the “fair balance” test at statutory level, reference may be made to

paragraph 5.2.3, in which the possibilities to apply less intrusive forms of regulation are

extensively discussed. Reference may also be made to paragraph 2.4, in which

alternatives for this legislative proposal are discussed. As regards the “fair balance” test

at individual level, reference may be made to paragraphs 5.2.3.1 to 5.2.3.9, inclusive.

Additionally, it may be noted that two specific powers provide for a compensation for the

costs incurred by the designated enterprise or its subsidiaries (Article 48(5) and Article

72(6) and as regards Article 72, including a reasonable profit mark up. In this way, a

“fair balance” is realised for these two specific powers. It has to be acknowledged,

however, that as regards Chapter 4, which provides a statutory framework for the share

ownership of the designated enterprise, an additional assessment of the compatibility

with Article 1, First Protocol, ECHR is required (see paragraph 5.3.2).

Lastly, Article 14 of the Dutch Constitution should be briefly mentioned. This provision

protects private property against expropriation by the state (Article 14(1) Constitution),

or against the destruction, rendering useless or restricting the enjoyment of the right of

ownership (Article 14(3) Constitution). The protection offered by this provision basically

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corresponds with the protection offered by Article 1, First Protocol, ECHR.

In this connection it may be noted that this legal proposal provides in two respects for

possible compensation (see the explanatory notes to Articles 48 and 72). Compensation

is granted by Ministerial decision, which makes it open to objection and appeal.

The distinction between compensating all costs (without profit margin in Article 48)

depends on the nature of the designation order and the activities the enterprise is

required to take in the execution thereof. This compensation furthermore removes any

inconsistencies with Article 14(3) of the Constitution. There is consequently no

compulsory purchase within the meaning of Article 14(1) of the Constitution.

5.3.2. Regulating ownership – providing a legal framework for share ownership

Regarding the shareholders of the designated enterprise it is first of all noted that they

will only be able to invoke violation of Article 1, First Protocol, ECHR in rare isolated cases

(ECtHR, Agrotexim v. Greece, judgment of 26 September 1995, grounds 64-66). This will

only be otherwise where the statutory restrictions specifically concern a direct

infringement of the restriction of the rights that are usually granted to a shareholder

(ECtrHR, Agrotexim v. Greece, judgment of 26 September 1995, ground 62). Solely the

specific framework of Chapter 4 may possibly constitute an infringement of property

rights. For the rest, the provisions of the other Chapters of the legislative proposal do not

directly affect or restrict the rights that are normally vested in a shareholder.

Shares (and the rights attached to them) are regarded as ‘possession’ within the

meaning of the First Protocol ECHR. They represent the economic value of an enterprise.

The protection of ownership rights in the First Protocol is very broad in scope. The

provisions on share ownership (Articles 15 to 28 inclusive) may infringe ownership rights.

An infringement of ownership rights is justified in the event of regulation that satisfies

the requirements of legality, legitimacy, and proportionality (“fair balance”).

The legislative proposal does not provide for expropriation of ownership by the Minister

or by the competent authorities of the Federal Republic of Germany or the United

Kingdom. The legislative proposal does provide, however, for regulating ownership.

Some investors are excluded from acquiring or holding shares, whereas other investors

may only acquire and hold shares up to a specific threshold. Lastly, the rights of

shareholders may temporarily be restricted and in the ultimate instance they may be

forced to sell their shares.

It should first of all be noted that the case law of the ECtHR in principle regards

legislative measures that may, in a general sense, affect possessions as regulation and

are not immediately equated with expropriation (Decision European Court of the Human

Rights, 9 March 1989, case Banér v. Sweden, Application No. 11763/85, AT 5, third

paragraph). The fact that elements related to the right to ownership were restricted does

not make these restrictions a form of expropriation (ECtHR, Sporrong and Lönnroth,

judgment of 23 September 1982, Series A no. 52, grounds 60 -63).

Although investors are not completely free to acquire, hold and dispose of shares in

the designated enterprise, the statutory regime does in fact uphold the marketability of

the shares. The holder of the share is entitled to dispose of shares, even if the Minister

instructs, pursuant to Article 23, the sale of shares within a reasonable period of time.

Thus, there is always the possibility to maintain control of the shares. The ownership is

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not lost if the Minister temporarily prohibits the exercise of rights attached to a share

pursuant to Article 21 or even instructs the shareholder, pursuant to Article 23, to sell his

shares, in view of the risk for the public interest. Furthermore, in both instances the right

to dividend is preserved, as long as the shareholder respects the statutory obligations.

Article 15 (no transfer to and acquisition by an undesired person) and Article 16

(maximum number of shares permitted and maximum controlling right of 3%) of this

legislative proposal contain an absolute prohibition on disposing of, holding, or acquiring

shares in some instances. These provisions stipulate rules with which a future

shareholder must comply. If an undesired person acquires or holds shares in a

designated enterprise in contravention of these provisions, the Minister may instruct him

to sell those shares. The same is the case in the event of share ownership in

contravention of Article 16 and in the situation in which an investor acquires shares

without having first obtained a declaration of no objection. Article 23(1) to (5) inclusive,

provides for this. Since the investor was not allowed to hold shares in the designated

enterprise in the first place (because this was contrary to the law), his possessions

cannot be said to have been expropriated or regulated if he is instructed by the Minister

to sell its shares.

Article 17 and Article 19 of this legislative proposal concern the possibilities for ex ante

supervision by granting a declaration of no objection to shareholders in listed and

unlisted enterprises. The Minister may refuse to issue the declaration if the public interest

is at risk or if the applicant is an undesired person, and if the threshold value mentioned

in Article 16 is attained and exceeded by a shareholder who was not allowed to attain or

exceed this threshold.

Based on the criteria of Article 17(7) and Article 19(6), the Minister assesses whether

an investor may be issued a declaration of no objection. Consequently, this concerns the

regulation of the possibility to hold or dispose or acquire shares or controlling rights.

Provided these procedural provisions are met, the shareholder is still able to freely

control his shares. This constitutes a regulation of ownership.

Article 21 and Article 23 of this legislative proposal concern ex post supervision by the

Minister. The initial assessment of a shareholder by means of a declaration of no

objection may be reviewed on the basis of new facts or circumstances, including the

conduct of the shareholder, whereby the same criteria are applied as those on the basis

of which the declaration of no objection was issued. On the basis of this consideration

and due to the risk for the public interest, the Minister may decide, pursuant to Article

21, to prohibit the exercise of the rights attached to the shares (with the exception of the

right to dividend). By applying Article 23(3), (4) or (5), the Minister may similarly

instruct the shareholder, if the protection of the public interest so requires, to sell (part

of) his shares, offering him a reasonable period in which to do so.

Both powers are also aimed at shareholders in a designated enterprise that is a listed

company, who, in view of their limited shareholdings, do not require a declaration of no

objection in order to acquire shares. Their shareholding will remain below a certain

threshold and they are generally entitled to be shareholder, provided they do not exceed

the threshold values and do not pose a threat to the public interest. It should be noted

that where Article 23 applies, there is no expropriation or confiscation by a government

body because the shareholder concerned will be given the opportunity to sell his shares

within a reasonable period of time to an investor who is prepared to take over those

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shares. This constitutes a form of regulation of ownership and is supported by the

following of the ECtHR: ECtHR. Tre Traktorer Aktieblog v. Sweden, judgment of 7 July

1989, Application 10873/84, grounds 54 and 55 and ECtHR, case Posti and Rahko v.

Finland, judgment of 24 September 2002, Application 27824/95, grounds 76 and 77 and

judgment of the ECtHR in Denimark (ECtHR, Denimark Limited and 11 Others v. United

Kingdom), Application 37660/97, judgment of 26 September 2000, p. 9 and 10).

The statutory provisions of the legislative proposal entail a restriction of share

ownership, although the shareholder is and remains the owner of the share. This means

that the shareholder is free to dispose of his possessions, provided he does not act

contrary to the statutory provisions. When applying paragraph 2 of Article 1, First

Protocol, ECHR, it must also be considered whether the statutory provisions are

sufficiently accessible, exact, and predictable. The possible restrictions in this legislative

proposal are based on proper and demarcated grounds, and the shareholders are given

the opportunity to take note of them. Thus, the requirement of legality has been met as

well.

A measure aimed at regulating ownership can only be justified if it is taken to serve

the public interest, which in this legislative proposal means securing the public interest.

This includes the essential interests of security of the State, protection of the public

security and compliance with international obligations that contribute towards the

protection of the public security. These interests are at stake with the enrichment of

uranium and the production of radioactive substances for their commercial use. The

imperative nature of these interests requires an effective and efficient protection and

justifies both restrictions of share ownership, such as an ex ante assessment of

prospective shareholders, and ex post mechanisms in the form of prohibiting the exercise

of rights attached to shares or even the compulsory sale of shares.

A restriction in ownership rights must furthermore be in accordance with the principle

of “fair balance”. There are no possibilities to take less intrusive measures to protect the

earlier mentioned interests (see e.g. the explanation in paragraph 5.2.3 and paragraph

2.4). As regards proportionality at individual level, all (future) shareholders are treated

similarly, so no prohibited individual and excessive burden is imposed.

When determining whether the principle of “fair balance” is applied, the ECHR also

examines to what extent complainers have manoeuvred themselves knowingly into a

risky position. Reference is made in this respect to the criterion of active and passive

acceptance of risks. In this legislative proposal it is clear from the start what statutory

restrictions and criteria the shareholders must take into account and which powers are

available to the Minister to ensure compliance. As soon as the shareholder fails to

comply, the shareholder actively accepts the risk that the Minister will prohibit him from

exercising the rights to his shares or imposes an order to sell his shares. As regards the

powers included in

Articles 21 and Article 23(3), (4) and (5) it is noted that the Minister is not obliged to

take such decision.

Article 23(3) refers to an unlisted designated enterprise, whereby the shareholder is

granted a reasonable period of time to sell his shares, taking into account the fact that it

is more difficult to sell shares in an unlisted enterprise than shares in a listed enterprise.

When determining this period all factors are taken into account that may affect the

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possibility to sell the shares to a (third) enterprise to prevent the shareholder from

incurring a loss. Since the shareholder is granted a reasonable period of time to adapt to

the situation, there is no reason to assume that the shareholder is unreasonably

prejudiced.

Under Article 23(4), a holder of shares in a listed enterprise may sell his shares on the

stock exchange at a market price. In the event of a compulsory sale, the transferor will

always receive a market price equal to the price at which the share is traded on the

market at that time.

What holds in respect of all shareholders in a designated enterprise is that these

provisions restrict their possibility to exercise the ownership rights in respect of the

shares to be acquired or disposed of. For this reason it cannot be said that a

disproportional or excessive burden rests on individual shareholders. An individual

shareholder is insufficiently distinguished from other shareholders in the designated

enterprise to state that an “individual and excessive burden” exists. For this reason, no

right of compensation has been included.

6. Implementation, enforcement and supervision

6.1. Implementation

The public interest is presently secured via the majority stake the Dutch State and the

United Kingdom hold in the capital and their participation in the Joint Committee under

the Treaty of Almelo and the Treaty of Cardiff. The legislative proposal explicates the

elements being controlled via these instruments. For some of these elements the

supervision and enforcement regime will become stricter. This will create a need for

additional capacity and specialist knowledge of the parties mentioned, which in the event

of a change in share ownership will have to be further determined.

For the supervison and enforcement expertise already available within the public

service shall be used, whereby the responsibilities en current practice as to supervision

will be fully respected, may be considered. Extra knowledge and experience shall be

established for those aspects for which no responsible supervisor or subdepartment is

available.

As regards the individual elements of this legislative proposal the following is noted.

6.1.1. Structure and control mechanisms (Chapter 2)

A designated enterprise is required to submit a request for approval to the Minister for

any amendment to the articles of association or the terms and conditions of

administration, or of a dissolution, merger, demerger, conversion or relocation of

corporate seat. Such acts are expected to be executed only rarely. Compared to the

current situation, the implementation and enforcement of these provisions will not result

in an additional burden since these changes are not, or only seldom. executed and

submitted and assessed by the Joint Committee in the present situation, either.

6.1.2. Executive directors, non-executive directors and other officers (Chapter

3)

The appointment of executive directors, non-executive directors and other officers

holding certain confidential key positions requires the issue of a declaration of no

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objection, which is preceded by a security screening. In the current situation, all

employees of URENCO Nederland B.V. in Almelo, including the executive directors, non-

executive directors and other officers holding confidential positions, are already subjected

to security screenings by the security service. This is also the case, mutatis mutandis, in

respect of the directors and other officers of the URENCO group in other countries. The

legislative proposal codifies this practice. The total burden of the security screenings and

monitoring is more or less equally divided between the Dutch, British and German

competent authorities. New appointees are usually screened beforehand by the security

service of one of the three Contracting States. In addition, each Contracting State

regularly monitors the employees within their own territory on security risks. Compared

to the existing situation, these provisions will not result in an additional supervision and

enforcement burden.

6.1.3. Shareholders, shares and control, and exercising rights attached to

shares (Chapter 4)

The disposal and acquisition of shares in the designated enterprise is made subject to

restrictions and conditions, whereby as regards enforcement distinction must be made

between three scenarios:

-1. status quo: shares held or indirectly controlled by the three Contracting States;

-2. private sale of (part of) the shares in the designated enterprise;

-3. application for a listing of (part of) the shares in the designated enterprise.

The legislative proposal defines in Articles 15 to 20, inclusive, prohibitions and

restrictions regarding share ownership. In order to assess whether a candidate

shareholder poses a possible threat to the public interest, the following factors are taken

into account, which must also be considered in their mutual relationship:

● analysis of the (underlying) ownership structures and relationships;

● analysis of the financial structure and relationship and the related influence of

third parties;

● analysis of the track record as regards security, nuclear safety, security and non-

proliferation;

● investigation of possible close ties with undesired persons;

● analysis of the security situation in the country of establishment;

● investigation of relationships with states that have not signed or are in breach of

relevant international treaties and obligations;

● availability of sufficient and verifiable information on the proposed acquirer.

Specifically, the above implies that the relevant country and investor must be

reviewed. This review is carried out by one of the Contracting States, whereby each

Contracting State retains an independent right of veto. The burden of the review will be

shared on the basis of available expertise and capacity.

If the review is carried out by the Minister, the Minister will be authorised to issue the

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declaration of no objection, which he will do on the basis of information and analyses

obtained from public and non-public sources. A controlling role for the NCTV is provided

for in respect of the acquisition of these sources. Information and a risk analysis may be

provided, in respect of the assessment of natural persons, by the General Intelligence

and Security Service, AIVD. As regards the screening of investors that are established in

the Netherlands, Justis, the Ministry of Justice Agency for Scrutiny, Integrity and

Screening may provide insight into the relevant relationships between the shareholder

and persons and enterprises affiliated with him. In this respect information will be

processed from the commercial register, the municipal personal database, the central

insolvency register and public sources (so-called network drawings). Until the present,

Justis, the Ministry of Justice Agency for Scrutiny, Integrity and Screening has carried out

only limited international scrutiny. Specifically in the event of an application for a listing

on a stock exchange, the legislative proposal finds common ground with the powers and

obligations concerning transparency as laid down in the Securities (Bank Giro

Transactions) Act and the Act on Financial Supervision. The legislative proposal includes

the necessary regulations to allow Justis, the Ministry of Justice Agency for Scrutiny,

Integrity and Screening to provide the Minister with the necessary information in

accordance with the Legal Entities (Supervision) Act (see Article 89). Lastly the Ministry

of Economic Affairs shall co-ordinate the actions referred to in 6.1.

The anticipated enforcement effort in respect of the implementation of this Act

depends on the scenario and on the related frequency in changes in the share ownership.

If no changes occur in the share ownership, these provisions will not or hardly have to be

applied. In the event of a private sale, the scrutiny mentioned above must take place for

all intended transactions. In the event of an application for a listing at a stock exchange

this obligation will apply to all proposed transactions whereby a shareholding of 3% or

more is acquired as well as for all threshold percentages stipulated for the shareholding.

Also, in the event of an application for a listing, it will not be likely that a situation arises

in which a (new) shareholder acquires an equity interest in excess of the threshold value

of 3% or tries to exercise control. Where the situation so arises, a review is required

afterwards if this specific equity interest does not reach the first threshold of 10% with

accompanying ex ante review, but questions are nonetheless raised from the perspective

of safeguarding the public interest. In addition, upon each change relative to the existing

situation the (underlying) share ownership will have to be monitored.

6.1.4. Supervision over activities (Chapter 5)

Negotiations on concluding agreements for sale or transfer or the (actually) making

available of certain assets for dual use, intellectual property rights, business secrets, or

services is prohibited, unless dispensation is granted.

The powers exercised by the Contracting States via the Joint Committee in this respect

are translated into legislation. The enforcement of Regulation 428/900, the Strategic

Services Act and the Strategic Assets Decree that apply to the export of the assets for

dual use, intellectual property rights, business secrets, or providing services concerned,

remains unaltered. If the current business activities are continued as they are, no or

hardly any additional implementation and enforcement efforts are anticipated. The

approval regime in respect of investments constitutes a codification of the current

practice as executed under the Treaties. This concerns major business decisions, of which

it is not anticipated that they will significantly increase in number.

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6.1.5. Joint ventures (Chapter 6)

In order to protect the public interest, the Minister may also refuse to issue a

declaration of no objection for forming, changing or discontinuation of joint ventures. The

provisions of Chapter 3 may be declared applicable by analogy to positions of trust in

joint ventures. The Minister may in certain instances also issue a designation order to a

designated enterprise or its subsidiary. This is standing practice for the existing joint

ventures (i.e. ETC) and no change is anticipated. Thus, no or hardly any additional

implementation and enforcement burden is anticipated.

6.1.6. Financial management (Chapter 7)

Chapter 7 contains obligations concerning the drafting of various plans by and duties to

disclose of the designated enterprise. If the URENCO Ltd. group remains within the

already stipulated frameworks of prudent financial management, there will be no

additional supervision and enforcement burden. In the existing situation URENCO Ltd. is

required to disclose the information as well and the financial management of the URENCO

Ltd. group is also subject to review, as is standard practice for all companies in which the

state holds an interest. The provisions concerning threatened lack of creditworthiness are

contingency plans. Apart from the safeguards for prudent management offered by the

other provisions of the legislative proposal, an early notification duty enabling timely

intervention is already in place.

6.1.7. Powers of intervention (Chapter 8)

Chapter 8 authorises the Minister to intervene directly in the designated enterprise if a

specific activity cannot be realised in any other way. It is not expected that such action

will be necessary often. Should it occur, the enforcement and implementation burden will

be substantial.

6.1.8. Suspension of payments, bankruptcy and continuity (Chapter 9)

The legislative proposal contains special provisions that will apply if the designated

enterprise or its subsidiaries are declared bankrupt. Although it is not expected that

these provisions will have to be applied, these provisions contain powers for securing the

public interest in an emergency. As a precaution, it must be ensured that there are

sufficient receivers and administrators who have been screened. This implies that a

limited number of people will be subjected to a security screening by way of a

precautionary measure.

6.1.9. Duty to disclose (Chapter 10)

As regards the information the designated enterprise is required to disclose to the

Minister, no or hardly any additional enforcement or supervision efforts will be necessary

compared to the existing situation in which the designated enterprise informs the Joint

Committee.

6.2. Supervision and legal protection

6.2.1. Supervision

In the existing situation, several parties are charged with the supervision and

enforcement of elements that are included in the legislative proposal. This will hardly

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change. The most relevant of these parties are:

• International regulatory commissions, for instance under the Treaty of Almelo or

the Treaty of Cardiff (the Joint Committee and the Quadripartite Committee);

• Ministry of Economic Affairs, as ministry responsible for policy;

• Ministry of Finance, responsible for participation on behalf of the state;

• Ministry for Foreign Affairs, in view of the relationship to foreign policy, non-

proliferation and the granting of export licences for strategic goods;

• Ministry of Security and Justice, in view of the security elements related to the

activities of the URENCO Ltd. group;

• Intelligence and security services, in view of the security screenings and the

confidential positions at the designated enterprise;

• Minister of Infrastructure and the Environment, specifically the Nuclear Security

and Radiation Protection Authority (ANVS), in view of the supervision and

enforcement of the Nuclear Energy Act and as national body charged with the

implementation of the security and safety provisions of relevant international

treaties on nuclear activities and technology;

• in the event of a (partial) sale of shares or an application for a listing on a stock

exchange the designated enterprise will also fall under the supervision of the

Financial Markets Authority, pursuant to the Financial Supervision Act and –

depending on the location of the stock exchange listing – under the supervision of

the financial regulator of the country in which the stock exchange listing takes

place.

With respect to a number of those parties, supervisors have been designated who are

charged with supervising compliance with the provisions in the relevant field in which

these parties operate.

In consultation with the Minister for Security and Justice, the Minister may, pursuant to

Article 88, charge officials of his department with the supervision. The legislative

proposal includes various provisions imposing a duty to disclose and a duty to notify on

the designated enterprise. The intention is to charge officials of the Ministry for Economic

Affairs with monitoring compliance with those duties.

6.2.2. Legal protection

Decisions taken pursuant to this Act are open to objection and appeal. Objections may

be submitted to the Minister, while the District Court may be asked to review the decision

and appeal may be brought before the Trade and Industry Appeals Tribunal (CBb)

pursuant to Article 94. It has been proposed to allow an appeal before the CBb because

the legislative proposal interferes with the business operations of a designated

enterprise. Since this intervention is carried out by the government, the CBb is the

authority of choice to assess any disputes that may arise.

It is possible to ask the District Court to review decisions affecting a designated

enterprise. These include, for instance, the refusal of the Minister to approve an

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amendment of the articles of association, the appointment of an executive or non-

executive director, an instruction to suspend an executive or non-executive director,

prohibiting the realisation of the admission of the shares on a specific regulated market

within or outside the European Economic Area, undertaking certain activities and making

certain investments, entering into joint ventures, the a decision regarding a nuclear

management plan, designations to produce, or obeying instructions from an

administrator, the shareholders and the exercise of controlling rights. Since for the time

being there is only one enterprise concerned, the number of appeal cases is expected to

be limited, in any event as regards the decisions taken against the designated enterprise.

Where decisions against the shareholders are concerned, the number of objections will

also depend on whether the designated enterprise is a listed or an unlisted company and

on the volatility of trading. But in this respect as well it is noted that the number of

potentially interested parties will be limited, and therefore also the potential number of

objections.

As regards the burden placed on the courts, proceedings before the Enterprise Section

should be noted in the event that there is no longer a board. This will only very rarely

happen, so it is not expected that the burden on the courts will significantly increase.

Enforcement under administrative law may result in appeal proceedings. Where

sanctions imposed on a designated enterprise are concerned, the number of potential

appeal cases will be limited, since for the time being there is only one designated

enterprise.

Shareholders may also lodge objections against administrative sanctions. It is not

expected that this will amount to many cases. The number of shareholders that may

potentially be subjected to a sanction is limited to begin with and it is hardly likely that it

will often be necessary to impose sanctions.

Violation of a substantial number of Articles is punishable under the Economic Offences

Act. This may potentially result in an increase in workload for the Public Prosecutor’s

office and the criminal courts. Again, the number of criminal cases brought is expected to

be negligible. The number of potential perpetrators is limited.

6.3. Consultation

The draft of the Act was submitted to the Council for the Judiciary and the Dutch Data

Protection Authority (now the Dutch Privacy Authority). The comments made by the

Council for the Judiciary have resulted in an adjustment of Article 78 and the notes

thereto. Further to the advice of Data Protection Authority the explanatory notes to

Article 90 were amended.

The (translation of the) draft of the Act has also been discussed with the URENCO

group. Relevant information about the business practices, methods, and specific

characteristics of the activities of the URENCO group have been considered when drafting

the various statutory provisions, for instance the Articles on the activities of the

designated enterprise and its subsidiaries (Chapter 5 of the legislative proposal). In

addition, some of the Articles are phrased in such a manner that the designated

enterprise and its subsidiaries will not be confronted with contradictory obligations that

arise on the one hand from this legislative proposal and on the other hand from the rules

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that apply to the establishments of the URENCO group abroad (see in this connection for

instance Article 5 of the legislative proposal). The (translation of the) legislative proposal

has also been discussed with the ETC group. This has resulted in some adjustments in

Chapter 6 of the legislative proposal.

Lastly, it is noted that the legislative proposal has been extensively and harmonised in

detail with the Federal Republic of Germany and the United Kingdom, in view of the

inextricable ties between this legislative proposal and the special shares these States

hold. Apart from the Contracting States to the Treaty of Almelo, the object and scope of

the legislative proposal has also been discussed with the French Republic and the United

States of America, in their capacity as Contracting States to the Treaty of Cardiff, and the

Treaty of Washington, respectively. In addition, several administrative bodies of the

European Commission have been informed of the object and principal elements of the


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II. ARTICLES

Article 1

Article 1(1) contains a number of definitions.

Share

The scope of the term ‘share’ is determined by reference to Article 5:33(1)(b) and

Article 5:45 of the Act on Financial Supervision. This term includes not only shares in

the traditional meaning of Article 79(1), Book 2, of the Dutch Civil Code, but also all

other negotiable instruments that represent a right to exert or that enable exerting

influence in the designated enterprise. The term also includes depositary receipts issued

for shares or comparable negotiable instruments, as well as options and comparable

negotiable instruments that grant a right to acquire a share, depositary receipt, or a

comparable negotiable instrument. The term ‘share’ furthermore includes a share that a

person is considered to have at his disposal pursuant to Article 5:45. In paragraphs

three, four, seven, eight, ten, and eleven of that Article the situations are described in

which a person is considered to have a share at his disposal. A person is, for instance,

also considered to have a share at his disposal if it is kept by a third person for his

account (Article 5:45(4)), or if he may be required under an option to buy a share

(Article 5:45(10)).

This (wide) scope of the term ‘share’ is important in order to be able to effectively

monitor (the control over) the designated enterprise and compliance with the other

rules that are stipulated in order to protect the public interest.

Equity interest

A definition of the term equity interest is included in view of the provisions of Articles 19

and 20, which apply to a listed designated company. This refers to a certain number of

shares or controlling rights.

Affiliated institution

Article 1 of the Securities (Bank Giro Transactions) Act defines ‘affiliated institution’ as a

legal entity that is admitted as such by the central institution. As a rule, these legal

entities are banks or other large financial institutions which hold large blocks of

securities on behalf of their clients. Each affiliated institution is a partner in the giro

deposit of the central institution in respect of the number of shares the affiliated

institution itself administrates for the benefit of third parties for the aggregate number

of securities of the issuing institution held by the relevant affiliated institution in a

collective deposit (see Article 9 and Article 10 Securities (Bank Giro Transactions) Act).

Note that an affiliated institution is itself also an intermediary as defined in Article 1 of

the Securities (Bank Giro Transactions) Act.

Business secret

This definition is in line with the definition of business secret included in EU Directive

2016/943 of the European Parliament and the Council of 8 June 2016 on the protection

of undisclosed know-how and business information (business secrets) against their

unlawful acquisition, use and disclosure (OJ 2016, L157). This definition is of particular

importance in respect of the URENCO group (and the ETC group), since proliferation-

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sensitive technical information is to a large extent not laid down in the form of an

intellectual property right, since this would require (partial) disclosure. A classic

example of a business secret is the “Coca Cola” formula: this is not laid down as an

intellectual property right, but is kept top-secret through very heavy security.

Proliferation-sensitive information may also be qualified as a business secret, since the

Treaty of Almelo and the Treaty of Cardiff explicitly stipulate that this information must

be safeguarded and may only be accessible to authorised persons. Furthermore,

transfers of such information by the URENCO group and the ETC group are strictly

regulated. By including and applying this definition in the legislative proposal it is

ensured that any form of proliferation-sensitive information is regulated by this

legislative proposal, and not just the information laid down in an intellectual property

right.

Listed designated enterprise

A listed designated enterprise is an enterprise the shares of which are admitted to

trading on a regulated market within the meaning of Article 1:1 of the Act on Financial

Supervision. In so far as the designated enterprise is considering filing an application for

a listing on a stock exchange, a review is provided for to determine whether such a

listing may threaten compliance with the obligations of Chapter 4 of this legislative

proposal (see Article 14).

Competent authority (of the Federal Republic of Germany, the United Kingdom of

Great-Britain and Northern Ireland, and the French Republic, respectively)

The Treaty of Almelo and the Treaty of Cardiff grant rights to and impose obligations on

the Contracting States. In each Contracting State an authority is charged with

exercising the powers necessary to effectuate these rights and obligations. Thus, this

authority also possesses powers vis-à-vis a designated enterprise that falls under the

scope of the treaties. Which authority is charged depends of course on the constitutional

law of that state. In respect of the Netherlands, the relevant authority is the Minister.

Apart from the Netherlands, the Federal Republic of Germany and the United Kingdom,

France is also a party to the Treaty of Cardiff. This Treaty has enabled collaboration with

France in the field of ultracentrifuge technology. The current ETC group was formed via

a joint venture of the URENCO group with Areva. Via the ETC group, the URENCO group

and Areva jointly operate and develop ultracentrifuge technology. It is therefore

necessary that the treaty status of the French Republic is also reflected in this legislative

proposal in so far as the designation relates to ETC Holding, which controls the ETC

group.

Compared with the definition of both the other competent authorities, the definition of

competent authority of France contains as extra element that what is involved is the

execution of powers, which that body exercises directly or indirectly. The French

competent authority will not readily have direct authority vis-à-vis ETC Holding, but via

the participation of Areva in ETC Holding as holder of 50% of the shares in this joint

venture, it naturally has indirect powers. The French State holds the majority of the

shares in Areva (Article 2 of the current Décret no. 83-1116 du 21 décembre 1983

relatif à la société des participations du CEA (AREVA)). In 2014, 21.68% of the shares

were held by the Agence des Participations de l’État (French State) and 61.52% by the

Commissariat à l’Énergie Atomique et aux énergies alternatives (a government body).

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Via this shareholding the French State exerts dominant influence over Areva and it is

able via Areva to also exert influence on ETC Holding. The definition of competent

authority of the French Republic expresses this control via the shareholding. The French

State has announced a restructuring of Areva, whereby the majority of the shares in

Areva will remain in the hands of the State.

Custodian of an investment institution

The legislative proposal defines ‘custodian of an investment institution’ as an entity that

has as its object, according to its articles of association, to legally own, whether or not

jointly with holding and administering, the shares or controlling rights of an investment

fund or a fund for collective investments in securities. This definition finds common

ground with the substantive description of the tasks of the custodian as described in

Article 4:37j and Article 4:44 of the Act on Financial Supervision. Thus, it has been

decided to not only find common ground with the term custodian of an investment

institution as provided in Article 49b(1)(d) of the Securities (Bank Giro Transactions)

Act. This is because this term does not yet take into account the role of the custodian at

an icbe, as defined in Article 1:1 of the Act on Financial Supervision and the possibility

that the custodian is not also the legal owner of the securities. By finding common

ground with the substantive description of custodian in the Act on Financial Supervision,

this lapse is repaired.

Unlike a central institution, a foreign institution whose tasks are comparable with those

of a central institution, the affiliated institution, intermediary, or an institution abroad, a

custodian is characterised by the circumstance that the custodian of an investment

institution as defined is the legal owner of the shares of the issuing institution. When an

investigation is conducted into the identity of shareholders in accordance with Article

13(5) and (6) of this legislative proposal, the custodian will be formally identified as

shareholder. However, the custodian is not the entity responsible for taking the de facto

decisions concerning the voting behaviour and handling the share ownership in the

designated enterprise: this rests with the administrator of the investment institution

(see Article 4:37f and Article 5:45(7), of the Act on Financial Supervision).

Central Institution

Securities transactions as regulated in the Securities (Bank Giro Transactions) Act and

as they are executed on regulated markets like Euronext Amsterdam, are a type of

trade in securities that no longer involves the physical delivery of bearer or registered

shares, but that takes place by holding and making changes in the name in which

balances are held by dedicated accounts: securities accounts. The Securities (Bank Giro

Transactions) Act defines several types of securities accounts, based on their specific

function. The present legislative proposal adopts these definitions, providing more

details where necessary. In addition, the Securities (Bank Giro Transactions) Act, and

consequently also this legislative proposal, expressly mentions and defines various

players who are involved in securities transactions and who administrate specific

securities accounts.

In respect of bank giro transactions, the central institution is the starting point in the

custody chain of shares. Article 1 of the Securities (Bank Giro Transactions) Act provides

that a central institution is designated by the Minister of Finance. Presently, Euroclear

Netherlands acts as central institute. According to Article 34(1) of the Securities (Bank

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Giro Transactions) Act a central institution holds giro deposits and is charged pursuant

to Article 36(1) of the Securities (Bank Giro Transactions) Act with administrating these

deposits. A giro deposit comprises all securities of an issuing institution of which the

shares are admitted to the regulated market. If the shares of the designated enterprise

URENCO Holding NV are admitted to a regulated market in the Netherlands, these

shares will be administrated by a central institution in a giro deposit. The central

institution will be entered in the shareholders’ register of the listed designated

enterprise as holder of the shares that are traded on the regulated market via the

securities book-entry transfer system. In this system, Euroclear Netherlands acts as

Central Securities Depository, as defined in Article 2 of Regulation (EU) No. 909/2014 of

the European Parliament and the Council of 23 July 2014 on improving securities

settlement in the European Union and on central securities deposits and amending

Directives 98/26/EC and 2014/65/EU and Regulation (EU) No. 236/2012.

The legislative proposal provides for the possibility that the designated enterprise will

seek a listing on a regulated market abroad. As a result, the central institution will only

fulfil a role as provided for in the Securities (Bank Giro Transactions) Act) for part of the

shares or perhaps for none of them. In order to preserve the effectiveness of the

statutory rules regarding share ownership in the listed designated enterprise, the term

‘foreign institution’, whose function is comparable with that of the central institution is

introduced, in addition to a review of the admission to a specific regulated market as

provided in Article 14 (see e.g. Article 13(7)). This ensures that the obligations imposed

in the legislative proposal on the central institution, also apply to such foreign

institutions in the event of a listing abroad, in so far as the tasks to be executed by

Euroclear Netherlands as central securities depository are wholly or in part assumed by

another central securities depository or if a foreign central securities depository

operates in the Netherlands. This also takes into account the free provision of services

from other EU Member States as regulated in Regulation (EU) No. 909/2014, Article 23.

Deposit

The general term ‘deposit’ is included and defined in this legislative proposal as an

account that includes an equity interest or an account that expresses an equity interest

that is professionally administrated or held and not as a shareholder. This term not only

comprises the giro deposit and collective deposit. The intent is to also include the

securities accounts of foreign institutions that perform tasks that are comparable with

those of the central institution and of the institution abroad. In order to account for the

possibility that foreign securities accounts may be different, the definition of deposit also

provides for the possibility that the securities account does not itself contain the security

interest but is merely the instrument for registering such equity interest and in which

the equity interest is expressed.

Divestment

It is essential, in order to secure the public interest, that no risks arise as regards the

proliferation of classified knowledge or assets for dual use as a result of the sale by

URENCO group of means of production, subsidiaries, or other assets. With this in mind,

this legislative proposal also provides rules regarding divestments. This includes the

selling off of a subsidiary or the sale of shares in a subsidiary or a joint venture and the

issue of shares in a subsidiary. It is impossible to indicate beforehand, also in view of

the rapid developments taking place in respect of sales structures, which other

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divestments may have a comparable effect. For this reason the possibility is provided to

designate other divestments, by way of an order in council.

Jointly managed company

In the elected corporate structure URENCO Ltd. is the jointly managed company and

it ensured that the designated enterprise may at all times, together with the ancillary

companies, effectively exercise the joint control over URENCO Ltd. A definition of a

jointly managed company is included in view of the term subsidiary and the provisions

of Article 4. This concerns a company that is directly or indirectly managed jointly by

the designated enterprise and the ancillary companies. With the exception of shares to

which special controlling rights are attached, the shares are held by the designated

enterprise and the ancillary company jointly.

Subsidiary

In light of the special corporate structure which has been chosen to ensure the

protection of the public interest, it is deemed necessary to explicitly state that URENCO

Ltd. (the jointly controlled subsidiary) and the subsidiary of URENCO Ltd. are

subsidiaries within the meaning of this Act. This is because URENCO Ltd. and its

subsidiaries are not subsidiaries within the meaning of Article 2:24a of the Dutch Civil

Code of a designated enterprise. By defining the term subsidiary it is ensured that

where in this legislative proposal obligations are imposed on a subsidiary, these will also

apply to the jointly managed company URENCO Ltd. and its subsidiaries.

Regulated market

A regulated market is a multilateral system within the meaning of Article 1:1 of the

Financial Supervision Act. According to this Article, a regulated market is a multilateral

system that operates subject to set rules and within which the intentions of third parties

to purchase and sell financial instruments that are admitted to that market are brought

together in order to effect transactions. The system operates in accordance with the

applicable licensing rules and continuing regulation. In practice, the markets concerned

are the stock exchanges of Amsterdam, Frankfurt, London, Paris, or New York. Thus,

the definition does not limit the scope to the Dutch stock exchange.

Classified information

When the joint industrial enterprise URENCO was created by the Treaty of Almelo, a

system of security and classification was devised, as well as the application of

equivalent security screenings by each of the three Contracting States. The starting

points and outlines of the security and classification policy are laid down in Schedule II

to the Treaty of Almelo. The Joint Committee set up by the Treaty of Almelo set up a

security task force, composed of representatives of each of the three Contracting

States, who are specialised in and responsible for security issues. It is this task force

that decides, on the basis of common guidelines, whether and if so which information

must be classified, and the level of classification. In addition, the facilities of the

URENCO group in the Netherlands are governed by the Nuclear Energy Act (Secrecy)

Decree.

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Giro deposit

Giro deposit refers to a securities account that is administrated by a central institution

and in which all securities of a specific type are held of an issuing institution that are

admitted to the regulated market. If the shares of the designated enterprise are listed

on a regulated market in the Netherlands, a central institution will administrate these

shares in the giro deposit.

Asset for dual use

Common ground is found with the definition of EC Regulation 428/2009. Assets for dual

use are items which can be used for both civil and military purposes, or that may be

used in the development and production of weapons of mass destruction or their means

of delivery.

Foreign institution

The legislative proposal takes into account the possibility that the shares in the listed

designated enterprise will not be administrated in the Netherlands in the name of clients

via securities accounts, but by foreign parties who perform tasks that are comparable

with those performed by the intermediary. The legislative proposal consequently finds

common ground with the term foreign institution as it is defined in Article 49a(b) of the

Securities (Bank Giro Transactions) Act. A foreign institution is an institution that has its

registered office in another country and that is authorised under the laws by which that

institution is governed to administrate or maintain securities accounts in the name of

clients.

Intermediary

Article 1 of the Securities (Bank Giro Transactions) Act defines ‘intermediary’ as an

affiliated institution, investment firm, or bank within the meaning of Article 1:1 of the

Act on Financial Supervision that is authorised pursuant to that Act to provide

investment services, or to conduct the business of a bank, and that administrates

securities accounts in the Netherlands in the name of its clients. In other words, an

intermediary is a party that administrates securities in the securities system for a third

party via a securities account. The aggregate of all securities of an issuing institution

that are managed or administrated by the relevant intermediary are held in a collective

deposit.

The distinction between an affiliated institution and an intermediary is found in the fact

that an affiliated institution is a direct participant in a giro deposit, whereas an

intermediary is not, unless the intermediary itself is an affiliated institution. The

intermediary is a participant in the collective deposit of the affiliated institution. It is

consequently possible that another intermediary is in turn a participant in the collective

deposit of the first-mentioned intermediary. Thus, a layered custodial chain for

securities may be created in respect of shares, in which various intermediaries in turn

become participants in a collective deposit of another intermediary. An intermediary

that administrates shares for its own account and risk, rather than on behalf of its

clients, is not regarded as an intermediary within the meaning of the Securities (Bank

Giro Transactions) Act, but as a shareholder in the listed designated enterprise.

International obligations

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This term includes all obligations imposed on the Netherlands (as well as on the other

Contracting States to the Treaties of Almelo and Cardiff) by the treaties included in the

description in respect of nuclear weapons, nuclear material, nuclear activities, biological

and toxic weapons and nuclear security. In addition, it includes obligations arising from

general treaties concerning the European Union and the United Nations Charter, since

these treaties determine the conduct of states towards each other in a general sense,

among other things in the field of security and economic relations.

Investment

The term investment includes four types of activities. This distinction of four types is

determined by the powers the Minister and the competent authorities of the Federal

Republic of Germany and the United Kingdom may exercise. The supervisory regime will

after all have to be stricter in respect of the construction of an entirely new production

facility in a third country than in respect of the new construction or expansion of an

existing facility in one of the three Contracting States. A specific approval regime applies

to each type of investment.

Sub (a) and sub (b) concern investments outside the territory of the three Contracting

States. Sub (a) concerns investments that are related to the creation or commissioning

of a (new) production facility, whereas sub (b) is concerned with a significant expansion

of the production capacity of an existing production facility outside the territory of one

of the three Contracting States. Sub (c) concerns the creation or commissioning of a

new production facility within the territory of the three Contracting States. Sub (d)

concerns the purchase of assets for dual use, intellectual property rights, business

secrets, or services or a security right or right of use created thereon, the procurement

of which falls outside the scope of the normal business activities and in respect of which

a licence requirement applies by or pursuant to the Strategic Services Act, the Strategic

Goods Decree or under a number of provisions of Regulation 428/2009.

Sub (e) provides for the possibility to designate by order in council other investments

that may also be brought under the scope of application of this legislative proposal.

Multilateral trading facility

A multilateral trading facility is a multilateral trading facility within the meaning of

Article 1:1 of the Financial Supervision Act. According to this Article a multilateral

trading facility is a system operated by an investment undertaking in which various

purchase and sale intentions of third parties pertaining to financial instruments are

brought together based on non-discretionary rules, in such a fashion that they lead to

transactions in accordance with the applicable rules for granting authorisation and

continuous supervision. They are really alternative, less well-regulated securities

exchanges. Examples of multilateral trading facilities are Alternext and The Order

Machine.

Ancillary company

Paragraph 3.2.2. gives an explanation of the new structure of the URENCO group. The

Dutch legal entity URENCO Holding NV, the British legal entity URENCO Holding Ltd and

the German legal entity URENCO Holding GmbH are ancillary companies

(nevenmaatschappijen). The three legal entities share the same board. The members of

the executive boards of these three legal entities also make up the board of the jointly

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managed company, i.e. URENCO Ltd. Within the URENCO group the three ancillary

companies together form the parent companies of the rest of the URENCO group. The

term ‘ancillary company’ is mainly relevant for the manner in which the decision-making

process of the competent authorities of the three Contracting States concerning the

URENCO group is shaped.

Undesired person

Securing the public interest, including the security of the state, cannot be reconciled

with the possibility of third countries on which sanctions are imposed by the United

Nations in connection with a threat to the peace, breaking the peace, or acts of

aggression, acquiring the ownership of or an interest in or control over a designated

enterprise. The definition of undesired person therefore first of all includes these

countries. Undesired persons are additionally countries in respect of which the European

Union has decided to sever or fully or partially restrict economic or financial ties,

pursuant to Article 215 of the Treaty. This also applies to natural persons, legal entities

or non-state groups or entities against which measures are adopted pursuant to Article

215(2), Rome Treaty. Sub (a) also identifies as undesired person persons and entities

on whom a restrictive measure is imposed pursuant to the Sanctions Act 1977. These

persons or entities will in large part also be regarded as undesired person pursuant to

measures adopted in Chapter VII of the Charter of the United Nations or in Article 215

Rome Treaty. However, the scope of restrictive measures pursuant to the Sanctions Act

1977 also encompasses natural persons, legal entities, states and other entities against

which specific measures are taken in order to comply with other treaties, decisions, or

recommendations of international organisations or international agreements concerning

the enforcement or the recovery of the international peace and security, the promotion

of the international rule of law, or the fight against terrorism. The special provisions of

the articles of association of URENCO Holding GmbH and of URENCO Holding Ltd. aimed

at securing the public interest will define undesired person as also including persons to

whom a restrictive measure applies under the sanctions laws of the Federal Republic of

Germany or the United Kingdom.

Sub (b) and sub (c) are aimed at securing to all possible extent the safeguards the

Treaty provides in respect of non-proliferation of nuclear weapons in connection with the

shareholding in a designated enterprise. Sub (b) specifies the natural persons and legal

entities that are nationals of and that are domiciled in, or have their registered office

and central management in, a state of which the United Nations or the European Union

have established that it violates the Treaty on the non-proliferation of nuclear weapons

or an agreement implementing the obligation of Article III of that Treaty.

Sub (c) also considers as undesired persons natural persons or legal entities in states

that are not party to the Treaty on the non-proliferation of nuclear weapons or to an

agreement implementing Article III of that Treaty. The phrase ‘party to’ expresses that

the Treaty on the non-proliferation of nuclear weapons is binding on a State, i.e. in

accordance with Article 11 of the Vienna Convention on the Law of Treaties, the consent

of a State is expressed by signature, exchange of instruments constituting a treaty,

ratification, acceptance, approval or accession, or by any other means if so agreed.

Public interest

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The term public interest has already been discussed in paragraph 1.3. In addition, it is

noted that the most logical approach, from a technical and transparency point of view,

is to refer in the definition to the provisions cited in the Rome Treaty. In doing so,

common ground is found with European law and a term of reference exists of what

‘public interest’ is meant to signify.

Joint venture

A joint venture can take various forms. A designated enterprise or a subsidiary may,

together with another enterprise, incorporate a separate legal entity or take a

participating interest therein. The venture may also have a different form, e.g.,

contractual commitment between the parties to enter into a (durable) collaboration.

There must exist a durable collaboration in the field of uranium enrichment, the

production of radioactive substances, or the development and application of technology

for enrichment or production. The definition of joint venture does not include non-

permanent collaborations. Section 6 of the legislative proposal does not govern these

temporary forms of collaboration. Where these other forms of collaboration concern

assets for dual use, Article 31 of this legislative proposal may apply (see Article

31(2)(c)). Other forms of collaboration that do not concern assets for dual use nor carry

a proliferation risk in other respects, are not included in the scope of application of this


The most obvious example of such a joint venture is the ETC group, in which the

URENCO group and Areva work together in the field of research and development of

ultracentrifuge technology, the manufacture of gas centrifuges, and the related

technology and activities.

Alert

The legislative proposal provides for the possibility that the Minister of Security and

Justice, further to a request of the Minister, issues an alert concerning legal entities.

This alert is based on the risk report as provided for in the Legal Entities (Supervision)

Act. In order to avoid confusion with this risk report, it is decided to use a different

term.

Supervisory committee

Article II of the Treaty of Almelo provides for setting up a Joint Committee. The task of

this committee, which is composed of representatives of the three Contracting States, is

to effectively supervise the collaboration under the Treaty. Article II(5) describes the

tasks of the Joint Committee in more detail. These tasks encompass security and

advising on agreements with other States. They also include decision-making on the

transfer of data, equipment and materials obtained through the collaboration under the

Treaty outside the territories of the Contracting States. The Joint Committee may

approve deeds by which the joint enterprises are incorporated, and specifically may

approve the composition of those enterprises as well as proposals regarding the place of

establishment of all major systems to be construed as part of the collaboration under

the Treaty. The Joint Committee is furthermore vested with a number of powers related

to the business operations, e.g. the approval of research and development programmes

that are financed, entirely or in part, with subsidies granted by the Contracting States.

The Joint Committee may take decisions on measures in the event of technical or

economic developments that may have a major impact on the commercial exploitation

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of the gas-ultracentrifuge process. The Joint Committee may also issue guidelines to the

joint venture concerning decisions it takes as part of the performance of its duties,

which the joint ventures are obliged to comply with.

The Treaty of Cardiff provides for the setting up of a Quadripartite Committee, which

includes, in addition to representatives of the three Contracting States to the Treaty of

Almelo (the Netherlands, the Federal Republic of Germany and the United Kingdom) a

representative from France. The tasks of the Quadripartite Committee correspond with

those of the Joint Committee, on the understanding that they will be aimed at the

undertaking that falls under the scope of the Treaty of Cardiff, i.e. the ETC group.

Confidential position

A confidential position within the meaning of Article 1(1)(a), in conjunction with Article 3

of the Security Screening Act means a position designated by the Minister responsible

for the policy area to which the confidential position pertains or by the competent

authority of the High Council of State in accordance with the Minister of the Interior and

Kingdom Relations that may put the national security at risk.

Collective deposit

A collective deposit refers to a securities account in which the aggregate of all securities

of an issuing institution that are managed or administrated by the relevant intermediary

are held.

The term intermediary also includes the affiliated institution, which consequently also

holds and administrates a collective deposit.

Security of supply

For the interpretation of this term common ground is found with its application in Article

122 Rome Treaty. This Article concerns the supply of certain products, specifically in the

field of energy. This fits in with the interpretation given or to be given within the

European Union, as it is also interpreted by the ECJ (see judgment Campus Oil, case

73/83, grounds 34-35 and judgment Commission/ Belgium, case C-503/99, ground 46).

The term is also in line with title II, Chapter VI of the Euratom Treaty.

Control

Control means: the number of votes that may be cast on shares, including rights under

an agreement for the acquisition of votes (Article 5:33 of the Act on Financial

Supervision) and votes a person is considered to have at his disposal pursuant to Article

5:45(1) to (11) inclusive of the Act on Financial Supervision. The latter votes do not

arise from a direct shareholding but from sundry constructions whereby the influence

that may be exercised rests with someone other than the owner of the share (see also

the definition of the term ‘share’).

Paragraph two

Paragraph two expresses that in the new set-up, the shares and controlling rights in the

designated enterprise and the ancillary companies are inextricably bound to each other.

This means that it is not possible to dispose of a share in the designated enterprise

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without simultaneously disposing of the share held in each of the ancillary companies.

The inextricable connection is found at three levels.

The first level is corporate: the articles of association of URENCO Holding NV provide

that, as a rule, the shares in the company may not be disposed of without

simultaneously disposing of the shares in URENCO Holding Ltd. and URENCO Holding

GmbH. The articles of association of URENCO Holding NV will furthermore stipulate that

shares may not be transferred to a party that does not also hold shares in URENCO

Holding NV, URENCO Holding Ltd. and URENCO Holding GmbH.

The second level is transactional: the shares in the listed designated enterprise and the

shares (or depositary receipts for shares) in the ancillary companies will be traded in the

form of “units”. The central institution, or the foreign institution whose function is

comparable with that of the central institution, will assign just one International

Securities Identification Number” (ISIN) to the “unit”. The “unit” will be traded in

securities transactions on a regulated market or multilateral trading facility, and the

three shares (or depositary receipts for shares) will only be expressed, as a ‘bundle’,

through the “unit”.

The third level is factual. In terms of control, the holder of the joined shares will exert

the same influence in the designated enterprise URENCO Holding NV, URENCO Holding

Ltd., and URENCO Holding GmbH. Nor will there be any difference in the dividend that

will be distributed to the shareholder from the three companies.

Article 2

Paragraphs 3.2.1. to 3.2.3. inclusive, above set out the structure of the URENCO group.

The legislative proposal contains the rules for the top holding, which, within the

structure, has its registered office in the Netherlands, i.e. the public company URENCO

Holding NV. In order to bring this top holding under the operation of the law, a

designation from the Minister is required.

URENCO Holding NV is not the only enterprise engaged in the enrichment of uranium,

the production of radioactive substances, or the development of the necessary

technology. There are other enterprises active in these fields. It may become necessary

to secure the public interest by law in respect of these enterprises as well. Where these

enterprises fall under the scope of the Treaty of Almelo, the Treaty of Cardiff or the

Treaty of Washington, they may be designated pursuant to this Act. The proviso that

the enterprises concerned must fall under the scope of the Treaties is made because

these Treaties provide for intergovernmental supervision, as a result of which the

statutory powers cannot be separated from the provisions of the Treaties and the

influence the other Contracting States have on the enterprises that fall under the scope

of those Treaties.

For the time being there is no intention to designate other enterprises. In due time ETC

Holding or URENCO Nederland BV in Almelo, which fall under the scope of the Treaty of

Cardiff, might be considered, but for now there is no reason for this. This would not be

possible at any rate at present, since ETC Holding has its registered office in the United

Kingdom. The influence URENCO Holding NV exerts on the ETC group may for the time

being be adequately managed by the rules of Chapter 6, so that the public interest is

secured where the ETC group is concerned as well. For that matter, such a designation,

moreover, could only take place if all the parties to the Treaty of Cardiff agree to this.

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It is important to note that the Act does not mention any enterprise by name, as this

would lead to unmanageable situations as soon as a change in the name or in the

intergroup relationship occurred, or if new legal entities are incorporated which fall

under the scope of the treaties. In that event a discussion might ensue as to whether

the Act in fact applies to the proper legal entity.

The Minister’s duty to notify all Contracting States to the Treaties of Almelo, Cardiff and

Washington is stipulated in paragraph 2 in order to lay down the formal nature of the

designation in an international context as well. The powers included in this Act may not

be considered separate from the formal powers vested in the competent authorities

concerned in the other countries. Thus, the notification also pertains to the moment

when, where the Netherlands is concerned, the rules of this Act apply to the designated

enterprise.

This is, moreover, important for the other Contracting States since it enables these

states to be aware of the positioning and the directing of the enterprise they have

dealings with as partner of an enterprise in their own country or if the designated

enterprise has facilities in their country.

The national accessibility is ensured via paragraph 3, through announcement of the

designation in the Government Gazette.

Article 3

Article 3 grants the Minister powers in respect of changes in the structure of the

designated enterprise. These pertain to amendments to the articles of association or to

the terms and conditions of administration, the dissolution, merger, or demerger of a

designated enterprise, or the relocation of the corporate seat or head office of a

designated enterprise. Terms and conditions of administration refer to the agreements

and general terms and conditions applied by administration offices, financial institutions,

and trust offices when they manage shares in a company. Pursuant to Article 3(1), the

designated enterprise may only change its structure with the approval of the Minister.

Article 33(2) provides that the Minister shall refuse his approval where this may put the

public interest at risk. Paragraph 3.2.3.3 discusses the background of this power and

how the Minister will exercise this power.

As is explained in paragraph 3.2.3.2. above, the most demanding decision-making

procedure is the one applied to intended changes in the structure of a designated

enterprise. Starting point for the procedure set out in this Article is that a unanimous

decision of the three Contracting States is required. With an eye on this unanimity, each

of the three Contracting States must give its approval for this change in structure.

Paragraph 3 expresses that the starting point for the procedure is that a unanimous

decision of all three Contracting States is required. Article 33(3) solely pertains to the

situation in which the Minister has already given his approval but one of the other two

competent authorities has not yet done so. In light of this, Article 33(3) provides that

the Minister’s approval is not effective until both the competent authority of the Federal

Republic of Germany and the competent authority of the United Kingdom have given

their consent. If, for instance, one of the other competent authorities has not yet given

its consent, the moment when the Minister’s approval becomes effective will depend on

when the consent of this authority enters into effect.

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Article 4

Article 4 provides for the situation in which an ancillary company or the jointly managed

company (URENCO Ltd.) intend to amend the articles of association or the terms and

conditions of administration, dissolution, merger, demerger, conversion, or relocation of

corporate seat, rather than the designated enterprise. The designated enterprise is

obliged to cooperate with this intention. Since the starting point regarding a change in

structure is that each of the three Contracting States must approve that change, Article

4(1) provides that a designated enterprise may not give its cooperation without the

Minister’s approval. Paragraph 2 provides that the Minister will refuse his approval if the

public interest may be put at risk.

Article 4 not only concerns a change in the structure of an ancillary company but also in

that of the jointly managed company, because the jointly managed company plays a

crucial role in the effective securing of the public interest. For instance, it must be

ensured that the provisions of the articles of association that require that the board of a

jointly managed company forms a personal union with part of the board of the

designated enterprise and the ancillary companies cannot be amended without the

Minister’s approval and that of the competent authorities of the Federal Republic of

Germany and the United Kingdom.

Article 5

The starting point for the Act is that the obligations under the Act rest, in principle, with

the designated enterprise and, where necessary, have a pass-on effect on the

subsidiaries. The nature of the various obligations concerns the strategic decisions and

integrated decision-making at the level of the three holding companies, URENCO

Holding NV, URENCO Holding Ltd. and URENCO Holding GmbH, and not the decision-

making at the subsidiaries. Some chapters (e.g. Chapter 5) explicitly mention the

subsidiaries as well, and that obligations are imposed on these subsidiaries. Some

provisions explicitly have a pass-on effect on the subsidiaries, since it is there where the

relevant risks for the public interest arise. In addition, Article 5(1)(a) instructs a

designated enterprise to ensure that its subsidiaries refrain from any acts that may

cause the designated enterprise to act in breach of the provisions of or pursuant to this

Act. The designated enterprise URENCO Holding NV will for instance share responsibility

for ensuring that the jointly managed company URENCO Ltd. and all other subsidiaries,

including URENCO Nederland BV in Almelo, act in accordance with the obligations

imposed by the Contracting States on the designated enterprise and the ancillary

companies.

Not only must a designated enterprise ensure that the subsidiaries refrain from certain

acts, but the designated enterprise must also ensure that the subsidiaries act in

accordance with the provisions of or pursuant to the Act, in so far as these obligations

rest on the subsidiaries pursuant to this Act. This is enshrined in Article 5(1)(b).

The obligations of Article 5(1) may be formalised by the designated enterprise through

the articles of association, for which reason Article 5(2) is included. Important to note in

this respect is that a designated enterprise must ensure that the articles of association

of subsidiaries and the agreements or deeds in which the control structure and

organisation of these subsidiaries are set out, provide that the obligations imposed on

the designated enterprise by or pursuant to the Act are complied with. Although it is

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true that the legal practice assumes a de facto right to instruct in intercompany

relationships, by explicitly stipulating this right to instruct any misunderstanding will be

avoided.

Subsidiaries may be established in a country where the local law may impose

restrictions on the control a parent company may exercise in a subsidiary and the

manner in which a parent company may exercise control over a subsidiary. In view of

this, Article 5(1) provides that it applies in so far as the laws governing these

subsidiaries so allow. This prevents the designated enterprise from being given a

statutory instruction it cannot fulfil because of the applicability of the laws that govern

the relevant subsidiary. A similar provision applies to the obligation of Article 5(2),

which ensures that the articles of association of the subsidiaries stipulate that the

designated enterprise or its subsidiaries implement the obligations that rest on them by

or pursuant to this Act.

Article 6

As is stated in paragraphs 3.2.2. and 3.2.3.1., above, the shared responsibility of the

three Contracting States and the effective operation of the structure set up for this

purpose require that the three legal entities hold priority shares in each other. These

cross-held shares are necessary to ensure that resolutions passed in one legal entity

have a pass-on effect on the other two legal entities. This system also ensures that the

three Contracting States exert a comparable influence on and accept a comparable

responsibility for the URENCO group. This is because the Federal Republic of Germany

and the United Kingdom have resolved to take responsibility for the URENCO group by

issuing special shares, which will be stipulated in the articles of association of the

ancillary company URENCO Holding GmbH and of the ancillary company URENCO

Holding Ltd., respectively.

Without using exactly the same phrasing and legal techniques, these special shares will

have the same type of competences and will bring about a comparable kind of effects as

this legislative proposal. A good example of this is the suspension of directors provided

for in Article 10 of the legislative proposal. If a director of URENCO Holding NV and

URENCO Holding Ltd. is suspended, he will still formally remain in office. In the Federal

Republic of Germany, if a director of URENCO Holding GmbH is suspended, this means

that he is temporary dismissed; after the suspension is lifted, this director may be re-

appointed. This creates an effect comparable with suspension. In addition, the laws of

the Federal Republic of Germany apply to URENCO Holding GmbH and English law

applies to URENCO Holding Ltd..

In view of this decision and the ensuing legal situation, it is necessary to additionally

provide for the passing-on of rights, obligations, restrictions, and resolutions that are

applicable to the ancillary companies to the designated enterprise and vice versa, where

these concern the matters regulated in these ancillary companies in which both the

Federal Republic of Germany and the United Kingdom hold special shares.

For this reason, Article 6 provides that the articles of association of a designated

enterprise include requirements with which an executive or non-executive director must

comply as well as requirements related to holding shares and controlling rights (sub a

and b). In addition, the articles of association must provide that certain obligations

under the articles of association may be imposed on the shareholder that may result in

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a suspension of his rights, the offering and transfer of his shares or controlling rights, or

that pertain to the relationship between the board of the designated company (sub c

and d). Article 6(e) therefore provides that the articles of association will stipulate that if

a holder of shares or controlling rights has not disposed of his shares within a

reasonable period of time (stipulated by the Minister or by the competent authority of

the Federal Republic of Germany or the United Kingdom) despite being ordered to do

so, the designated enterprise may dispose of these shares on behalf of that shareholder.

The articles of association must furthermore provide that another corporate body of the

legal entity, or an ancillary company of this legal entity, is authorised to instruct the

board (sub f). These other corporate bodies will be the ancillary companies that hold

shares in URENCO Holding N.V. Lastly, it is provided in sub g that the articles of

association must provide that executive and non-executive directors may be suspended

or dismissed by a corporate body other than the corporate body that is authorised to

make appointments.

In this regard the rules that apply to the listed company are to a considerable extent

departed from, which is made possible by the flexibility presently offered to the private

company by the Dutch Civil Code.

For instance, Articles 87(1), first and second sentence, and (2) to (5) inclusive,

2:87a(2), second sentence, and (3), 87b(2) and (3), 129(4), 132(2), second sentence,

and 134(1) of Book 2 of the Dutch Civil Code are departed from. The provisions

pursuant to which the general meeting may set aside requirements for the directors or

shareholders, the provisions concerning the setting of prices by experts, the restrictions

imposed on suspending the rights attached to shares, the restriction imposed on

following directions by directors given by other corporate bodies of the company, the

provisions governing the termination of the authorisation given to the company to

transfer shares, and the provisions governing the termination of the obligation of the

shareholder to transfer the shares are not applicable to a designated enterprise.

The flexibility the Dutch Civil Code presently offers the private company is set out in

substantially adapted form in Article 6 of this legislative proposal. For instance, Articles

192(3), (4), second, third and fourth sentences, and (5), third sentence, 192a, 239(4),

second sentence, 2:242(2), second sentence, and 244(1) of Book 2 of the Dutch Civil

Code are departed from.

With these departures and adaptations it is for instance ensured that the articles of

association of URENCO Holding NV provide that if the Federal Republic of Germany

instructs the ancillary company URENCO Holding GmbH to ensure that a shareholder in

URENCO Holding GmbH is prohibited from exercising his rights to his shares interest,

URENCO Holding NV will not only be obliged to ensure a similar effect for that same

shareholder in respect of the shares he holds in URENCO Holding NV, but will also have

the required legal basis to do so.

Article 6 does not prescribe the exact content of the articles of association, but rather

allows the designated enterprise to depart from certain mandatory provisions in the

Dutch Civil Code in order to be able to comply with the obligations imposed on it by the

legislator, or that are imposed on the ancillary companies by the competent authorities

of the Federal Republic of Germany or of the United Kingdom. The articles of association

of URENCO Holding NV will make clear in due time in what manner this enterprise has

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taken advantage of the room offered by the legislator. Pursuant to Articles 3 and 4, any

amendment to the articles of association requires the Minister’s approval.

Article 7

Article 7 regulates the appointment of executive and non-executive directors of a

designated enterprise. ‘Executive director’ refers to a director as defined in the Dutch

Civil Code. This may either be a director within the meaning of Article 129(2) or 239(2)

of Book 2 of the Dutch Civil Code, but may also refer to an executive or non-executive

director within the meaning of Article 129a(1) or 239a(1) of Book 2 of the Dutch Civil

Code, in the event the designated enterprise has availed itself of the possibility to set up

a ‘one tier board’.

The starting point of the procedure is that one of the Contracting States will decide

whether a declaration of no objection may be issued, but that the other two Contracting

States will have the right of veto the proposed appointment by the designated

enterprise. Article 7 sets forth the procedure for screening executive or non-executive

directors if the Minister and the competent authorities of the other two Contracting

States have agreed that the Minister will in the first instance screen the person

concerned. Article 8 regulates that the Minister or one of the competent authorities may

exercise the right of veto.

The procedure in respect of the declaration of no objection is initiated by a notification

from the designated enterprise to the Minister of any intention to appoint an executive

or non-executive director. The articles of association of the British ancillary company

URENCO Holding Ltd. and of the German ancillary company URENCO Holding GmbH

provide that the same notification must be made to the competent authorities of the

Federal Republic of Germany and of the United Kingdom. This ensures that the Minister

is aware of that intention and is able to decide, in consultation with these competent

authorities, which of the three competent authorities will determine whether such a

declaration may be issued. If this is to be determined by the Netherlands, the Minister

will exercise his power as referred to in paragraph 2 and the designated enterprise will

have to file an application for a declaration of no objection with the Minister before it

may appoint the person concerned.

Paragraph 3 subsequently prohibits the appointment of an executive or non-executive

director without first having obtained a declaration of no objection from the Minister or a

comparable declaration to be issued by the competent authority either of the Federal

Republic of Germany or of the United Kingdom. The competent authority of these bodies

is laid down in the articles of association of the British ancillary company URENCO

Holding Ltd. and of the German ancillary company URENCO Holding GmbH.

Paragraph 4 provides two grounds for refusal. Firstly, the Minister will refuse to issue a

declaration of no objection if the outcome of the statements referred to in Article 13(1)

of the Security Screening Act gives rise to do so. Secondly, the Minister will refuse to

issue the declaration if the appointment may put the public interest at risk.

Paragraph 5 provides that the Minister must notify the other competent authorities of

his intention to issue a declaration of no objection. This notification may cause one of

the competent authorities to exercise its right of veto, which is vested in each of the

three Contracting States. If one of the competent authorities of one of the other

Contracting States exercises its right of veto, the Minister will not further consider the

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application for a declaration of no objection pursuant to paragraph 6. This decision is

open to objection and appeal, which however only has procedural significance. The

substantive consideration underlying the decision of a competent authority of the

Federal Republic of Germany or the United Kingdom will have to be challenged before

the German or British court, as the case may be. This is because it is not the Minister

that has taken a decision on the substance, but one of the other competent authorities.

If the executive or non-executive director is appointed without first obtaining a

declaration of no objection within the meaning of paragraph 3, the appointment will be

null and void (paragraph 7).

Pursuant to Article 3:41 of the General Administrative Law Act, any decision taken

under this Article will be communicated to the designated enterprise and the individual

in respect of whom this decision is taken.

Article 8

Article 8 provides for the situation in which one of the Contracting States exercises its

right of veto the proposed appointment of the executive or non-executive director and

contains two prohibitory provisions in view of this.

Pursuant to paragraph 1(a) it is prohibited to appoint someone if the Minister has

exercised his right of veto. This refers to the situation in which it is the competent

authority either of the Federal Republic of Germany or of the United Kingdom, rather

than the Minister, who will initially assess the person concerned. Similar to the Minister

pursuant to Article 7(5), the competent authorities will notify the other Contracting

States of their decision in order to enable the Minister to exercise his right of veto within

a period to be stipulated by Ministerial regulation. Pursuant to Article 3:41 of the

General Administrative Law Act, the Minister’s decision will be communicated to the

designated enterprise and the individual in respect of whom this decision is taken.

Paragraph 1(b) provides for the situation in which the competent authority either of the

Federal Republic of Germany or of the United Kingdom has exercised its right of veto. If

this situation arises, it is prohibited to appoint the executive or non-executive director

as well.

If a designated enterprise nevertheless appoints an executive or non-executive director,

in violation of paragraph 1, the appointment under paragraph 2 will be void.

Article 9

In order to be able to determine, pursuant to Article 7(4)(a), whether a declaration of

no objection may be issued, Article 9(1) provides that the Minister may request the

Minister of the Interior and Kingdom Relations to issue statements about a person as

referred to in Article 13(1) of the Security Screening Act. Article 13 of the Security

Screening Act provides that the Minister of the Interior and Kingdom Relations may

issue statements further to a request from another state or international organisation.

As is also stated in paragraph 3.3.2., it has been decided, also in view of the

international context in which the URENCO group operates, to find common ground with

this regime of the Security Screening Act, rather than with the regime of Article 3 of the

Security Screening Act.

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Paragraph 2 provides that Article 13(2) to (6) inclusive, of the Security Screening Act

applies by analogy, with the exception of Article 13(2), first sentence. This will ensure

that directors on whom statements have been issued will be informed of the essence of

these statements. If the Minister of the Interior and Kingdom Relations intends to issue

statements, a security screening will subsequently take place, provided the director has

consented to this in writing (see Article 13(1)). Article 13(4) of the Security Screening

Act provides what the security screening entails and what aspects are taken into

account. Pursuant to Article 13(5) of the Security Screening Act the statements will

include the conclusions that may be drawn from the security screening, or the

establishment that the screening yielded insufficient information, or that the executive

or non-executive director did not consent to the security screening. Lastly, it follows

from the corresponding statement of Article 13(6) of the Security Screening Act that if

in respect of an executive or non-executive director a statement is issued in a different

context that there is no objection, from a national security point of view, to the person

concerned assuming a security-sensitive position, the Minister who has issued this

statement will decide on the request from the Minister. In that event, a security

screening may be dispensed with and a statement will suffice that a declaration is

issued in respect of this person.

Article 10

Article 10 provides under what circumstances and when an executive or non-executive

director of a designated enterprise may be suspended or relieved from his duties.

Paragraph 1 grants the Minister the power to suspend , whereas paragraph 2 regulates

when an executive or non-executive director is suspended.

The executive or non-executive director will be suspended by operation of law as from

the date of entry into force of the decision of the Minister to suspend the board member

(paragraph 2 sub a). Paragraph 2 sub b regulates the same thing but in respect of the

situation whereby the competent authority either of the Federal Republic of Germany or

of the United Kingdom has suspended an executive or non-executive director of an

ancillary company. Since a personal union exists between the board of the designated

enterprise and that of the ancillary companies, paragraph 2(b) provides that the

executive or non-executive director of the designated enterprise will also be suspended

as a result.

As is explained in paragraph 3.3.3., above, this power to suspend is a power each

Contracting State may exercise independently if that state possesses information that

raises doubt about the reliability or suitability of the executive or non-executive director,

as a result of which it is thought that the public interest may be at risk. The possibility

to suspend offers Contracting States the certainty that it is possible to effectively

intervene on very short notice, without requiring a final judgement on the reliability and

suitability of the director concerned. The suspension and ending it require a decision of

the Minister, which decision is open to objection and appeal. Both the executive or non-

executive director concerned and the designated enterprise may challenge the decision

or ask the Minister to retract the decision.

Article 2:147 of the Dutch Civil Code does not apply to the situation regulated by

paragraph 1, since Article 2:147 of the Dutch Civil Code deals with the suspension of a

director by the supervisory board and the lifting of the suspension by the general

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meeting of shareholders. The decision to suspend as contemplated here is taken by the

Minister and by the competent authorities of the Federal Republic of Germany and the

United Kingdom, which suspension may not be lifted by the general meeting.

Paragraph 3 provides the power of the Minister to relieve a board member of his

function. Paragraph 4 provides as from what date an executive or non-executive

director is relieved from his duties. Pursuant to Article 10(4)(a) and (b), an executive or

non-executive director is relieved from his duties first of all as from the date on which

the Minister or a competent authority of another Contracting State has revoked a

declaration of no objection. Secondly, pursuant to Article 10(4)(c) and (d) an executive

or non-executive director of a designated enterprise will be relieved from his duties if

the Minister or a competent authority of one of the other Contracting States has

independently resolved to do so and adopted a decision which has entered into force.

The Minister or a competent authority will take an independent decision if he or it has

not issued a declaration of no objection and is consequently unable to revoke it.

Article 11

As clarified in paragraph 3.3.4., the Minister may, pursuant to Article 11 designate, by

order in council, positions to which Articles 7 to 10 apply by analogy. This will be the

case in respect of key officers in a designated enterprise and its subsidiaries who, in

addition to executive and non-executive directors, are authorised to legally bind the

enterprise by virtue of their position or because these officers hold a confidential

position that directly affects the security and non-proliferation interests of the

Contracting States. At the same time the offices of temporary executive and non-

executive directors may be designated in the order in council. If the designated

enterprise has opted for a one-tier board (see note to Article 7), it is conceivable that

either all executive directors or all non-executive directors are suddenly absent from the

board. In that event it will not be possible to follow the procedure set out in Article 78,

which concerns the instance in which the entire board (i.e. all executive as well as all

non-executive directors) has ceased to be in office, in order to fill the vacancies. Since

replacements will nevertheless need to be quickly appointed and it is not possible to

await the standard appointment procedure, it will be necessary to designate temporary

executive and non-executive directors. Naturally, these persons will have to be

adequately vetted by the Contracting States as well.

Article 12

Article 12 offers the possibility that persons who, for instance, have been subjected to a

security screening in the United Kingdom and who have been accredited in accordance

with the security and classification policy of the Treaty of Almelo and the Treaty of

Cardiff and the Treaty of Washington, to hold a specific (technical) position, may accept

a security-sensitive position in one of the production plants of the URENCO group or the

ETC group in the Netherlands without additional formalities being required pursuant to

the Safety Screening Act. With a view of this, Article 12 regulates that the accreditation

is deemed to be a declaration within the meaning of Article 1(1)(b) Safety Screening

Act. Conversely, this also applies in respect of employees who have been subjected to a

security screening in the Netherlands because they hold a security-sensitive position in

the Netherlands and have been accredited pursuant to the security and classification

policy. This situation is based on the security and classification policy and the

agreements made in connection with the implementation of Schedule II to the Treaty of

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Almelo. Since this legislative proposal aims to lay down all necessary statutory powers

and obligations required to secure the public interest and to implement the Treaty of

Almelo, this aspect of the Treaty of Almelo has been included as well.

Article 13

Paragraph 1

Article 13 imposes various duties to disclose information on the designated enterprise.

Pursuant to Article 13(1), the designated enterprise is required to forward notifications

to the Minister made in accordance with Articles 5:38, 5:39, 5:40 or 5:43 of the Act on

Financial Supervision to the Authority for the Financial Markets (AFM) and subsequently

forwarded by the AFM to the designated enterprise. This provides the Minister with

information on when the following thresholds are exceeded or no longer reached: three

percent, five percent, ten percent, fifteen percent, twenty percent, twenty-five percent,

thirty percent, forty percent, fifty percent, sixty percent, seventy-five percent and

ninety-five percent (Article 5:38 and Article 5:39 of the Act on Financial Supervision).

The Minister will furthermore be informed about each acquisition of shares to which

special rights are attached under the articles of association (Article 5:40 of the Act on

Financial Supervision). In view of their nature, these shares, to which special rights are

attached under the articles of association, grant an influence that is disproportional to

the influence and rights attached to ordinary shares. Notifications concerning these

shares must therefore be forwarded to the Minister.

Paragraphs 2 and 3

Paragraph 2 requires the designated enterprise to notify the Minister if it has knowledge

of a shareholder or holder of controlling rights wishing to dispose of these shares or

controlling rights in breach of the law. This also applies if the designated enterprise has

knowledge that the holder of the shares wishes to trade these on a specific multilateral

trading facility (paragraph 3) or a specific system comparable to a multilateral trading

facility outside the European Economic Area, e.g. ITC Bulletin Board in New York. These

provisions do not imply that the designated enterprise must conduct an active

‘investigation policy’ into these types of affairs, but that it must notify the Minister as

soon as matters like these come to its attention. Failure to share this information which

is already in the enterprise’s possession is subject to sanctions (Article 91(1) and Article

93).

Paragraph 4

Holders of registered shares are recorded in a register to be kept by the public limited

company. This is a requirement pursuant to Article 85 of Book 2 of the Dutch Civil Code.

The register will state the name and address, the date on which the shares were

acquired, the date on which the acquisition was recognised or the relevant deed served

on the company, and the amount paid up on each share. Upon request the executive

board of the company will issue to a shareholder, holder of a right of usufruct, or holder

of a pledge, an extract from the register, free of charge, concerning his right to a share

(Article 85(3) of Book 2 of the Dutch Civil Code). Article 13(4) provides that the

company shall also issue such extract, at no charge, to the Minister. Since Articles 88

and 89 of Book 2 of the Dutch Civil Code provide that if a right of usufruct or pledge is

created on a share, the voting right to those shares may rest with the holder of the

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usufruct or pledge, rather than with the shareholder, the extract issued to the Minister

will also state who holds the relevant rights.

Paragraphs 5 and 6

The investigation the designated enterprise must carry out further to a request from the

Minister or an ancillary company and the means at the disposal of a designated

enterprise if it is a listed company for such investigation are derived from the regulation

of Chapter 3a of the Securities (Bank Giro Transactions) Act. However, not all provisions

of that regulation are suitable for instigating an investigation by the designated

enterprise pursuant to this legislative proposal. For this reason, the provisions of the

Securities (Bank Giro Transactions) Act the designated enterprise requires to effectively

execute the statutory obligation are expressly declared applicable by analogy.

Article 49b(2), (3), (5), and (6), on the other hand, are not declared applicable by

analogy because these would hinder the designated enterprise in executing the

investigation to be performed at the Minister’s request. Furthermore, applying these

provisions might harm the interests of the investigated shareholder and the designated

enterprise because the fact that an investigation is conducted must be made public (see

Article 49b(6), Securities (Bank Giro Transactions) Act). The same holds for the

derogation that provides that the Minister must be informed of the results of the

investigation (Article 13(6)(c)). This will override the duty of confidentiality of Article

49d of the Securities (Bank Giro Transactions) Act.

Article 13(6)(a) provides that an issuing institution within the meaning of Article 49a of

the Securities (Bank Giro Transactions) Act is also a listed designated enterprise. This

consequently introduces the possibility that an issuing institution is also a listed

designated enterprise, in addition to the existing definition in the Securities (Bank Giro

Transactions) Act that refers to issuing institutions of which the shares are listed on a

stock exchange or on a multilateral trading facility permitted in the Netherlands, a

broader definition is added, which specifically refers to the listed designated enterprise.

Under the Securities (Bank Giro Transactions) Act this listed designated enterprise is

also an issuing institution as defined in that Act, even if the shares are listed at a stock

exchange or a multilateral trading facility outside the Netherlands. The shares of a listed

designated enterprise may also be traded on a regulated market in a foreign country,

while still being able to benefit from the investigative powers that pursuant to Article

13(6) are declared applicable by analogy. Thus, it is not required that the shares are

traded on a Dutch trading platform for a designated enterprise to be able to launch an

investigation.

Article 13(6)(b) provides that an issuing institution may also ask a custodian of an

investment institution for information about a manager of an investment fund or a fund

for collective investment in securities. This supplements the term custodian of an

investment institution as applied in Article 49b(1)(d) of the Securities (Bank Giro

Transactions) Act and ensures that information may also be obtained about a manager

of a fund for collective investment in securities.

Lastly, reference is made to Article 13(6)(d). This provision ensures that an institution

that administrates or holds in a professional capacity shares in the designated

enterprise abroad may still be ordered by the court to cooperate with an investigation.

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Paragraph 7

When conducting the investigation referred to in Article 13(5), the listed designated

enterprise possesses the powers provided in the Securities (Bank Giro Transactions)

Act, supplemented by the frameworks laid down in Article 13(6). Inversely to the

powers of the listed designated enterprise, Article 13(7) imposes a general duty to

cooperate on all parties in the custodial chain of securities that may assist in

identifying a shareholder in a listed designated enterprise.

These are, for instance, the central institution of a comparable foreign institution, the

so-called ‘Central Securities Depositories’. These parties constitute the first link in the

custodial chain and are formally registered in the listed designated enterprise’s

shareholders register as shareholder. These institutions administrate the securities that

are distributed among the institutions that are members of these central securities

depositories. These may, for instance, be large commercial banks that manage large

securities accounts. Pursuant to Article 13(7) these parties are required to cooperate

with an investigation as provided for in Article 13(5) and (6) as well. These affiliated

institutions in turn hold securities accounts for intermediaries like banks or securities

brokers. In addition, foreign institutions may hold a securities account with an affiliated

institution, for instance an asset manager established in a third country that manages

securities in the listed designated enterprise on behalf of its clients.

The duty to cooperate also extends to these parties, as well as to custodians of

investment institutions that are responsible for the custody and supervision of the

assets in an investment fund or a fund for collective investments in securities. When

conducting an investigation into the identity of shareholders in accordance with Article

13(5) of this legislative proposal, the custodian will be formally identified as

shareholder. However, the custodian is not responsible for taking the de facto decisions

concerning the voting behaviour and handling the share ownership in the designated

enterprise: this rests with the administrator of the investment institution (see Article

4:37f and Article 5:45(7), of the Act on Financial Supervision). For this reason it is

essential, as the legislator already recognised when adopting Article 49b(1)(d) of the

Securities (Bank Giro Transactions) Act, that it is possible to not only identify the

custodian, but the administrator of the investment institution as well. This is why the

legislative proposal imposes in Article 13(7) the obligation on the custodian to

cooperate with the investigation mentioned in Article 13(5), as this ensures that the

administrator is identified as well.

Paragraph 8

Paragraph 8 allows the Minister to adopt by ministerial regulation rules governing the

manner in which a request must be made pursuant to Article 49b(1) of the Securities

(Bank Giro Transactions) Act, read in conjunction with Article 13(6) of this legislative

proposal and the manner in which this request is considered. This basis for delegation is

comparable to the basis of delegation of Article 49b(7) of the Securities (Bank Giro

Transactions) Act.

Since the investigation as regulated in Article 13(5) and (6) differs in some

essential respects from the investigation as regulated in Article 49b of the Securities

(Bank Giro Transactions) Act, a different basis of delegation is provided for.

Article 14

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Article 14 concerns the admission of shares in a designated enterprise for trade on

a regulated market or multilateral trading facility or a comparable system outside the

European Economic Area (e.g. the OTC Bulletin Board in New York). This Article is

aimed at a designated enterprise and a holder of a share in a listed designated

enterprise who intend to initiate preparations for an application for admission to a

specific market, trading facility or comparable system.

Starting point of the procedure of this Article is that all three Contracting States

must be in favour.

Paragraphs 1 and 3 contain a notification duty. Pursuant to paragraph 1, a

designated enterprise must notify the Minister of his intention to start preparations for

a listing on a specific market, trading facility, or a comparable system. Pursuant to

paragraph 3, a holder of a share in a designated enterprise must notify the Minister

and the designated enterprise of his intention to apply for an admission of shares for

trading on a trading facility, or a comparable system.

Paragraphs 2 and 4 grant the Minister the power to prohibit a designated enterprise or

a holder of a share in a listed designated enterprise from filing an application for

admission. The Minister may impose this prohibition in two events. In the first place, if he

believes that this will result in the designated enterprise no longer being able, or only

being partially able, to comply with its obligations under Chapter 4. The second event is if

the Minister will no longer be able to exercise his powers under Chapter 4 once the

shares are publicly traded. As is explained in paragraph 3.4.3., above, a stock market

listing or the public trading of shares in a multilateral trading facility may affect the

possibilities the designated enterprise and the Minister have for obtaining information

about shareholders. Failing to obtain this information may in turn impede the possibilities

of enforcing compliance with the requirements and obligations laid down in Chapter 4, as

well as the possibilities of suspending a shareholder or to force him to sell shares.

It was examined whether it was possible to restrict the scope of application of the

Minister’s power to review to listings on stock exchanges outside the European Union or

the European Economic Area. However, this proved to be impossible because cross-

border disclosure of information and exchange of information between issuing

institutions, financial intermediaries and clearing institutions is not harmonised and

compulsory. Although the European Commission submitted a proposal on 9 April 2014 to

harmonise the identification of shareholders and the relevant requests for information in

the internal market (see COM(2014)213 - Proposal for a directive of the European

Parliament and of the Council amending Directive 2007/36/EC as regards the

encouragement of long-term shareholder engagement and Directive 2013/34/EU as

regards certain elements of the corporate governance statement), this proposal is still in

the very early stages of consideration. It is furthermore as yet unclear to what extent the

proposed inclusion of Chapter Ibis in Directive 2007/36/EC offers the designated

enterprise sufficient instruments to effectively conduct the investigation instructed by the

Minister. If this is the case, an amendment to Article 14 will be made upon the

implementation of this proposed Directive.

Article 14(5), lastly, provides that the designated enterprise or a holder of a share in a

designated enterprise is also prohibited from realising the intention referred to in Article

14(3) if a competent authority of the Federal Republic of Germany or of the United

Kingdom objects to that intention.

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Article 15

Article 15 contains two prohibitory provisions in connection with undesired persons.

Paragraph 1 prohibits the disposal or granting of a share or the disposal of a controlling

right to an undesired person. Granting a share refers to the possibility for the designated

enterprise to grant options or shares to executive and non-executive directors and other

officers as part of an incentive scheme. Pursuant to paragraph 2 an undesired person

may furthermore not acquire or hold shares or controlling rights in a designated

enterprise. For more details, see paragraph 3.4.4., above.

Article 16

Article 16 restricts potential shareholders who wish to invest in a designated

enterprise. Pursuant to Article 16 certain investors are not allowed to acquire or hold 3%

or more of the shares or of the controlling rights. For a further explanation, see

paragraph 3.4.5.

Article 17

Article 17 provides rules concerning the disposing of or granting shares or controlling

rights in an unlisted designated enterprise. The starting point for the procedure is that

one of the Contracting States will issue a declaration of no objection, but that the other

two Contracting States have a right of veto. Article 17 contains the assessment

procedure to be applied in the event of the disposal or granting of a share or disposing of

controlling rights, if the Minister and the competent authorities of the other two

Contracting States have agreed that it is the Minister who will initially consider the

application for the declaration of no objection. Article 18 regulates the situation in which

the Minister or one of the competent authorities exercises the right of veto.

The procedure for issuing a declaration of no objection is initiated by the notification of

the unlisted designated enterprise or the holder of a share or controlling right in an

unlisted enterprise to the Minister (and the designated enterprise) of an intention to

dispose of or grant a share or to dispose of a controlling right. The articles of association

of the German ancillary company URENCO Holding GmbH and of the British ancillary

company URENCO Holding Ltd. provide that a similar notification must be made to the

competent authorities of the Federal Republic of Germany and of the United Kingdom.

This enables the Minister to be aware of the intention and to consult with these

competent authorities in order to decide which of three competent authorities will

determine whether a declaration of no objection may be issued. Where this is the

Netherlands, the Minister will exercise the power of paragraph 3 and the proposed

acquirer or the unlisted designated enterprise must file an application for a declaration of

no objection with the Minister in order for the disposal or granting of a share or the

disposal of a controlling right to take place lawfully.

Paragraph 4 subsequently provides that it is prohibited to dispose of or grant shares or

to dispose of a controlling right without first having obtained a declaration of no objection

from the Minister or a declaration issued by the competent authority of either the Federal

Republic of Germany or of the United Kingdom that is equivalent as regards nature and

content. The authority of these competent bodies is stipulated in the articles of

association of the British ancillary company URENCO Holding Ltd. and of the German

ancillary company URENCO Holding GmbH.

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Paragraph 5 provides what information must be disclosed with the application.

Paragraph 6 provides that declaration of objection will furthermore not be issued if by

acquiring the share or the controlling right the intended acquirer acts in violation of

Article 16 or is an undesired person. Furthermore, the Minister will refuse to issue a

declaration of no objection if the public interest may be put at risk.

Paragraph 7 gives a non-exhaustive list of assessment criteria to be considered by the

Minister in their mutual relationship in order to determine whether a declaration of no

objection must be refused because the public interest may be put at risk. Considered in

their mutual relationship means that all listed assessment criteria are considered and

that an individual criterion will not automatically result in a threat to the public interest.

In certain situations one single criterion may,– in view of the specific circumstances – be

so urgent, compared with the other criteria, that the Minister may refuse to issue a

declaration of no objection on the basis of this criterion nevertheless.

In addition to what is stated in respect of the assessment factors in paragraph 3.4.7.,

it may be noted that the assessment factors stated under d, e, h and i of Article 17(7)

refer to the ties a prospective holder maintains with natural persons, legal entities or

non-state entities that must be critically assessed in connection with the public interest.

The assessment criteria mentioned in paragraph 6(j), (k) and (l) refer to the nature of

the prospective holder. If this is a state or an entity controlled by this state and there are

indications that the state in question attempts to gain access to enrichment technology

or endeavours to develop weapons of mass destruction, both criteria will offer sufficient

basis for the Minister to refuse a declaration of no objection.

Other criteria include the (non-financial) motives underlying the acquisition of the

shares by the prospective holder (Article 17(7)(f)) and the existence of an export control

policy and the track record on export control in the country where the prospective holder

is established or domiciled (Article 17(7)(p)). These criteria offer the Minister additional

means to determine who exerts influence on the prospective holder, why the prospective

holder wishes to acquire the shares, and whether the country where the prospective

holder is established has an adequate track record in the field of export control to

assume that this country will also take steps against the prospective holder if the

prospective holder causes proliferation risks.


his intention to issue a declaration of no objection. This notification may cause one of the

other competent authorities to exercise its right of veto, which is vested in all three

Contracting States. If one of the competent authorities of the other Contracting States

exercises the right of veto, then the Minister will not further consider the application for a

declaration of no objection pursuant to paragraph 9. This decision is open to objection

and appeal, which however only has procedural significance. The substantive

consideration underlying the decision of a competent authority either of the Federal

Republic of Germany or of the United Kingdom will have to be challenged before the

German or British court, as the case may be. This is because it was not the Minister who

took this decision, but one of the other competent authorities.

Paragraph 10 provides additional rules regarding the forwarding of the decision of the

Minister further to an application for a declaration of no objection. Pursuant to Article

3:41 of the General Administrative Law Act a decision under this Article will be

announced to the party who submitted the application for a declaration of no objection,

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i.e. the designated enterprise or the holder of the share or the controlling right.

Paragraph 10 provides that the decision will also be announced to the prospective holder

and the designated enterprise, if this is not the applicant. This is proposed for reasons of

protecting the legal interests, since a decision may have a negative impact on a

prospective holder, for instance because objections are raised regarding his capacity or

regarding the ties he maintains. By being notified of the decision, it will be easier for him

to object to or appeal the decision. Being notified of the decision is relevant for the

designated enterprise (if it is not the applicant) because it will timely inform it as well of

any change in the shareholding. Where the situation so arises, the designated enterprise

may challenge the decision in its capacity as interested party.

Article 18

Article 18(1) regulates the situation in which one of the Contracting States exercises

its right of veto with respect to an unlisted designated enterprise, and in view of this

includes two prohibitory provisions.

Pursuant to paragraph 1(a) it is prohibited to dispose of or grant a share or to dispose

of a controlling right in the designated enterprise if the Minister has exercised his right of

veto. This refers to the situation in which the competent authority either of the Federal

Republic of Germany or of the United Kingdom will initially assess the disposal or the

granting of shares of the disposal of controlling rights, rather than the Minister. Similar to

the Minister pursuant to Article 17(8), the competent authorities will notify the other

Contracting States of their decision, thus enabling the Minister to exercise his right of

veto, if necessary, within a period to be set by Ministerial regulation.

Paragraph 1(b) refers to the situation in which the competent authority either of the

Federal Republic of Germany or of the United Kingdom exercises its right of veto. In this

event it will be prohibited to dispose of or grant shares in the unlisted ancillary company,

or to dispose of controlling rights in the unlisted ancillary company. This prohibition

consequently also applies to the share or controlling right in the unlisted designated

enterprise that is inextricably linked to the share or controlling rights in the company.

It follows from paragraph 2 that Article 17(7) applies by analogy with regard to the

assessment whether the public interest may be at risk.

Paragraph 4, lastly, explicitly provides, in line with Article 17(10), that in addition to

the disposing party, the intended acquirer and the unlisted designated enterprise will be

notified of the Minister’s decision under paragraph 1(a) as well.

Article 19

Article 19 provides rules for holding, acquiring or increasing an equity interest if a

threshold value is reached or exceeded in a listed designated enterprise. A shareholder

may reach and exceed a threshold either as a result of the designated enterprise

acquiring shares (Article 19(1)(a)) or by a conscious action of the (potential) shareholder

to acquire these shares up to and in excess of a threshold value (Article 19(1)(b)). If, as

a result of the acquisition of shares by the listed designated enterprise, a shareholder

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exceeds a threshold without being aware of this, the obligation to report this is not

automatically violated. This is expressed by the phrase “as soon as it is apparent to this

person”.

The obligation to report also takes into account the possibility that the shareholder is

already aware of the acquisition of shares by the designated enterprise, but that the

designated enterprise has not yet effected it. The threshold will then be reached, but this

is not the case yet. In that event the holder of the shares must make a notification,

which is expressed by the phrase “will be reached”.

Starting point of the procedure for obtaining a declaration of no objection is that one

of the Contracting States will issue a declaration of no objection, but that the other two

Contracting States will have a right of veto. Article 19 contains the assessment procedure

regarding the holding, acquiring or increasing an equity interest upon reaching or

exceeding a threshold value, where the Minister and the competent authorities of the

other two Contracting States have agreed that the application for the declaration of no

objection will initially be considered by the Minister. Article 20 regulates the situation in

which the Minister or one of the other competent authorities exercises the right of veto.

The procedure for applying for a declaration of no objection is initiated by the

notification of anyone who holds an equity interest or who intends to acquire or increase

an equity interest, to such extent that a threshold value in a listed enterprise is reached

or exceeded, notifying the Minister and the designated enterprise of this intention. It

must be notified as soon as the party concerned realises that a threshold has been or will

be reached. Through this notification the Minister is aware of this intention and may

consult with these competent authorities to determine which of the three competent

authorities will decide whether or not a declaration of no objection may be issued. If this

is the Netherlands, the Minister will exercise the power of paragraph 2 and will instruct

the prospective holder to file an application for a declaration of no objection with the

Minister in order to be lawfully entitled to hold, acquire or increase the equity interest.

Paragraph 3 subsequently regulates that it is prohibited to hold, acquire, or increase

an equity interest in a listed designated enterprise where this would result in a threshold

value being reached or exceeded, without first acquiring a declaration of no objection

from the Minister or a declaration issued by the competent authority of either the Federal

Republic of Germany or of the United Kingdom that is equivalent as regards nature and

content.

Paragraph 4 provides that the application must at any event state the identity and

contact details of the holder or proposed acquirer. This is in addition to the provisions of

Article 4:2 of the General Administrative Law Act.

Paragraph 5 provides that the Minister will refuse the declaration of no objection if the

prospective holder is an undesired person. In addition, paragraph 5 provides that the

Minister will refuse a declaration of no objection if the applicant acts in violation of Article

16. Thus, if a shareholder is only allowed, pursuant to Article 16, to hold an equity

interest in URENCO Holding NV of less than 3% of the shares, he will not be issued a

declaration of no objection that grants him the right to acquire and hold 3% or more of

the shares.

Paragraph 6 provides that Article 17(7) applies by analogy with regard to the

assessment whether the public interest may be at risk. Article 17(7) contains a non-

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exhaustive list of the assessment criteria the Minister will consider, in their mutual

relationship, in order to determine whether or not the issue of a declaration of no

objection may be refused because the public interest may be at risk (for an explanation

of these criteria, see paragraph 3.4.7. and the explanation to Article 17).


his intention to issue a declaration of no objection. This notification may cause one of the

other competent authorities to exercise the right of veto, which is vested in all three


exercises its right of veto, then the Minister will not further consider the application for a


and appeal, which however only has procedural significance. The substantive

consideration underlying the decision of a competent authority of the Federal Republic of

Germany of the United Kingdom will have to be challenged before the German or British

court, as the case may be. After all, the decision on the substance is not taken by the

Minister, but by one of the other competent authorities.

Under Article 3:41 of the General Administrative Law Act, a decision taken further to

this Article will be communicated to the party submitting an application for a declaration

of no objection, i.e. a holder of an equity interest that exceeds the threshold value

stipulated in this Article or anyone who intends to acquire or increase an equity interest

that exceeds the threshold value stipulated in this Article. Pursuant to paragraph 9 the

decision will also be communicated to he who disposes of the equity interest and to the

listed designated company.

Article 20

Article 20(1) regulates the situation in which one of the Contracting States exercises

its right of veto with respect to an unlisted designated enterprise, and in view of this

includes two prohibitory provisions.

Pursuant to paragraph 1(a) it is prohibited to hold, acquire or increase an equity

interest in the designated enterprise if the Minister exercises his right of veto. This

concerns the situation in which the competent authority either of the Federal Republic of

Germany or of the United Kingdom will initially consider the application, rather than the

Minister. Similar to the Minister pursuant to Article 19(7), the competent authorities will

notify the other Contracting States of their decision, enabling the Minister to decide,

within a period to be set in a Ministerial regulation, whether he will exercise the right of

veto.

Paragraph 1(b) refers to the situation in which the competent authority either of the

Federal Republic of Germany or of the United Kingdom exercises the right of veto. In this

situation as well it will be prohibited to hold, acquire, or increase an equity interest in the

designated enterprise if this results in reaching or exceeding a specific threshold value.

Pursuant to paragraph 2, Article 17(7) applies by analogy with regard to the

assessment as to whether the public interest may be at risk.

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Paragraph 3 provides that the decision of the Minister under paragraph 1(a) will also

be communicated to he who disposes of the equity interest and to the listed designated

enterprise.

Article 21

Pursuant to paragraph 1 the Minister may prohibit the holder of a share or controlling

right from exercising any right attached to a share (with the exception of the right to

dividend or a distribution from reserves) or exercise controlling rights in a designated

enterprise, if by exercising those rights the public interest may be put at risk. This

notification is open to objection and appeal.

Paragraph 2 provides for the pass-on effect of a decision comparable with the decision

of paragraph 1 taken by the competent authority either of the Federal Republic of

Germany or of the United Kingdom concerning the exercise of rights by a specific

shareholder of an ancillary company.

Paragraph 3 places the Minister’s exercise of his power in a legal framework: the

Minister may only impose a ban if the public interest may be put at risk. When making

this assessment he will take into account the factors set out in Article 17(7). The factors

that must be taken into account in an ex ante assessment of a shareholder are

consequently applicable when deciding whether a ban must be imposed on a shareholder

pursuant to this Article as well.

Paragraph 4 provides for a power if it is not possible to identify with certainty the

holder of the equity interest in a listed designated enterprise. In that event the Minister

may prohibit the last party in the custodial chain who could be identified as holder of

shares from exercising the rights attached to the shares. The wording of paragraph 4

makes it possible to identify as shareholder the intermediary who administrates or holds

a deposit for the benefit of a person in which this person is a participant. Whether this

power may be exercised depends on whether the minister is able, using the means and

powers available to him, to identify this person with sufficient certainty.

Paragraph 5 stipulates that the Minister’s decision will expressly state that this power

is exercised. This provision is included in view of the legal protection of the person

concerned, because it allows this person to know more precisely on what grounds a ban

is imposed on him as shareholder.

Paragraph 6 contains an obligation for all parties in the custodial chain not to frustrate

or undermine the effective execution of the ban on exercising the rights (except for the

right to dividend and other capital distributions) in a listed designated enterprise by

executing acts as a result of which a holder of a share or controlling right exercises rights

or control in violation of this prohibition (see also paragraph 3.4.8). Naturally, this

obligation only arises if the parties in the custodial chain are aware that a ban has been

imposed. Without this information they cannot be blamed for having executed (without

being aware thereof) acts that allow the holder of the share to exercise rights in violation

of the ban. The order in council referred to in Article 22(7) will therefore, in view of this,

impose an obligation on the listed designated enterprise to notify them thereof in certain

circumstances.

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Article 22

Paragraph 1 lays the responsibility for the effective implementation of the ban

imposed in accordance with Article 21(1) or (2) with the designated enterprise. Although

the ban is imposed on the holder of the share or controlling right and he is the one who

must comply with the ban, it is the designated enterprise that is able, by executing

actual acts, to prevent, or at any event make it very difficult, that the rights attached to

a share are exercised. For instance, prior to the general meeting the designated

enterprise registers the shareholders who may attend the general meeting and may vote

at that meeting. By refusing to register the banned shareholder, this shareholder is

legally unable to vote or even to attend the meeting. Even if he does present himself at

the meeting, the designated enterprise may refuse him access. The designated

enterprise may also refuse to provide the shareholder on whom the ban is imposed with

information.

Similar to Article 13(7), paragraph 2 includes a general duty to cooperate for all

parties in the custodial chain to allow an effective implementation of the ban on

exercising the rights attached to the share (with the exception of the right to dividend

and other capital distributions) by the listed designated enterprise. An intermediary, for

instance, will not be allowed to cooperate with a vote by proxy: the intermediary is

obliged to refuse to vote on behalf of a shareholder if a ban is imposed on that

shareholder. The custodian of an investment institution must be specifically mentioned in

this context. While the custodian – unlike for instance the intermediary – is the legal

owner of the shares, his relationship towards the manager of an investment fund or fund

for collective investment in securities is such that he is quite well able to ensure that the

manager is unable de facto to exercise control. In view of the contractual relationship

between the custodian and the manager as provided in Article 4:37f and Article 4:43 of

the Act on Financial Supervision, a custodian may provide for the necessary powers and

restrictions to comply with the statutory obligations under Article 22(2) of the legislative

proposal.

Paragraph 3 stipulates that the listed designated enterprise has a duty to report if no

or insufficient cooperation is given to effectively comply with the ban. Such report will

inform the Minister of the lack of cooperation from the parties in the custodial chain in

the listed designated enterprise. In certain situations the Minister may decide to enforce

the cooperation by imposing an administrative order of by imposing an administrative

fine, as provided in Articles 91 and 92, or to exercise the powers of paragraph 4. The

threat of exercising the powers laid down in Articles 91 and 92 alone will induce the

parties concerned to cooperate.

Paragraph 4 provides that the Minister may establish which party in the custodial

chain failed to cooperate. Paragraph 5 ensures that the acts and determinations of the

competent authorities of the Federal Republic of Germany and of the United Kingdom

that are comparable as regards nature and content are to be observed by the listed

designated enterprise in the same way.

As a result of the determination pursuant to Article 22(4) or (5), as holder or owner of

the equity interest is considered the party in the custodial chain – e.g. an intermediary or

a foreign institution – that is the participant in the deposit of the last party in the

custodial chain to cooperate with the implementation of that prohibition. As a result of

this legal fiction, the ban on exercising the rights attached to the equity interest will

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affect, for instance, all shares held in deposit by the relevant intermediary or institution

abroad with the last cooperating party in the custodial chain. It should be noted that the

holder referred to in Article 22(6), final sentence, is the holder of a giro deposit,

collective deposit, or deposit.

Article 22(7) provides for a ground for delegation to further detail, in or by way of an

order in council, the manner in which the Minister will exercise this power and within

what period the ban imposed by the Minister will be implemented. This ground offers the

possibility to give both the designated enterprise and any other relevant parties – e.g.

the parties in the custody chain – practical instructions on how to implement the ban in

practice. For instance, the listed designated company will be required to notify the other

parties in the custodial chain - subject to certain conditions – of the ban imposed on a

holder of a share or controlling right under Article 21(1).

Article 23

Article 23 offers the Minister the possibility to order the compulsory sale of a share, a

controlling right, or the compulsory full or partial sale of an equity interest. The effect of

this provision has already been extensively discussed in paragraph 3.4.9. Chapter 5, and

paragraph 5.2.3 specifically, focus on the treaty law aspects.

In addition, it may be noted that paragraph 7 provides for the pass-on effect of a

decision of the competent authority either of the Federal Republic of Germany or of the

United Kingdom that is comparable with paragraphs 1 to 5 inclusive, directed at a holder

of a share, controlling right, or equity interest in an ancillary company

Paragraph 10 provides for the power to set additional rules concerning the manner in

which and the period within which the order imposed by the Minister (or by the

competent authorities of the Federal Republic of Germany or of the United Kingdom)

must be implemented. It may for instance be stipulated that where the compulsory sale

of a significant equity interest in a listed designated enterprise is ordered, the decision

may not be published for a specific period of time to avoid large fluctuations in the share

price.

Paragraph 11 includes a power that is comparable with that of Article 21(4). This

power may be exercised if it is not possible to establish with certainty the identity of the

holder of an equity interest in a listed designated enterprise. In that event the Minister

may impose the obligation to sell on the last party in the custodial chain that can be

identified. The wording makes it possible to regard the intermediary who administrates

and holds a deposit in which the person that cannot be identified is a participant, as

shareholder. This power is exercised if the Minister is unable, with the means and powers

available to him, to establish with sufficient certainty the identity of this person.

Paragraph 12 provides that the decision imposed by the Minister will expressly state if

the power provided in paragraph 11 is exercised. This provision is included in view of the

legal protection of the person concerned, because it allows this person to know more

precisely on what grounds a ban is imposed on him as shareholder.

Article 24

Article 24 authorises that the designated enterprise is entitled and exclusively

authorised, in the event that a share or controlling right is not disposed of or an equity

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interest is not disposed of or reduced further to an order of the Minister, to proceed to do

so. Paragraph 3.4.9.2, above, already extensively discusses the effect of this provision.

Chapter 5, specifically paragraph 5.2.3.4, focuses on the treaty law aspects.

It is noted, in addition to the explanation given in those paragraphs, that paragraph 1

grants the designated enterprise a statutory power to dispose of shares on behalf of the

shareholder that is not dependent on the cooperation or confirmation of the shareholder

concerned. Nor can this statutory power be revoked and it has to be accepted as such in

legal transactions. For that matter, it will be necessary for the listed designated

enterprise, in certain situations, to notify the parties in the custodial chain about this

power, if it is invoked and executed.

Paragraph 2 provides that by or pursuant to order in council additional rules may be

set concerning the period within which the designated enterprise may effect the disposal

and how the proceeds are passed on or credited to the owner of the share or to another

entitled party. It is, for instance, anticipated that rules will be set, if UN sanctions are

imposed on the former shareholder himself and his assets are frozen, stipulating how the

proceeds of the compulsory sale must be dispensed with. In addition, the possibility is

provided to adopt specific rules concerning the treatment of entitled parties. It is

possible, for instance, that the proceeds are not transferred to the owner, but to a party

possessing a right of pledge on the shares.

In order to preserve the legal certainty, paragraph 3 is aimed at putting beyond doubt

that if the Minister or the competent authority of the Federal Republic of Germany or of

the United Kingdom has exercised the authority to identify a specific person as

shareholder because it is not possible to identify with certainty the underlying person, the

listed designated enterprise may also rely on this identification when exercising the

powers of paragraph 1.

In line with Article 22(2), paragraph 4 imposes an obligation to cooperate on the

parties in the custodial chain. These parties are obliged to cooperate with the execution

of the statutory task that rests on the designated enterprise pursuant to Article 24(1). In

departure from Article 22(2), however, this obligation to cooperate is not imposed on the

custodian of an investment institution. In the event of a compulsory sale of the shares in

a listed designated enterprise, as the obligations of the custodian are the same as those

of any other shareholder, since as legal owner of the shares the custodian will be subject

to the order.

Article 25

Under Article 25(1) the listed designated enterprise is obliged to notify the Minister

of any difficulties encountered in the implementation of the statutory obligation of

Article 24(1). This is because the situation may occur that a financial intermediary

refuses or is unable to cooperate with a listed designated enterprise in actually and

effectively executing the compulsory sale. This may for instance be the case if the

financial intermediary where the holder of the equity interest maintains his securities

account is not allowed, under the laws of its country of establishment, to directly

cooperate with the compulsory sale of the equity interest by the designated enterprise.

If the cooperation prescribed in Article 24(4) is not forthcoming, the Minister may order

the listed designated enterprise to submit a request for delivery in accordance with

Article 26(1). Upon receipt of the order the listed designated enterprise is obliged to

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follow the procedure for the delivery of shares provided in Article 26. A comparable

obligation exists if the competent authority of the Federal Republic of Germany or of

the United Kingdom has given an order to this effect to an ancillary company

(paragraph 4).

Article 26

A listed designated enterprise is not only obliged to follow the procedure of Article 26

in the event that Article 25(3) or (4) is applied, and it has received an order, but may

also do so voluntarily, without having received an order. A designated enterprise will for

instance avail itself of this possibility if it thinks that application of the procedure of

Article 26 will result in a quicker and more effective execution of the statutory

instruction for a compulsory sale. In view of this, paragraph 1 provides that the listed

designated enterprise is irrevocably authorised to make a request for the delivery of the

equity interest from the deposits (i.e. securities accounts held by financial parties) of

the financial intermediaries. A financial intermediary is subsequently obliged to

cooperate with this request and deliver the equity interest concerned from its deposit to

the listed designated enterprise and to reduce the deposit by the number of shares

(paragraph 2). However, the situation may occur that the identified shareholder whose

equity interest is to be disposed of or reduced does not hold his shares directly in the

deposit of the financial intermediary to which the listed designated enterprise has made

its request for delivery, but that these shares are held in his name by a different

financial intermediary. In that situation the financial intermediary that received the

request for delivery from the listed designated enterprise will have to instruct one or

more other financial intermediaries in the custody chain of the shares to reduce their

deposits for the account of the identified holder of the equity interest (Article 25(2) and

(3)). Like Article 24(4), Article 25(2) and (3) do not make any reference to the

custodian of an investment institution. If the delivery of shares is requested, the

obligations of the custodian are the same as those of any other shareholder, since as

legal owner of the shares the custodian will be subject to the order.

The purpose of such delivery is ultimately to enter the equity interest in the

shareholders’ register and register it in the name of the shareholder who was given the

order to sell (paragraph 4). Lastly, the entry in the shareholders’ register will make it

possible to dispose of the equity interest by following the procedure of Article 24. The

entry may be invoked against anyone in the chain of custody, which will ensure that the

designated enterprise may validly transfer the shares without other (new) rights holders

being able to oppose this (Article 26(5)). Paragraph 5 ensures that the request for

delivery of the shares (and their subsequent sale) is not obstructed during a brief

period of time by transactions with the relevant shares.

In view of the complexity of executing the delivery of the shares in accordance with

the procedure of Article 26, the possibility is provided in Article 26(6) to set additional

rules by or pursuant to order in council governing the authorisation for submitting a

request for delivery and for the manner in which compliance with the obligations of

Article 26(2) and (3) must be enforced.

In order to preserve the legal certainty, paragraph 7 is aimed at putting beyond

doubt that if the Minister (or the competent authority of the Federal Republic of

Germany or of the United Kingdom) has exercised the authority to identify a specific

person as shareholder because it is not possible to identify with certainty the underlying

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person, the listed designated enterprise may rely on this identification when making the

request for delivery.

Article 27

The situation that a financial intermediary in the chain refuses or is unable to

cooperate with a request for the delivery of the equity interest may arise when applying

the procedure described in Article 26 as well. The listed designated enterprise is obliged

to notify the Minister of this lack of cooperation (Article 27(1).

The Minister may in that event exercise the power laid down in Article 27(2) and

determine which party in the custodial chain was the last party to cooperate. Pursuant

to paragraph 3, a listed designated enterprise is obliged to comply with this

determination. Paragraph 4 ensures that the designated enterprise complies with

comparable acts and determinations of the competent authorities of the Federal

Republic of Germany and of the United Kingdom towards an ancillary company and its

shareholders. Article 27(5) subsequently provides who, in this situation, is to be

regarded as the shareholder, which is the person who is a partner in the relevant

deposit of a financial intermediary, the holder of which deposit was the last party to

cooperate. Next, the equity interest may be disposed of or reduced by following the

procedure of Article 24 in the name and for the account of this shareholder. This Article

will encourage the cooperation of financial institutions in the custodial chain of the

shares in the listed designated enterprise since this ensures that each will have an

interest in preventing from being affected by this determination.

Article 28

Article 28 provides rules for the situation in which a person has been given an order

as referred to in Article 23(1) to (5) inclusive, or (7) and subsequently intends to

acquire shares or controlling rights in an unlisted designated enterprise or to acquire an

equity interest in a listed designated enterprise as a result of which the threshold value

specified in the order will be reached or exceeded.

In respect of an unlisted designated enterprise this may signify that both the acquirer

of shares or controlling rights under Article 28 and the disposer of the shares or

controlling rights under Article 17 will have to give notice and where necessary will have

to submit an application for a declaration of no objection before they are allowed to

make the intended transaction. In respect of a listed designated enterprise the situation

may occur that both the procedure of Article 19 and of Article 28 will apply to the

acquirer of an equity interest. In that situation, since the two procedures are identical,

the declaration of no objection will be issued on two legal grounds.

The starting point of the procedure is that one of the Contracting States will issue a

declaration of no objection, and that the other two Contracting States will have a right

of veto. Article 28 provides the assessment procedure if the Minister and the competent

authorities of the other two Contracting States have agreed that the Minister will initially

decide on the application for a declaration of no objection. Article 29 provides for the

situation in which the Minister or one of the other competent authorities exercises their

right of veto.

The procedure concerning the declaration of no objection is initiated by the Minister

being notified by the party who is given an order, referred to in Article 23(1) to (5)

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inclusive, or Article 23(7), and who intends to acquire shares or controlling rights or

who intends to acquire an equity interest that exceeds the threshold specified in the

order. The articles of association of the German ancillary company and of the British

ancillary company will provide for the obligation that the competent authorities of the

Federal Republic of Germany and of the United Kingdom must receive a similar

notification. This will inform Minister of the intention and allow him to determine, in

consultation with these competent authorities, which of the three competent authorities

will decide whether or not a declaration of no objection will be issued. If this is to be

decided by the Netherlands, the Minister will exercise the powers provided in paragraph

2 and instruct the holder or intended acquirer to submit an application for a declaration

of no objection in order to duly acquire the share, controlling right or equity interest.

Paragraph 3 subsequently provides that anyone who has been given an order is not

allowed to acquire shares, controlling rights or an equity interest equal to or in excess of

the threshold value stipulated in the order without first having obtained a declaration of

no objection from the Minister or an equivalent declaration from the competent

authority either of the Federal Republic of Germany or of the United Kingdom. The

power of these competent authorities will be provided for in the articles of association of

the German and British ancillary companies.

Paragraph 4 sets out the minimum information to be included in the application. This

paragraph is supplementary to Article 4:2 of the General Administrative Law Act.

Paragraph 5 provides that the Minister must refuse to issue the declaration of no

objection if the intended acquirer is an undesired person. or if an applicant acts in

violation of Article 16. If pursuant to Article 16 a shareholder may only hold an equity

interest in URENCO Holding NV of less than 3% of the shares, he will not be issued a

declaration of no objection. Paragraph 5 additionally provides that the Minister must

refuse to issue a declaration of no objection if the public interest may be put at risk.

From paragraph 6 it follows that Article 17(7) applies by analogy with regard to the

determination whether the public interest may be put at risk.

Paragraph 7 provides that the Minister will notify the other competent authorities of

his intention to issue a declaration of no objection. This may cause one of the

competent authorities to exercise its right of veto, which is vested in all three


exercises its right of veto, the Minister will not further consider the application for a

declaration of no objection further to paragraph 8. This decision is open to objection and

appeal which, however, only has procedural significance. The substantive consideration

underlying the decision of a competent authority either of the Federal Republic of

Germany or of the United Kingdom will have to be challenged before the German or

British courts, respectively, since it is one of these competent authorities that will have

taken the substantive decision, rather than the Minister.

Paragraph 9 provides additional rules regarding how the decision on the application

for a declaration of no objection will be communicated. Pursuant to Article 3:41 of the

General Administrative Law Act, a decision further to this Article will be communicated

to the party who filed the application for the declaration of no objection, i.e. the holder

or intended acquirer of the shares, the controlling rights, or the equity interest.

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Paragraph 9 ensures that the disposer and the designated enterprise will be notified of

the decision as well.

Paragraph 10, lastly, provides that a holder or an intended acquirer who has

completed the procedure of Article 28 and has been issued a declaration of no objection

pursuant to paragraph 3 will not again have a duty to notify as stipulated in paragraph

1. Thus, paragraph 10 prevents someone who has been given an order from being

forever under an obligation to notify pursuant to paragraph 1. Nevertheless, the

provisions of Articles 15 to 20 inclusive, will continue to apply unabridged. However, the

situation may also occur that Articles 15 to 20 are not applicable (for instance if an

order specifies a percentage that is different from the one mentioned in Article 19(1), or

if somebody is no longer an undesired person). In order to be able to compel somebody

to sell his share in that event as well, paragraph 11 provides that the Minister may

order someone who as acted in violation of Article 28(3) or Article 29(1) to dispose of

his share, controlling right, or equity interest. Paragraph 12 declares the provisions in

respect of the compulsory sale applicable by analogy.

Article 29

Article 29(1) provides for the situation in which one of the Contracting States

exercises its right of veto and in view of this contains two prohibitory provisions.

Pursuant to paragraph 1(a), anyone who has received an order as referred to in

Article 23(1) to (5) inclusive, or Article 23(7), is prohibited from acquiring shares,

controlling rights, or an equity interest in a designated enterprise that is equal or in

excess of the threshold value specified in the order if the Minister has exercised his right

of veto. This refers to the situation in which the competent authority either of the

Federal Republic of Germany or of the United Kingdom will initially decide on the

application, rather than the Minister. Just like the Minister pursuant Article 28(7), the

competent authorities will notify the other Contracting States of their decision,

whereupon the Minister will be entitled, within a period to be stipulated by Ministerial

regulation, to exercise his right of veto.

Paragraph 1(b) refers to the situation in which the competent authority of either the

Federal Republic of Germany or of the United Kingdom has exercised the right of veto.

Also in this situation the ban is in place with regard to the acquisition of shares,

controlling rights or an equity interest in a designated enterprise.

Paragraph 2 provides that Article 17(7) applies by analogy to the assessment of

whether or not the public interest may be put at risk.

Paragraph 3 provides additional rules for communicating the decision on the

application for a declaration of no objection. Pursuant to Article 3:41 of the General

Administrative Law Act a decision further to paragraph 1(a) will be communicated to the

party who has submitted the application for the declaration of no objection, i.e. the

intended acquirer of the shares, controlling rights or equity interest. Paragraph 3

provides that the decision will also be communicated to the disposer and the designated

enterprise.

Article 30

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Pursuant to Article 30(1), an undesired person is not allowed to exercise the rights

attached to a share or control in a designated enterprise. Anyone who acts in breach of

Article 16(1) is prohibited, pursuant to paragraph 2, from exercising the rights attached

to the shares or controlling rights in a designated enterprise (either listed or unlisted),

or control, with the exception of the right to dividend and distributions from the

reserves, where the right or the control attached to the shares is equal to or in excess

of the 3-percent threshold value. The holder or acquirer will also retain his rights and

control attached to the share package that is held or acquired below the threshold

value. See the explanation given in paragraph 3.4.10., above for more details.

Some time may elapse between an order as referred to in Article 23 (1) to (5),

inclusive, and Article 27(7) and the actual transfer of the shares, controlling rights or

interest. Precisely because the measures are aimed at avoiding rights attached to

shares or controlling rights from being exercised that may put the public interest at risk,

Article 30(3) provides for putting a stop to the exercise of these rights. As soon as the

holder of the shares, controlling rights or equity interest has been given an order or has

received an instruction or an ancillary company has been given an order in respect of

those shares, controlling rights or that equity interest from a competent authority, he is

no longer allowed to exercise the rights attached to those shares, controlling rights or

equity interest. This prohibition does not apply to the right of dividend and to

distributions from the reserves.

Paragraph 4 provides for the situation in which none of the rights attached to shares

and controlling rights may be exercised, and there is consequently no entitlement to

dividend or distributions from the reserves either. This will be the case if a person has

acquired the shares or controlling rights from an unlisted designated enterprise or

holder in breach of Article 17(4) or Article 18(1) (i.e. without a declaration of no

objection). In addition, this may be the case if a person acts in breach of Article 19(3)

or Article 20(1) (i.e. if he has held, acquired or increased an equity interest in a listed

designated enterprise without a declaration of no objection). Lastly, this ban will apply

to the situation in which this person acts in breach of an order as referred to in Article

23(5) or (7) (breach of an order to dispose), or in breach of Article 28(3) or Article

29(1) (acquisition of shares, controlling rights or an equity interest without a declaration

of no objection).

Article 31

Articles 31 and following provide for the possibility of an ex ante review of all sales

agreements, transfers, or the (actual) making available of assets for dual use,

intellectual property rights, business secrets or services. These are activities that carry

or may carry a security or proliferation risk. In order to be able to properly identify and

demarcate this risk, common ground is found with EC Regulation 429/2008, the

Strategic Services Act and the Strategic Assets Decree: to the extent that the assets for

dual use, intellectual property rights, business secrets or services have been identified

in this Regulation and regulations as subject to an export licence, Article 31 apply.

Article 31 in other words covers – in accordance with the existing regulatory practice

under the Treaty of Almelo – the procedure prior to the negotiations for and the

conclusion of agreements that will lastly lead to the physical delivery or actually making

available. Consequently, Article 31 does not concern the export itself, since the export is

regulated by EC Regulation 428/2009, the Strategic Services Act and the Strategic

Assets Decree.

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Article 31(1) and (2) contain a general prohibition for the designated enterprise and

its subsidiaries. Under paragraph 1 it is prohibited to negotiate or conclude an

agreement on the sale of assets for dual use, intellectual property rights, business

secrets or services that are subject to a licence requirement pursuant to EC Regulation

428/2009, the Strategic Services Act or the Strategic Assets Decree.

This may first of all concern assets for dual use that are listed in Annex I to EC

Regulation 428/2009 and the additional effects of this Annex pursuant to Article 15(1)

of EC Regulation 428/2009 in accordance with international regulations on non-

proliferation and export control. A well-known example of an international regulation on

non-proliferation and export control are the guidelines issued by the Nuclear Suppliers

Group (NSG), e.g. the Guidelines for transfers of nuclear-related dual-use equipment,

materials, software, and related technology (INFCIRC/254, Part 2). Not all assets listed

in Annex I fall within the scope of Article 31(1). This scope is restricted to assets that

are included in category 0 of Annex 1 (nuclear goods) and goods that are included in

categories 1 to 9, inclusive (special materials and related equipment). Moreover, it must

concern technology that is directly related to nuclear goods as included in category 0 on

the ground of the nuclear technology note.

Secondly, these may be assets for dual use that are not listed in Annex I to EC

Regulation 428/2009 but in respect of which the Minister has imposed a licence

requirement because the assets may be used for the development and production of

weapons of mass destruction or their means of delivery (see Article 4(1) to (3)

inclusive, of EC Regulation 428/2009).

Thirdly, these may be assets for dual use that are subject to a licence requirement by

or pursuant to the Strategic Assets Decree.

Services for dual use include for instance providing technical assistance as referred to

in Article 3 of the Strategic Services Act, or the non-physical transfer of technology and

software related to assets that are listed in Annex I to EC Regulation 428/2009. Lastly,

this may concern providing brokering services or the non-physical transfer of technology

and software where the Minister for Foreign Affairs has imposed a licence requirement

because the assets in respect of which these services are provided, although they are

not listed in Annex I to EC Regulation 428/2009, may nevertheless be used in the

development and production of weapons of mass destruction or their means of delivery

(see Article 4(1) to (3) inclusive, and Article 5(1) of EC Regulation 428/2009, and Article

5(1) and Article 6(1), of the Strategic Services Act).

Article 31(2) provides for the situation in which, although there is no sale, the assets

for dual use, intellectual property rights, business secrets or services are still physically

(or legally) transferred or actually made available. Furthermore, a designated enterprise

or a subsidiary may enter into some form of cooperation with a third party that may

result in such transfer or actual making available. Pursuant to Article 31(2)(c) such

cooperation is prohibited as well. In Article 31(2)(d) the scope of the prohibition is

extended to entering an agreement for the creation of security rights or rights of use on

an asset, intellectual property right of business secret within the meaning of paragraph

1. This is done in order to take into account the risk that by creating security rights or

rights of use, assets for dual use, intellectual property rights, or business secrets are

eventually (physically) transferred nevertheless. By adding the phrase “Notwithstanding

198

paragraph 1”, in paragraph 2, it is indicated that the prohibition in respect of sale as

referred to in paragraph 1 fully applies.

Paragraph 3 provides in which instances Article 31 is not applicable. These include

activities between a designated enterprise and a full subsidiary of the jointly managed

company (URENCO Ltd.), between a designated enterprise and the jointly managed

company, between full subsidiaries of the jointly managed company, and between the

jointly managed company and its full subsidiaries. This is, however, subject to the

subsidiary and the jointly managed company both having their registered offices and

their central management being located in one of the Contracting States of the Treaty of

Almelo, the Treaty of Cardiff, the Treaty of Washington or the Treaty of Paris, or of a

treaty on nuclear collaboration with a comparable purport. This allows the enterprises

within the URENCO group to act freely and adequate safeguards are ensured.

Paragraph 4(a) provides the basis for designating, by or pursuant to an order in

council, dual use goods, intellectual property rights, business secrets or services to

which the prohibition of paragraphs 1 and 2 extends as well. This option is provided for

because changes in Regulation 428/2009 take time to implement and a need might

arise, from a security or non-proliferation point of view, to rapidly extend this

prohibition and the related supervision to assets for dual use, intellectual property

rights, business secrets, or services, in respect of which a new security risk is created.

This, for instance, will be the case if the guidelines of the Nuclear Suppliers Group are

revised.

In addition, it is possible, by order in council, to designate parties or classes of

parties with whom negotiations are taking place or with whom agreements are being

concluded to whom paragraphs 1 and 2 do not apply. These may include all potential

customers in a country, or even the customers in a group of countries. In addition,

certain types of customers may be exempted, for instance a demarcated group of

parties that have a specific role in the nuclear fuel cycle (paragraph 4(b).

Paragraph 4(c) provides that by or pursuant to an order in council assets for dual

use, intellectual property rights, business secrets or services may be designated to

which the prohibitions of paragraphs 1 and 2 do not apply either. Paragraph 4(d), lastly,

provides a ground for delegation pursuant to which forms of cooperation may be

designated to which the prohibition of paragraph 2 does not apply. These may for

instance include certain research projects in which cooperation is entered with a third

group of parties.

Article 32

Article 32 offers the Minister the possibility to grant exemption from the prohibitions

mentioned in Article 31. Paragraph 3.5.2. discusses the possibility to grant exemption.

Both the Minister and the competent authorities of the other Contracting States are

authorised to allow a designated enterprise to submit a request for exemption. The

starting point of the procedure is that one of the Contracting States will grant the

exemption, whereby the other two Contracting States will have a right of veto.

Article 32 contains the assessment procedure to be observed in connection with a

request for exemption if the Minister and the competent authorities of the other two

Contracting States have agreed that the request will initially be considered by the

199

Minister. Article 33 provides for the situation in which the Minister or one of the other

competent authorities exercises its right of veto.

The procedure for granting exemption is initiated by the designated enterprise

notifying the Minister of its intention to carry out the activity prohibited under Article 31.

The articles of association of the German ancillary company URENCO Holding GmbH and

of the British ancillary company URENCO Holding Ltd provide that a same notification

may be made to the competent authorities of the Federal Republic of Germany and of

the United Kingdom. This enables the Minister to be aware of the intention and to


authorities will decide whether or not to grant exemption. If this is the Netherlands, the

Minister will decide, within a period to be set by Ministerial regulation, whether he will

exercise the authority referred to in paragraph 2 and the designated enterprise will

submit a request for exemption with the Minister. After this period has expired without

the Minister having exercised his authority, the designated enterprise will no longer be

able to submit a request for exemption.

Paragraph 3 stipulates the legal consequences of granting exemption by the Minister

or consent equivalent to exemption granted by the Minister by one of the other

Contracting States. In these instances the prohibitions listed in Article 31(1) and (2) do

not apply.

Paragraph 4 provides that the Minister will refuse to grant exemption if the public

interest may be put at risk.


his intention to grant exemption. This notification may cause one of the competent

authorities to exercise its right of veto, which is vested in each of the three Contracting

States. If one of the competent authorities of the other Contracting States exercises its

right of veto, the Minister will not further consider the request for exemption, pursuant

to paragraph 6. This decision is open to objection and appeal which, however, only has

procedural significance. The substantive consideration underlying the decision of a

competent authority either of the Federal Republic of Germany or of the United Kingdom

will have to be challenged before the German or the British courts, respectively, since it

is either of these competent authorities that has taken the substantive decision, rather

than the Minister.

Paragraph 7 provides that exemption may only be requested for a number of

agreements, or for certain types of agreements and agreements related to categories of

activities or to categories of parties. This makes it possible to grant blanket exemption

for related and for the most part identical agreements that are regularly concluded with

the same parties, for instance in respect of a specific project, rather than having to

grant exemption for each agreement individually.

Article 33

Article 33, lastly, provides for the situation in which one of the Contracting States

exercises its right of veto.

Pursuant to sub (a), and in departure from Article 32(3), the prohibition of Article

31(1) and (2) is fully applicable if the Minister has exercised his right of veto. This refers

to the situation in which the competent authority either of the Federal Republic of

200

Germany or of the United Kingdom, rather than the Minister, will initially decide on the

application. Like the Minister pursuant to Article 32(5), the competent authorities will

notify the other Contracting States of their decision, enabling the Minister, within a

period to be stipulated by Ministerial regulation, to exercise the right of veto. The

consequence of exercising the right of veto by the Minister is that the prohibitions

specified in Article 31 will fully apply.

Sub (b) regulates the situation in which the competent authority either of the Federal

Republic of Germany or of the United Kingdom has exercised the right of veto. Also in

this situation the prohibitions of Article 31 will fully apply.

Article 34

Article 34 covers the situation in which it appears that the performance of the activity

for which, pursuant to Article 32(3) exemption is granted by the Minister, or one of the

competent authorities has granted permission, may put the public interest at risk. This

may for instance be the case if the security situation in the country of the buyer

deteriorates and war appears imminent. If this situation arises, the Minister will be

authorised, pursuant to paragraph 1, to prohibit a designated enterprise or its

subsidiary from performing the activity or to have the performance suspended. It is

preferable to order the suspension of the activity, because this will mean that for

instance an agreement concluded in that context will continue, in principle, to be in

force. On the other hand, it cannot be ruled out in some instances that the situation

deteriorates to such a point that the initial ground for exemption is no longer present. In

that event it stands to reason to impose prohibitions pursuant to paragraph 2, as this is

in line with the prohibition of Article 31(1) and (2).

Paragraphs 3 to 6 inclusive, list a number of specific procedural provisions. Pursuant

to paragraph 3, the Minister will submit the draft of a decision concerning suspension or

a prohibition to perform to a designated enterprise or its subsidiaries to enable them to

express their views within a period to be stipulated by Ministerial regulation. Paragraph

4 sets forth within which period the Minister will take a final decision. If an urgent threat

to the public interest exists, the Minister may depart from the procedure described in

paragraphs 3 and 4. This decision lapses after 6 months after entry onto force. The

provision to let the decision lapse after six months is included in order to offer the

designated enterprise and the buyer certainty. Either the situation has recovered to

such an extent that the risk to the public interest has diminished to such a degree that

the performance of the activity may be resumed, or the threat still exists, in the latter

event the Minister will have to convince the competent authorities of the Federal

Republic of Germany and of the United Kingdom to jointly impose a permanent

prohibition to execute. It is important, given the reputation of the URENCO Group as a

reliable supplier of enriched uranium and enrichment services, that a decision on such

an interruption of the performance of the activity is not taken lightly and only as a last

resort.

Starting point of the procedure of this Article is that all three Contracting States must

be in agreement. Pursuant to this legislative proposal the Minister is authorised to

prohibit a designated enterprise or its subsidiary to perform an activity or to have the

agreement suspended, albeit that such decision will not enter into effect until the other

two Contracting States have taken a similar decision either. Paragraph 7 expresses the

required unanimity. Paragraph 7 only concerns the situation in which the Minister has

201

already imposed a suspension or prohibition, but the competent authorities of the

Federal Republic of Germany and of the United Kingdom have not yet done so. In view

of this, paragraph 7 provides that the Minister’s decision will not enter into effect until

both the suspension and the prohibition of the activity by the competent authorities of

both the Federal Republic of Germany and of the United Kingdom has entered into

effect. If, for instance, one of the other competent authorities has not yet imposed a

suspension or a prohibition, the moment when the Minister’s decision enters into effect

will be the moment when the suspension or prohibition imposed by the later competent

authority enters into effect.

Article 35

Article 35(1) prohibits a designated enterprise and its subsidiaries to make an

investment as referred to in Article 1(a) without the approval of the Minister. This refers

to an investment related to opening or putting into operation a production facility for the

enrichment of uranium, the production of radioactive substances, or the development

and application of the relevant technology outside the territory of the three Contracting

States.

Paragraph 2 provides that the Minister may only grant approval if a treaty in the field

of nuclear cooperation is in place the purport of which is comparable to that of the

Treaty of Washington, the Treaty of Cardiff, or the Treaty of Paris as concluded by the

Netherlands, the Federal Republic of Germany and the United Kingdom and entered into

with the State on whose territory the production facility is to be established or put into

operation and this treaty has entered into force.

As is explained in paragraph 3.2.3.2. and 3.5.3., above, these types of investments

are subject to the most demanding decision-making procedure. This is because having

an enrichment facility within the meaning of this Article will bring the possibility of

producing a nuclear weapon at short notice much closer. The starting point of the

procedure of this Article is that unanimity of the three Contracting States is required. In

view of this, each of the three Contracting States must have given their approval to the

investment. The requirement of unanimity of the three Contracting States is set out in

paragraph 3. Paragraph 3 solely concerns the situation in which the Minister has already

given his approval, but one of the other two competent authorities has not yet done so.

In view of this, paragraph 3 provides that the Minister’s decision will not enter into

effect until the suspension or the prohibition of the agreement by both the competent

authority of the Federal Republic of Germany and by the competent authority of the

United Kingdom has entered into effect. If, for instance, one of the other competent

authorities has not yet imposed a suspension or a prohibition, the moment when the

Minister’s decision enters into effect will be the moment when the suspension or

prohibition imposed by the later competent authority enters into effect.

Article 36

Article 36 covers making an investment as referred to in Article 1, under investments

sub (b) or (c) that entail a significant expansion of the production capacity of an existing

production facility located outside the territory of the three Contracting States. As is

explained in paragraph 3.5.3. above, such expansion may carry proliferation risks,

specifically if the production capacity and facility are used for other purposes than was

anticipated. This may also concern an investment for the purpose of creating or

202

commissioning a new production facility within the territory of the three Contracting

States.

The starting point of the procedure is one of the Contracting States issuing a

declaration of no objection, whereby the other two Contracting States will have a right

of veto. Article 36 contains the assessment procedure concerning such investment in

the event that the Minister and the competent authorities of the other two Contracting

States have agreed that the application for a declaration of no objection will initially be

considered by the Minister. Article 37 provides for the situation in which either the

Minister or one of the other competent authorities exercises the right of veto.


designated enterprise notifying the Minister of its intention to make the investment. This

notification must be made timely, i.e. within a period before the negotiations for

concluding the agreement in respect of the investment start. The articles of association


company URENCO Holding Ltd. provide that a same notification must be made to the

competent authorities of the Federal Republic of Germany and of the United Kingdom.

This ensures that the Minister is aware of the intention and allows the Minister to


authorities will determine whether or not the declaration of no objection may be issued.

If this is the Netherlands, the Minister will exercise the authority of paragraph 2 and the

designated enterprise will have to submit an application for a declaration of no objection

to the Minister.

Paragraph 3 subsequently provides that it is prohibited to make such an investment

without a declaration of no objection or an equivalent declaration issued by the

competent authority of either the Federal Republic of Germany or of the United

Kingdom. The authority of these authorities is laid down in the articles of association of

the German ancillary company URENCO Holding GmbH and of the British ancillary

company URENCO Holding Ltd..

Paragraph 4 provides that the Minister will not issue a declaration of no objection if

the public interest may be put at risk.



the competent authorities to exercise the right of veto that is vested in all three


exercises the right of veto, the Minister will not further consider the application for a


and appeal, which, however, has only procedural significance. The substantive

consideration underlying the decision of a competent authority of the Federal Republic

of Germany or of the United Kingdom will have to be challenged before the German or

the British courts, respectively, since it is either of these competent authorities that will

take the substantive decision, rather than the Minister.

Article 37

Article 37 provides for the situation in which one of the Contracting States exercises

its right of veto and contains two prohibitory provisions in view of this.

203

Pursuant to Article 37(a) it is prohibited to make an investment as referred to in

Article 1, under investment, sub (b) or (c), if the Minister has exercised his right of

veto. This refers to the situation in which the competent authority either of the Federal

Republic of Germany or of the United Kingdom, rather than the Minister, will initially

assess the investment. Similar to the Minister pursuant to Article 36(5), the competent

authorities will notify the other Contracting States of their intent, to enable the Minister

to stipulate a period, by way of a Ministerial regulation, within which he may exercise

the right of veto.

Article 37(b) refers to the situation in which the competent authority either of the

Federal Republic of Germany or of the United Kingdom has exercised its right of veto.

Also in this situation it will be prohibited to make the investment.

Article 38

Article 38 covers making investments as referred to in Article 1, under investment,

sub (d) or (e). This involves the purchase of an asset for dual use, intellectual property

rights, business secrets or services where such purchase does not form part of the

normal business activities and a permit is required under Regulation 428/2009, the

Strategic Services Act, or the Strategic Goods Decree. This will usually concern goods,

property rights, business secrets, or services that bear no relationship to enrichment

activities but are instead intended to be used in other nuclear activities, e.g. the

construction of a nuclear power plant or the production of fuel rods. It will be reviewed

whether these types of investment will pose an additional risk for the public interest.

The necessity of these powers is already clarified in paragraph 3.5.4., above. The

starting point of the procedure is that one of the Contracting States will issue a

declaration of no objection, but that the other two Contracting States will have a right of

veto. Article 38 includes the assessment procedure to be observed in respect of

investments if the Minister and the competent authorities of the other two Contracting

States have agreed that the requested declaration of no objection will initially be

assessed by the Minister. Article 39 regulates the situation in which the Minister or one

of the competent authorities will exercise the right of veto.


designated enterprise notifying the Minister that it intends to make the investment

within a period to be stipulated by Ministerial regulation before the intended date of the

investment. The articles of association of the German ancillary company URENCO

Holding GmbH and of the British ancillary company URENCO Holding Ltd. will provide

that a similar notification must be submitted to the competent authorities of the Federal

Republic of Germany and of the United Kingdom, respectfully. Thus, the Minister will be

aware of any such intention and may confer with the other competent authorities to

decide which of the three competent authorities will determine whether the declaration

of no objection may be issued. Where it is decided that this is the Netherlands, the

Minister will exercise his authority provided in Article 38(2) and the designated

enterprise will have to submit an application for a declaration of no objection with the

Minister in order to make the investment.

Paragraph 3 subsequently provides that it is prohibited to make an investment

without a declaration of no objection or a similar declaration granted by the competent


power of these authorities is provided for in the articles of association of the German

204

ancillary company URENCO Holding GmbH and of the British ancillary company URENCO

Holding Ltd..





the competent authorities to exercise the right of veto that is vested in all three of the


exercises its right of veto, the Minister will not further consider the application for a



consideration underlying the decision of a competent authority either of the Federal

Republic of Germany or of the United Kingdom will have to be challenged before the

German or the British courts, respectively, since it is either of these competent

authorities that will take the substantive decision, rather than the Minister.

Paragraph 7 provides for designating by or pursuant to an order in council

investments to which the prohibition of paragraph 3 does not apply; these are

investments for the purchase of assets for dual use, intellectual property rights,

business secrets or services that do fall under the prohibition of Article 38(3), but that

are of minor interest or the nature of which makes them fall outside the scope of the

safeguards to be protected with this legislative proposal. The order in council may for

instance also designate a specific combination of investments, certain types of

investments, or certain categories of investments that will not be subject to this

prohibition.

Paragraph 8 provides that Article 38 does not apply to investments made within the

URENCO group. This concerns an investment made by a designated enterprise in a full

subsidiary of the jointly managed company (URENCO Ltd.), by a designated enterprise

in the jointly managed company, by a full subsidiary of the jointly managed company in

another full subsidiary of this company, and by the jointly managed company in its full

subsidiaries, provided the subsidiary and the jointly managed company both have their

registered offices and that the central management of each of the companies is

established in one of the Contracting States of the Treaty of Almelo, the Treaty of

Cardiff, the Treaty of Washington, or the Treaty of Paris, or of a treaty on nuclear

collaboration having a comparable purport. This enables intercompany investments and

ensures that there are sufficient safeguards.

Article 39


its right of veto and in view of this contains two prohibitory provisions.

Pursuant to sub (a), making an investment as referred to in Article 1, under

investment, sub (d) or (e) is prohibited if the Minister has exercised his right of veto.

This concerns the situation in which the investment will initially be assessed by the

competent authority either of the Federal Republic of Germany or of the United

Kingdom, instead of the Minister. Just like the Minister pursuant to Article 38(5), these

competent authorities will notify the other Contracting States of their decision, to enable

205

the Minister to exercise his right of veto within a period to be set by Ministerial

regulation.

Sub (b) refers to the situation in which the competent authority either of the Federal

Republic of Germany or the United Kingdom has exercised the right of veto. In that

event as well the investment will be prohibited.

Article 40

Article 40(1) covers divestments made by a designated enterprise.


declaration of no objection and that the other two Contracting States will have a right of

veto. Article 40 sets forth the assessment procedure to be followed in respect of

divestments, where the Minister and the competent authorities of the other two

Contracting States have agreed that the application for a declaration of no objection will

initially be considered by the Minister.

Article 41 provides for the situation in which the Minister or one of the other

competent authorities exercises its right of veto.

The procedure to be followed in respect of the declaration of no objection is initiated

by the designated enterprise notifying the Minister of an intended divestment within a

period to be stipulated in a Ministerial regulation before making the divestment. The

articles of association of the German ancillary company URENCO Holding GmbH and of

the British ancillary company URENCO Holding Ltd. provide that a similar notification

must be made to the competent authorities of the Federal Republic of Germany and the

United Kingdom. This ensures that the Minister will be aware of this intention and will

allow him to consult with these competent authorities in order to determine which of the

three competent authorities will decide whether or not the requested declaration of no

objection will be issued. If this is the Netherlands, the Minister will exercise the

authority of paragraph 2 and the designated enterprise must submit an application for a

declaration of no objection to the Minister in order to be able to make the divestment.

Paragraph 3 subsequently provides that it is prohibited to make a divestment without

a declaration of no objection having been issued, or an equivalent declaration issued by

the competent authority either of the Federal Republic of Germany or of the United

Kingdom to an ancillary company. The authority of these authorities is laid down in the


the British ancillary company URENCO Holding Ltd..




his intention to issue a declaration of no objection. Such notification may be cause for

one of the other competent authorities to exercise the right of veto vested in the three


exercises this right of veto, the Minister will not further consider the application for a




206

of Germany or of the United Kingdom will have to be challenged before the German and

British courts, respectively, since it is either of these competent authorities that has

taken the substantive decision, and not the Minister.

Paragraph 7 provides for the possibility to designate by or pursuant to an order in

council divestments to which the ban stipulated in paragraph 3 does not apply. These

are divestments that although they do fall within the scope of the prohibition of Article

40(3), are of minor importance or are of such a nature that they fall outside the scope

of the interests to be secured by this legislative proposal. The order in council may for

instance also designate a specific combination of investments, certain types of

investments, or certain categories of investments that will not be subject to this

prohibition.

Paragraph 8 provides in a similar fashion as Article 38(8) to which instances Article

40 does not apply. This provides that Article 40 is not applicable to divestments within

the URENCO group.

Article 41


the right of veto and in view of this contains two prohibitory provisions.

Pursuant to Article 41(a) it is prohibited to make a divestment if the Minister has

exercised his right of veto. This refers to the situation in which the competent authority

of either the Federal Republic of Germany or of the United Kingdom, instead of the

Minister, will initially assess the divestment. Just as the Minister pursuant to Article

40(5), the competent authorities will notify the other Contracting States of their

decision, thus enabling the Minister to decide, within a period to be stipulated in a

ministerial regulation, whether or not to exercise the right of veto.

Article 36(b) refers to the situation in which the competent authority either of the


In this event, the divestment will be prohibited as well.

Article 42

This Article formulates exceptions to which the Articles of Chapter 5 do not apply.

Article 42(1)(a) provides that Articles 31 to 37 inclusive, are not applicable to

negotiations on, concluding of, or performing agreements with Contracting States of the

Treaty of Almelo. The same holds for the actual making available of assets for dual use,

intellectual property rights, business secrets, or services pertaining to these (see Article

42(1)(b)) and for making an investment within the meaning of Article 1, under

investment, sub (a), (b), or (c) for the benefit of States that are parties to the Treaty Of

Almelo (See Article 42(1)(c)).

Nor do Articles 31 to 37 inclusive, apply to the execution of an act that is prohibited

under Article 31(1) or (2)(a), (b), or (c), the performance of an activity as referred to in

Article 31(1) or (2), or making an investment as referred to in Article 1, under

investment, sub (a), (b), or (d) in execution of a designation order under in Article

72(1), (2) or (4) (See Article 42(1)(d), (e), and (f)), since this order is given by the

Minister or by the competent authority either of the Federal Republic of Germany or of

207

the United Kingdom, so no subsequent approval from one of the Contracting States is

required.

Pursuant to Article 42(2)(a), Article 38 and Article 39 are not applicable to the

purchase of assets for dual use, intellectual property rights, business secrets or services

related to assets for dual use, for the benefit of one of the Contracting States. Pursuant

to Article 42(2)(b), Article 38 and Article 39 are not applicable if the designated

enterprise acquires intellectual property rights or business secrets originating from a

joint venture that is governed by Chapter 6 of this legislative proposal in the

implementation of a designation order issued in accordance with Article 48(2)(a) or (4).

Nor are Article 38 and Article 39 applicable if a designation order is given pursuant to

Article 72(1), (2), or (5).

Paragraph 3, lastly, provides that the rules concerning divestments in Article 40 and

Article 41 are not applicable to divestments for the benefit of one of the three

Contracting States.

All exceptions provided for in Article 42 concern transactions for the benefit of the

State as an international law and civil law entity. This explains also why this provision

does not make a reference to the Minister (or to the competent authorities of the

Federal Republic of Germany or of the United Kingdom), but refers to states that act in

legal transactions. Which authority or which entity of the Federal Republic of Germany

or of the United Kingdom enters into the transaction is for the respective Contracting

States to decide.

Article 43

Article 43 is intended to prevent the URENCO group from making nuclear weapons

itself. In view of this, a designated enterprise and its subsidiaries are prohibited

pursuant to Article 43 from manufacturing nuclear weapons or other nuclear explosives,

enriching uranium, or from enriching it to a level that makes it suitable for use as a

weapon.

The URENCO group is also prohibited from enriching or producing substances other

than uranium in order to use them for the manufacture of nuclear weapons or for other

nuclear explosive purposes.

Article 44

Article 44 contains a duty of care and imposes the obligation on a designated

enterprise and its subsidiaries to ensure that information, technology, equipment,

uranium, enriched uranium or other radioactive substances at their disposal cannot be

used for, contribute towards, or facilitate the manufacture, processing or control of

nuclear weapons or other nuclear explosives by a non-nuclear weapon state. This is a

further specification of the general obligation to prevent the proliferation of nuclear

weapons and the technology for manufacturing such weapons.

Article 45

Article 45 covers the creation, changing of the conditions, or discontinuation of a joint

venture of a designated enterprise or a subsidiary of the designated enterprise, where

this will grant or take away from the joint venture, a legal entity or an entity that forms

208

part of the joint venture or a third party access to assets for dual use, intellectual

property rights, business secrets, or services as referred to in Article 31(1), (2) or

(4)(a).


declaration of no objection, whereby the other two Contracting States will have a right

of veto. Article 45 contains the assessment procedure to be followed if the Minister and

the competent authorities of the other two Contracting States have agreed that the

application for the declaration of no objection will initially be considered by the Minister.

Article 41 provides for the situation in which the Minister or one of the other competent

authorities exercise their right of veto.

The procedure for obtaining a declaration of no objection is initiated by the

designated enterprise notifying the Minister of its intention to set up, change the

conditions of, or discontinue a joint venture. The articles of association of the German

ancillary company URENCO Holding GmbH and the British ancillary company URENCO

Holding Ltd. provide that the same notification must be made to the competent

authorities of the Federal Republic of Germany and of the United Kingdom. This ensures

that the Minister is aware of the intention and allows the Minister to consult with these

competent authorities in order to decide which of the three competent authorities will

determine whether or not the declaration of no objection will be issued. If this is the

Netherlands, the Minister will exercise the authority of paragraph 2 and the designated

enterprise will have to file the application for a declaration of no objection with the

Minister.

Paragraph 3 subsequently provides that the formation, changing of the conditions, or

discontinuation of a joint venture is prohibited if the competent authority of either the

Federal Republic of Germany or of the United Kingdom has not issued a declaration of

no objection or an equivalent declaration. The authority of these bodies is laid down in

the articles of association of the British ancillary company URENCO Holding Ltd. and of

the German ancillary company URENCO Holding GmbH.

Paragraph 4 provides that the Minister will refuse a declaration of no objection if the

public interest may be put at risk.



the competent authorities to exercise the right of veto that is vested in all three of the


exercises the right of veto, the Minister will not further consider the application for a







Pursuant to paragraph 7 the formation, changing the conditions, or the

discontinuation of a joint venture in violation of paragraph 1 will be void.

209

Paragraph 8 provides that this Article does not apply if a joint venture is discontinued

or set up, or if the terms are changed, further to the implementation of a designation

order as stipulated in Article 48(1) or Article 48(4)(a).

Article 46


its right of veto and contains two prohibitory provisions in view of this.

Pursuant to Article 46(1)(a) the formation, changing the conditions, or

discontinuation of a joint venture is prohibited if the Minister has exercised his right of

veto. This refers to the situation in which the competent authority of either the Federal

Republic of Germany or of the United Kingdom, instead of the Minister, will initially

assess the intention. Like the Minister pursuant to Article 45(5), the competent

authorities will notify the other Contracting States of their decision, thus enabling the

Minister to decide, within a period to be stipulated in a Ministerial regulation, whether or

not to exercise the right of veto.

Article 46(1)(b) covers the situation in which the competent authority of either the


If this is the case, the formation, changing the conditions, or discontinuation of a joint

venture will be prohibited.

Here as well, the creation, changing or discontinuation of a joint venture in violation

of the prohibition of paragraph 1 will be null and void.

Article 47

Article 47 is applicable to the executive and non-executive directors and staff of a

joint venture. Paragraph 1 provides the basis for designating, by order in council, a

position within a joint venture to which Articles 7, 8, 9 and 12 will apply by analogy.

These Articles will only apply by analogy if a designated enterprise is authorised

pursuant to powers granted by its articles of association, its shares, controlling rights,

or pursuant to an agreement, or has the de facto power, to recommend persons for

these positions, to agree with the appointment of persons, or is authorised to appoint

persons.

Paragraph 2 is comparable to Article 10. However, it contains a different regime

because the Minister has no powers to directly control the persons concerned. It follows

from paragraph 2(a) and (b) that if the Minister or the competent authority of one of

the other Contracting States revokes a declaration of no objection, the designated

enterprise is obliged to ensure that a person is suspended or is relieved from his duties.

Just as in Article 10, the Minister or the competent authority of one of the other

Contracting States may not be the authority that issued the declaration of no objection.

Paragraph 2(c) and (d) provide for this situation and stipulate that a designated

enterprise is obliged to ensure that the person in question is suspended or relieved from

his duties if the Minister or a competent authority has taken an independent decision to

do so.

Article 48

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Article 48 grants the Minister powers in respect of the activities conducted by a joint

venture. Article 48(1)(a) grants the Minister the authority to give an instruction to

ensure or contributing towards the designated enterprise or its subsidiaries guarantee

that the statutory obligations that rest on a joint venture are complied with by the joint

venture. A designated enterprise or its subsidiaries will have to make use of the rights

and powers vested in them in respect of the joint venture to guarantee to all possible

extent compliance with these statutory obligations. Where the situation so demands, it

may even be necessary to instruct the designated enterprise or its subsidiaries to

acquire shares or controlling rights from a participant in the joint venture, to prevent

third parties from gaining access to information or getting a grip on the joint venture.

Article 48(1)(b) provides the basis for this. In that event, the designated enterprise is to

exercise the rights or powers it has in the joint venture in order to ensure that these

statutory obligations are complied with to all possible extent. These may for instance,

be the rights under the powers of its articles of association, its shares or controlling

rights under an agreement, or that are vested in it in other ways. Other ways may for

instance be the initiation of negotiations with a view to concluding a completely new

agreement, even if the existing agreements do not provide a specific ground to do so.

Pursuant to paragraph 2(a) the Minister may give a designated enterprise or its

subsidiaries instructions concerning intellectual property rights or business secrets. This

authority is vested in the Minister because changes in intellectual property rights and

business secrets may raise questions concerning the adequate protection of security-

sensitive knowhow. Pursuant to paragraphs 2(b) and (c), the Minister may also give an

instruction in respect of the control ratios in the joint venture and the ownership of

shares in the joint venture.

Paragraph 4 ensures that a designated enterprise or its subsidiaries observe

comparable instructions given by the competent authorities of the other Contracting

States as well.

Paragraph 5 provides for a compensation scheme. As is also explained in paragraph

3.6., this compensation only covers costs incurred in the execution of the imposed

instruction.

Article 49

Article 49 concerns the contractual relationships between a designated enterprise and

a joint venture. This Article provides a basis for the Minister to subject to special

supervision changes in, or the termination or rescission of certain agreements

concerning assets for dual use, intellectual property rights, business secrets or services

related to assets for dual use as mentioned in Article 31(1) or (2). In other words, this

concerns assets, property rights, business secrets, or services for which a permit is

required by or pursuant to the Strategic Services Act, the Strategic Goods Decree, or

pursuant to Regulation 428/2009, as specified in Article 31(1). This supervision

furthermore only pertains to specific agreements designated by ministerial regulation.

These agreements will in any event include business-sensitive information and in some

instances even classified information. For this reason, it is decided to identify these

agreements by separate decree to ensure that the designated enterprise may be aware

of them. Presently, a number of agreements between the URENCO group and the ETC

group qualify for such designation. The designation concerns agreements that are vital

211

for protecting classified information and preventing short or middle-long term risks for

the proliferation of security-sensitive technology or the security of supply.

The starting point for the procedure is that one of the Contracting States will issue a


veto. Article 49(2) to (7) inclusive, set forth the assessment procedure if the Minister

and the competent authorities of the other two Contracting States decide that the

application for the declaration of no objection will initially be assessed by the Minister.

Article 50 provides for the situation in which either the Minister or one of the other

competent authorities exercise their right of veto.

The procedure for obtaining a declaration of no objection is initiated by the

designated enterprise notifying the Minister of any intended change, termination or

rescission of an agreement designated pursuant to paragraph 1. The articles of

association of and of the German ancillary company URENCO Holding GmbH and of the

British ancillary company URENCO Holding Ltd.. provide that a similar notification must

be made to the competent authorities of the Federal Republic of Germany and of the

United Kingdom. As a result, the Minister will be aware of such intention and may

consult with these competent authorities to decide which of the three competent

authorities will determine whether a declaration of no objection may be issued. Where

this is the Netherlands, the Minister will exercise the authority set forth in Article 49(3)

and the designated enterprise will have to submit an application for a declaration of no

objection to the Minister.

Paragraph 4 subsequently provides that the change, termination, or rescission of a

designated agreement shall be prohibited without declaration of no objection or an

equivalent declaration issued by the competent authority either of the Federal Republic

of Germany or of the United Kingdom. The power of these authorities is laid down in the

articles of association of the British ancillary company URENCO Holding Ltd. and the

German ancillary company URENCO Holding GmbH.

Paragraph 5 provides that the Minister will refuse to issue the declaration of no

objection if the public interest may be put at risk.


his intention to issue a declaration of no objection. This notification may be cause for

one of the competent authorities to exercise the right of veto that is vested in all three


exercises its right of veto, the Minister will not consider the application for a declaration

of no objection pursuant to paragraph 7. This decision is open to objection and appeal,

which, however, has only procedural significance. The substantive consideration

underlying the decision of a competent authority of the Federal Republic of Germany or

of the United Kingdom will have to be challenged before the German and British courts,

respectively, since it is either of these competent authorities that has taken the

substantive decision, and not the Minister.

Paragraph 8 ensures that this Article is not applicable, among other things, to a

change in or the termination or rescission of an agreement on intellectual property

rights or business secrets in a joint venture resulting from a designation order issued by

the Minister pursuant to Article 48(1), or (2)(a) and (b). A comparable designation

212

order may also be issued by a competent authority of the Federal Republic of Germany

or the United Kingdom. In view of this reference is made to Article 48(4)(a) and (b).

Lastly, concurrence may exist between Article 49 and Article 31 to 34, and 38 to 41.

Paragraphs 9 and 10 ensure that Article 49 takes precedence in these instances and

that these other Articles will not be applicable.

Article 50



Pursuant to paragraph 1(a), amending, terminating or rescinding an agreement as

referred to in Article 49(1) is prohibited if the Minister has exercised his right of veto.

This refers to the situation in which the competent authority either of the Federal

Republic of Germany or of the United Kingdom will initially assess the amendment,

termination or rescission of the agreement, instead of the Minister. Like the Minister


States of their decisions, enabling the Minister to exercise his right of veto within a

period to be stipulated in a ministerial regulation.

Paragraph 1(b) provides for the situation in which the competent authority either of

the Federal Republic of Germany or of the United Kingdom has exercised the right of

veto. In this situation, the amendment, termination or rescission of the agreement will

be prohibited as well.

Article 51

Article 51(1) provides requirements concerning the creditworthiness of the group of

which the designated enterprise forms part. Paragraph 1(a) sets requirements

concerning the creditworthiness of the entire group, since the creditworthiness of a

company is typically decided by the image of the entire group of which the company

forms part, with the company that contracts the most relevant loans being the

determining factor.

In addition, Article 51(1)(b) contains the obligation that the designated enterprise

may not execute any acts that may lead to a downgrade of the creditworthiness of the

group or of divisions of the group of which the designated enterprise forms a part to a

certain level. This combination of requirements guarantees that the board of the

designated enterprise will ensure the financial health of the enterprise.

The minimum creditworthiness of the group is determined by order in council. This

order will also expressly regulate on the basis of which loans taken out by a legal entity

forming part of the group the creditworthiness of the group as a whole may be

determined. As is stated in paragraph 3.7.2.1., a minimum credit rating of BBB-minus

applies for the time being. By or pursuant to an order in council in accordance with

paragraph 3, additional rules may be stipulated concerning the manner of determining

the creditworthiness. This order in council will furthermore stipulate how it may be

ensured that the group of which the designated enterprise forms part satisfies this

rating, for instance by demanding a rating from two recognised credit rating firms.

213

Paragraph 2 provides reporting obligations for the designated enterprise, in order to

allow verification of compliance with the obligations of paragraph 1.

Pursuant to paragraph 3 the details referred to in Article 51(1) and (2) may be

further detailed by order in council. As regards the reporting obligations, it may be

specified which information the designated enterprise is required to provide to the

Minister.

Article 52

A designated enterprise is obliged to immediately notify the Minister if it fails to

comply with the obligation referred to in Article 51(1)(a), i.e. if the credit rating drops

below the level stipulated by or pursuant to an order in council. If the designated

enterprise does not comply, it is in breach of the obligations regarding financial control.

Similarly, the competent authorities of the Federal Republic of Germany or of the United

Kingdom will be notified, pursuant to the relevant provisions in the articles of

association of the ancillary companies. If a designated enterprise has made the said

notification, the measures specified in Articles 53(1) and 56 will apply. This means that

it is, among other things, prohibited to take out financial loans, make certain types of

investments, distribute dividend, reduce the capital, buy own shares or make a

distribution from the reserves; in addition, a recovery plan must be prepared.

Article 53

Article 53 provides for the resulting consequences if the designated enterprise fails to

comply with the obligations set out in Article 51 concerning the credit rating of the

URENCO group or if it is unavoidable that the URENCO group is no longer able to satisfy

the minimum credit rating. If that situation occurs, the group companies of the URENCO

group are not allowed to raise loans or make investments that are not related to its

normal business activities, nor may the designated enterprise distribute dividend,

reduce its capital, buy own shares, or make a distribution from the reserves, unless the

Minister has granted it exemption to do so pursuant to Article 54.

The situation may arise that the designated enterprise makes a notification pursuant

to Article 52, but that it subsequently appears that the requirements concerning the

credit rating under Article 51(1)(a) are met after all. Paragraph 2 provides that the

prohibition of paragraph 1 will not apply in that event if during a period of six months

the enterprise has fulfilled the creditworthiness requirements.

Article 54

Article 54 offers the Minister the possibility to grant exemption from the prohibition

included in Article 53(1).

Both the Minister and the competent authorities of the other Contracting States are

authorised to offer a designated enterprise the possibility to apply for exemption. The

starting point for the procedure is that one of the Contracting States grants the

exemption, but that the other two Contracting States will have a right of veto. Article 54

sets out the assessment procedure to be observed when exemption is requested, if the

Minister and the competent authorities of the other two Contracting States have agreed

that the Minister will initially assess the request. Article 55 provides for the situation in

which the Minister or one of the other competent authorities exercises the right of veto.

214

The procedure to be observed for granting exemption is initiated by the designated

enterprise notifying the Minister of its desire to be exempted from the prohibition of

Article 53(1). The articles of association of the German ancillary company URENCO

Holding GmbH and of the British ancillary company URENCO Holding Ltd. provide that a

similar notification must be made to the competent authorities of the Federal Republic

of Germany and of the United Kingdom. Thus the Minister will be aware of the intention

and this will enable the Minister to consult with the other competent authorities to

determine which of the three competent authorities will determine whether exemption

may be granted.

If this is to be decided by the Netherlands, the Minister will, within a period to be

stipulated in a Ministerial regulation, exercise the powers referred to in paragraph 2 and

the designated enterprise may submit a request to the Minister to grant the exemption.

If this period expires without the Minister exercising his powers, the designated

enterprise will consequently not be allowed to request exemption.

Paragraph 3 sets forth the legal consequences of exemption granted by the Minister

or a permission similar to the exemption granted by the Minister given by one of the

other Contracting States. In that event the prohibition of Article 53(1) will not apply.


interest may be put at risk.


his intention to grant exemption. This notification may be cause for one of the

competent authorities to exercise the right of veto that is vested in all three Contracting

States. If one of the competent authorities of the other Contracting States exercises the

right of veto, the Minister will not further consider the request for exemption pursuant


procedural significance. The substantive consideration underlying the decision of a

competent authority of the Federal Republic of Germany or of the United Kingdom will

have to be challenged before the German and British courts, respectively, since it is

either of these competent authorities that has taken the substantive decision, and not

the Minister.

Article 55




53(1) fully applies if the Minister has exercised his right of veto. This refers to the

situation in which the competent authority of either the Federal Republic of Germany or

of the United Kingdom, instead of the Minister, will initially assess the application. Like


Contracting States of their decision, to enable the Minister to exercise his right of veto

within a period to be stipulated in a ministerial regulation. As a result of the Minister

exercising his right of veto, the prohibition of Article 53(1) will fully apply.

Sub (b) covers the situation in which the competent authority either of the Federal


this situation the prohibition of Article 53(1) will continue to fully apply.

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Article 56

If the designated enterprise fails to comply with Article 51(1)(a), or has given notice

pursuant to Article 52 that it is unavoidable that it will be unable to do so, it will prepare

a recovery plan to ensure that it will again be able to comply with the requirements of

creditworthiness. The recovery plan will set out how it intends to be able to again

comply with the requirements.

Starting point of the procedure is that one of the Contracting States will issue a


veto. Article 56 provides for the assessment procedure in the event that the Minister

and the competent authorities of the other two Contracting States have agreed that the

Minister will initially decide on the application for a declaration of no objection. Article 57

provides for the situation in which the Minister or one of the other competent authorities

exercises the right of veto.

The application procedure for a declaration of no objection is initiated by submitting

the recovery plan to the Minister. The articles of association of the German ancillary

company URENCO Holding GmbH and of the British ancillary company URENCO Holding

Ltd. provide that a similar notification must be made to the competent authorities of the

Federal Republic of Germany and of the United Kingdom. Thus the Minister will be aware

of the intention and the Minister will be able to consult with the other competent

authorities to determine which of the three competent authorities will decide whether a

declaration of no objection may be issued. If this is to be decided by the Netherlands,

the Minister will exercise the powers referred to in paragraph 4, and the designated

enterprise will have to submit an application for a declaration of no objection to the

Minister.

Paragraph 5 subsequently provides that the recovery plan may not be implemented

without a declaration of no objection, or a similar declaration issued by the competent


power of these authorities will be set out in the articles of association of the British

ancillary company URENCO Holding Ltd. and of the German ancillary company URENCO

Holding GmbH, respectively.

Paragraph 6 provides that the Minister will refuse to issue a declaration of no

objection if the recovery plan makes it insufficiently clear that the requirements for

creditworthiness as set forth in Article 51(1)(a) will be met within a reasonable period of

time.


his intention to issue a declaration of no objection. This may cause one of the

competent authorities to exercise the right of veto, which is vested in all three


exercises the right of veto, the Minister will not further consider an application for a







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Article 57



Pursuant to sub (a) it is prohibited to implement the recovery plan if the Minister has

exercised his right of veto. This refers to the situation in which the competent authority

either of the Federal Republic of Germany or of the United Kingdom, instead of the

Minister, will initially decide on the intention. Like the Minister pursuant to Article 56(7),

the competent authorities will notify the other Contracting States of their decision, to

enable the Minister to exercise his right of veto within a period to be stipulated in a

Ministerial regulation.

Paragraph (b) covers the situation in which the competent authority either of the


Also in this situation it will be prohibited to implement the recovery plan.

Article 58

Article 58 grants the Minister the power to relieve an executive or non-executive

director of his duties if the designated enterprise fails to submit the recovery plan, or

fails to do so in time, or if the recovery plan – even after it is amended – will not ensure

that the requirements concerning the creditworthiness pursuant to Article 51(1) are

met. The designated enterprise may amend a rejected recovery plan and resubmit it in

order to secure a declaration of no objection. If the declaration of no objection is

refused again, there is reason to suspect that one or more directors do not properly

comply with the statutory obligations. In that event the Minister will be authorised to

relieve an executive or non-executive director of his duties. The Minister will also have

this power if the designated enterprise fails to implement the recovery plan.

Paragraph 2 stipulates when a director or supervisory director will be relieved of his

position if the Minister or a competent authority of the Federal Republic of Germany or

of the United Kingdom has decided to do so. The power of the competent authority of

the Federal Republic of Germany is laid down in the articles of association of the

German ancillary company URENCO Holding GmbH and the power of the competent

authority of the United Kingdom is laid down in the articles of association of the British

ancillary company URENCO Holding Ltd.

Article 59

This Article provides for the consequences of the situation in which a risk of breach

threatens to occur. This refers to the situation in which there is a risk that the

designated enterprise will be unable in the next three years to satisfy the required

creditworthiness pursuant to Article 51(1)(a). Whether this situation exists will appear

from the reports to be submitted pursuant to Article 51(2) and Article 79. The

designated enterprise is obliged to submit a plan of action to the Minister.

The starting point, however, of the plan of action procedure is that unanimity of the

three Contracting States is required. In view of this unanimity, the Minister’s decision

pursuant to paragraph 1 will not enter into effect until the other two Contracting States

have adopted a similar measure. The required unanimity is stipulated in paragraph 2.

Paragraph 2 solely concerns the situation in which the Minister has already taken a

217

decision but one of the other two competent authorities have not. In view of this, it is

provided in paragraph 2 that a decision taken by the Minister will not enter into effect

until the measures adopted by both the competent authority of the Federal Republic of

Germany and the request of the competent authority of the United Kingdom have

entered into effect as well. If for instance only one of the other competent authorities

has not yet taken such measure, the moment when the Minister’s decision will enter

into effect will depend on the moment when the measure taken by this competent


In this recovery plan the designated enterprise will propose a strategy and measures

aimed at preventing the enterprise from actually ending up in the situation in which it is

no longer able to satisfy the obligations in respect of creditworthiness (paragraph 3).

The designated enterprise shall prepare this work plan in good faith and with sufficient

care. When implementing the plan of action, the board of the enterprise will also

observe prudence. If the designated enterprise fails to do so, the Minister may decide to

relieve an executive or non-executive director of the designated enterprise of his duties

(paragraph 4).

A situation of risk of breach may last no more than three years. If during this period

of three years this threat continues to exists, the Minister will have to decide, pursuant

to paragraph 6, after this period of three years has expired, with due observance of the

forecasts for next year, either that the risk of breach no longer exists, or that it will in

all likelihood not comply with Article 51(1)(a) the following year either. The Minister

may renew the decision pursuant to paragraph 6 each time for a period of one year if it

is likely that the designated enterprise will not comply with Article 51(1)(a) the next

year either.

Decisions taken under paragraph 6 or paragraph 7 require unanimity of the three

Contracting States. In view of this unanimity, the Minister’s decision pursuant to

paragraph 6 or paragraph 7 will not enter into effect until the other two Contracting

States have adopted a similar measure. The required unanimity is stipulated in

paragraph 8. Paragraph 8 solely concerns the situation in which the Minister has already

taken a decision but one of the other two competent authorities has not. In view of this,

it is provided in paragraph 8 that a decision taken by the Minister will not enter into

effect until both the measures adopted by the competent authority of the Federal

Republic of Germany and the measures adopted by the competent authority of the

United Kingdom have entered into effect as well. If for instance one competent authority

has not yet adopted such a measure, the moment when the Minister’s decision will enter

into effect will depend on the moment when the measure adopted by this competent


Paragraph 9 sets out the legal consequences of a decision taken by the Minister

pursuant to paragraph 6 or 7, which is that Article 53(1) will only be applicable in the

year to which the decision pertains. This means that the designated enterprise may not

take out financial loans or make investments that are not related to the normal business

activities, pay dividend, reduce the capital, buy own shares, or make distributions from

the reserves.

Article 60

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If it emerges that the manner in in which the creditworthiness of the designated

enterprise is currently determined (namely by means of a credit rating assessment by at

least two rating agencies) is no longer effectively possible, the designated enterprise

will, upon request, submit proposals to the Minister for a different manner in which to

determine the creditworthiness. Subsequently, the three Contracting States will have to

agree on the new manner of determining the creditworthiness. This situation will occur if

there is no longer an adequate rating available, for instance because the credit rating

agencies are no longer interested in rating the URENCO group. The new manner of

determining the creditworthiness will subsequently be laid down in an order in council as

referred to in Article 51(3)(a). This does not alter the fact that Articles 51 to 59,

inclusive, continue to fully apply.

Article 61

Article 61 contains the obligation for the designated enterprise to have a nuclear

management plan in place that provides for an adequate strategy concerning the

conversion of substances, the permanent storage of substances, the decommissioning,

dismantling, security, disposal, destruction or adjustment of installations, equipment,

data carriers, and materials by the designated enterprise of its subsidiaries. As regards

the subsidiaries it is added that these statutory obligations rest on subsidiaries to the

extent that these subsidiaries are subject to the applicable nuclear energy laws,

environmental laws and permits of the country where the subsidiary concerned is

registered or where the production facility is located. Article 61 and the nuclear

management plan it provides for are consequently based on aggregating all obligations

that rest on the subsidiaries and the designated enterprise to one coherent nuclear

management plan that provides insight in the obligations and how the funding is

provided necessary to fulfil these obligations.

Paragraph 2 provides that there must be adequate funding for the strategy set forth

in the nuclear management plan. The management plan must show that the designated

enterprise will have sufficient funding to be able to implement the plan (paragraph 2

and paragraph 3). In view of this, the management plan must contain an estimate,

pursuant to paragraph 4, of the costs involved in the strategy and an estimate of the

funding necessary to cover these costs ((a) and (b)).

The nuclear management plan also shows the structure of one or more funds at the

level of the designated enterprise or its subsidiaries. The fund must consist of resources

that are separated from those of the designated enterprise or its subsidiaries to such

extent that these will not be included in their assets in case of insolvency (‘ring-fenced

capital’), in so far as the law that governs the fund allows.

By order in council specific requirements may be stipulated in respect of the nuclear

management plan. These pertain to the format and methodology of the management

plan and its implementation. In addition, rules may be stipulated in respect of the set-

up, management and the functioning of one or more funds, in so far as these funds are

set up to provide financial cover for the costs of implementing the strategy in the

Netherlands (see paragraph 5).

Paragraph 6 provides that the nuclear management plan is to be implemented by the

designated enterprise. If it fails to do so, the measures mentioned in Article 68(1)

apply.

219

Article 62

Article 62 refers to the initial nuclear management plan to be drawn up by the

designated enterprise following the designation order. Pursuant to paragraph 1 the

designated enterprise will submit the plan to the Minister, in order to have the Minister

verify whether the designated enterprise adequately complies with Article 61. If the

Contracting States do not raise objections against this initial nuclear management plan,

in accordance with the procedure of Article 62, the compatibility of the plan with all

components of Article 61 is ensured.



veto. Article 62 provides for the assessment procedure in the event that the Minister

and the competent authorities of the other two Contracting States have agreed that the

application for the declaration of no objection will initially be considered by the Minister.

Article 63 provides for the situation in which the Minister or one of the other competent

authorities exercises the right of veto.

The procedure for the declaration of no objection is initiated by the submission of the

initial nuclear management plan to the Minister. The articles of association of the

German ancillary company URENCO Holding GmbH and of the British ancillary company

URENCO Holding Ltd. will provide that the initial nuclear management plan is to be

submitted to the competent authorities of the Federal Republic of Germany and of the

United Kingdom. Thus the Minister will be aware of the intention and this will enable the

Minister to consult with the other competent authorities to determine which of the three

competent authorities will decide whether a declaration of no objection may be issued.

If this is to be decided by the Netherlands, the Minister will exercise the powers as

stipulated in paragraph 2 and the designated enterprise will have to submit an

application for a declaration of no objection with the Minister.

Paragraph 3 subsequently provides that it is prohibited to implement the initial

nuclear management plan if no declaration of no objection is issued, or a similar

declaration to be issued by the competent authority either of the Federal Republic of

Germany or of the United Kingdom. The powers of these authorities are provided for in

the articles of association of the German ancillary company URENCO Holding GmbH and

of the British ancillary company URENCO Holding Ltd..


objection if Article 61(1) to (4) inclusive, or the rules stipulated in the order in council

referred to in paragraph 5(a) are not sufficiently complied with.



the competent authorities to exercise the right of veto that is vested in each of the

three Contracting States. If one of the competent authorities of the other Contracting

States exercises the right of veto, the Minister will not further consider an application

for a declaration of no objection pursuant to paragraph 6. This decision is open to

objection and appeal, which, however, has only procedural significance. The substantive



220



Article 63

Article 63 provides for the situation in which one of the Contracting States uses its

right of veto and in view of this contains two prohibitory provisions.

Pursuant to sub (a) the implementation of the initial nuclear management plan is

prohibited if the Minister has exercised his right of veto. This refers to the situation in

which the competent authority of either the Federal Republic of Germany or of the

United Kingdom, instead of the Minister, will initially decide on the intention. Like the

Minister pursuant to Article 62(5), the competent authorities will notify the other

Contracting States of their decision, in order to enable the Minister to exercise his right

of veto within a period to be stipulated in a ministerial regulation.

Sub (b) covers the situation in which the competent authority either of the Federal


this situation it will be prohibited to implement the initial nuclear management plan.

Article 64

After having obtained a declaration of no objection for its initial nuclear management

plan, the designated enterprise is obliged to submit the nuclear management plan to the

Minister each year. Article 64 sets out rules in the event that a nuclear management

plan has been amended relative to the previous year and this amendment pertains to

the format or methodology. A change in methodology may for instance be that the

technical life, rather than the economic life of a production facility, or even the fiscal

depreciation period, is taken as basis for calculating the financial set-up necessary to

comply with the decommissioning obligations and the related costs for the relevant

production facility. A change in format may for instance be a change in the type of

notional interest rate used to calculate a fund’s anticipated return. A change from LIBOR

rates to the EURIBOR rates would for instance imply a change in methodology.


declaration of no objection but that the other two Contracting States will have a right of

veto. Article 64 provides the assessment procedure in the event that the Minister and

the competent authorities of the other two Contracting States have agreed that the

Minister will initially decide on the application for a declaration of no objection. Article 65

provides for the situation in which the Minister or one of the other competent authorities

exercise their right of veto.

The application procedure for the declaration of no objection is initiated by the annual

submission of the nuclear management plan to the Minister. The articles of association


company URENCO Holding Ltd. will provide that the initial nuclear management plan will

also be submitted to the competent authorities of the Federal Republic of Germany and

of the United Kingdom. Thus the Minister will be aware of the intention and this will

enable the Minister, in the event the model or methodology has changed, to consult

with the other competent authorities to determine which of the three competent

authorities will decide whether a declaration of no objection may be issued. If this is to

be decided by the Netherlands, the Minister will exercise his powers as set out in

221

paragraph 2 and the designated enterprise will submit an application for a declaration of

no objection to the Minister.

Paragraph 3 subsequently provides that it is prohibited to amend the format and

methodology of the nuclear management plan without a declaration of no objection or a

similar declaration issued by the competent authority either of the Federal Republic of

Germany or of the United Kingdom. The powers of these authorities are laid down in the


the British ancillary company URENCO Holding Ltd..


objection if Article 61(1), (2), (3), or (4)(c), or the rules stipulated by or pursuant to the

order in council pursuant to Article 61(5)(a) are insufficiently met.



the competent authorities to exercise its right of veto that is vested in all three


exercises the right of veto, the Minister will not further consider an application for a



consideration underlying the decision of the competent authority of the Federal Republic




Article 65

Article 65 provides for the situation in which one of the Contracting States uses its

right of veto and in view of this contains two prohibitory provisions.

Pursuant to sub (a) it is not allowed to amend the nuclear management plan if the

Minister has exercised his right of veto. This refers to the situation in which the

competent authority of either the Federal Republic of Germany or of the United

Kingdom, instead of the Minister, will initially decide on the intention. Like the Minister


States of their decision, to enable the Minister to exercise his right of veto within a

period to be stipulated in a Ministerial regulation.

Sub (b) covers the situation in which the competent authority of the Federal Republic

of Germany or of the United Kingdom has exercised the right of veto. Also in this

situation it will be prohibited to amend the nuclear management plan.

Article 66

Article 66 refers to changes in the anticipated implementation of the nuclear

management plan.

The starting point of the procedure of this Article is that unanimity of the three

Contracting States is required. The annual submission of the nuclear management plan

pursuant to Article 64(1) may be cause for the Minister to exercise his powers to

prohibit a designated enterprise from implementing the nuclear management plan. He

222

will do so if one of the circumstances mentioned in paragraph 1 occurs. However, such a

decision will not enter into effect until the other two Contracting States have taken a

similar decision as well.

Paragraph 2 moreover sets out that advice must be obtained from an independent

external expert in those instances in which the implementation of the nuclear

management plan is prohibited, because there are insufficient safeguards concerning

adequate funding or because the details of the nuclear management plan are based on

data, assumptions, or anticipated market developments that are unreasonable,

unreasoned, or improbable. Obtaining the advice of an independent expert will ensure

that the Minister takes his decision on a properly reasoned basis. The required

unanimity is stipulated in paragraph 3.

Paragraph 3 solely concerns the situation in which the Minister has already taken a

decision but one of the other two competent authorities has not. In view of this, it is

provided in paragraph 3 that a decision taken by the Minister will not enter into effect

until both the measures adopted by the competent authority of the Federal Republic of

Germany and the measures adopted by the competent authority of the United Kingdom

that are equivalent to the Minister’s decision have entered into effect. If for instance one

competent authority has not yet adopted such a measure, the moment when the

Minister’s decision will enter into effect will depend on the moment when the measure

adopted by this competent authority enters into effect.

Article 67

A designated enterprise is obliged to notify the Minister if it does not comply with the

obligation stipulated in Article 61(2) to possess adequate funding to enable it to

implement the strategy referred to in Article 61(1). Similarly, the competent authorities

of the Federal Republic of Germany and of the United Kingdom will be notified pursuant

to the relevant provisions of the articles of association of the ancillary companies.

Article 68

Article 68 sets out the consequences if the designated enterprise does not comply

with the obligations arising from Articles 61(1) or (6), 62(3), 63, 64(3), or 65, or if it is

prohibited pursuant to Article 66 to implement the nuclear management plan. In view of

this, paragraph 1 includes a prohibitory provision.

Article 68(1) covers the situation in which the designated enterprise does not comply

with the obligations regarding the nuclear management plan and in such a case

prohibits the designated enterprise from paying dividend, reducing its capital, buying

own shares or making a distribution from the reserves. See the notes in paragraph

3.7.3.3. in this context. As regards sub (d) it is specifically noted that the regularity and

amount of the payments are fixed and based on the nuclear management plan. If a

failure to pay an instalment may be ascribed to a financial institution, Article 68(1)(d)

will not be considered to have been breached.

Paragraph 2 sets a maximum to the financial constraints that are imposed pursuant

to paragraph 1(c) and (d), in order to limit the restrictions to what is necessary to again

comply with the requirements imposed by the nuclear management plan.

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Naturally, any additions made by a designated enterprise to the fund or funds

referred to in Article 61(4)(c) must not affect the credit rating of the designated

enterprise. This is expressed in paragraph 4.

Article 69

Article 69 gives the Minister the possibility to grant exemption from the prohibition of

Article 68(1).

Both the Minister and the competent authorities of the other Contracting States may

grant a designated enterprise the possibility to request an exemption. The starting point

of the procedure is that one of the Contracting States will grant the exemption, but that

the other two Contracting States will have a right of veto. Article 69 sets out the

assessment procedure to be applied to a request for exemption if the Minister and the

competent authorities of the other two Contracting States have agreed that the Minister

will initially consider the request. Article 70 provides for the situation in which the

Minister or one of the other competent authorities exercises the right of veto.

The procedure for requesting exemption is initiated by the designated enterprise

notifying the Minister of its desire to be exempted from the prohibition of Article 68(1).

In the articles of association of the German ancillary company URENCO Holding GmbH

and of the British ancillary company URENCO Holding Ltd.. it will be provided that a

similar notification must be made to the competent authorities of the Federal Republic

of Germany and of the United Kingdom. Thus the Minister will be aware of the intention

and it will enable the Minister to consult with the other competent authorities to

determine which of the three competent authorities will decide whether exemption may

be granted. If this is to be decided by the Netherlands, the Minister will exercise, within

a period to be set in a ministerial regulation, his power under paragraph 2 and the

designated enterprise may submit a request for exemption with the Minister. If this

period expires without the Minister exercising his power, the designated enterprise will

not be given the possibility to request exemption.

Paragraph 3 sets out the legal consequences of granting exemption by the Minister or

consent equivalent to the exemption granted by the Minister given by one of the other

Contracting States. In that event the prohibition of Article 68(1) will not apply.


interest may be put at risk. While the absence of a proper nuclear management plan

may lead to the conclusion that the public interest is at risk, this does not necessarily

have to be the case. However, a substantial dividend or distribution from the reserves

may affect the possibilities of the enterprise to comply in due course with a (by then

approved) nuclear management plan.


his intention to grant exemption. This notification may be cause for one of the

competent authorities to exercise the right of veto that is vested in all three Contracting

States. If the competent authority of one of the other Contracting States exercises the

right of veto, the Minister will not further consider the request for exemption pursuant


procedural significance. The substantive consideration underlying the decision of the

competent authority of the Federal Republic of Germany or of the United Kingdom will

have to be challenged before the German and British courts, respectively, since it is

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either of these competent authorities that has taken the substantive decision, and not

the Minister.

Article 70




68(1) fully applies if the Minister has exercised his right of veto. This refers to the

situation in which the competent authority either of the Federal Republic of Germany or

of the United Kingdom, instead of the Minister, will initially consider the request. Like


Contracting States of their decision, in order to enable the Minister to exercise his right

of veto within a period to be stipulated in a ministerial regulation. The effect of

exercising the right of veto by the Minister is that the prohibition of Article 68(1) will

continue to fully apply.

Article 70(b) covers the situation in which the competent authority of the Federal


this situation the prohibition of Article 68(1) will continue to fully apply.

Article 71

This Article contains a number of prohibitions concerning the financial activities of a

designated enterprise, in order to prevent the financial position of the enterprise from

deteriorating as a result of standing surety for third parties or providing security for the

benefit of third parties (paragraph 1), granting loans to third parties, or assuming

certain obligations on behalf of or conducting transactions with third parties (paragraph

2). These types of activities may (unwittingly) undermine the financial position of the

enterprise.

There are two exceptions to the scope of application of these prohibitions. Excluded

from the prohibition in paragraph 1 is standing surety for third parties and providing

security for the benefit of third parties as part of activities that are directly related to

the normal business activities or to compliance with statutory obligations. which

activities are directly related to the normal business activities will be detailed in an order

in council.

In addition, the Minister may grant exemption from the prohibitions of paragraphs 1

and 2. However, he may only do so if this will not put the public interest at risk. Starting

point for the procedure to obtain exemption is however that unanimity is required of the

three Contracting States. Any exemption to be granted by the Minister will not enter

into effect until the other two Contracting States have granted a similar exemption as

well. The required unanimity is stipulated in paragraph 5. Paragraph 5 solely refers to

the situation in which the Minister has already granted exemption, but one of the other

two competent authorities has not. In view of this, it is provided in paragraph 5 that a

decision taken by the Minister will not enter into effect until both the measures adopted

by the competent authority of the Federal Republic of Germany and the measures

adopted by the competent authority of the United Kingdom have entered into effect. If

for instance one competent authority has not yet adopted such a measure, the moment

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when the Minister’s decision will enter into effect will depend on the moment when the

measure adopted by this competent authority enters into effect.

The Order in Council provided for in paragraph 6 offers the designated enterprise

some flexibility because certain financial transactions may be designated to which the

prohibitions of paragraph 1 or 2 are not applicable. This may also concern certain

categories or types of financial transactions. It will be clear that exemption for these

transactions may only be granted if the public interest is not put at risk as a result.

Article 72

In the absence of the ability to exert influence through direct shareholding, other

instruments are required to ensure that the designated enterprise undertakes certain

activities. It may be necessary to maintain the security of supply at a certain level,

although at some point this might be less attractive from a business point of view. This

has already been extensively discussed in paragraph 3.8. The public health may benefit

from certain activities, or compliance with the Euratom Treaty or the Charter of the

United Nations may require an increase in the production of radioactive substances or

the enrichment of uranium on a larger scale. In each of these instances the Minister

must have the possibility to induce the designated enterprise to undertake the required

activity. Paragraph 1 provides for this possibility.

Paragraph 2 provides for more permanent adjustments at the designated enterprise

or its subsidiaries. Paragraph 2(a) and (b) concern security and safety. Where the

production and storage facilities or offices of a designated enterprise are concerned that

are covered by a treaty concluded with a State other than the Contracting States of the

Treaty of Almelo or the Treaty of Cardiff, instructions must be complied with given by

the Minister, or by the competent authority of one of the other Contracting States to an

ancillary company. The production facilities, storage facilities and offices of a designated

enterprise in third countries must be in compliance with the local laws and regulations,

including regulations regarding the security concerning such facilities and offices. These

locally applicable regulations shall be in accordance and comply with the requirements

set out in and arising from the said Treaty.

The Minister may also require the designated enterprise to offer the IAEA or Euratom

technical support (paragraph 2(c)). In doing so, the designated enterprise helps the

Dutch State to make a contribution towards the implementation of those treaties as

regards the exchange of knowledge, among other things.

The unanimity of the three Contracting States is required, as regards the decision-

making procedure, for a designation order in respect of investments aimed at increasing

the safety or security (Article 72(2)(a)). Such designation order will only enter into

effect if the other two Contracting States have also imposed such a designation order.

The required unanimity is stipulated in paragraph 3. Paragraph 3 solely concerns the

situation in which the Minister has already taken a decision but one of the other two

competent authorities has not. In view of this, it is provided in paragraph 3 that a

decision taken by the Minister will not enter into effect until both the measures adopted

by the competent authority of the Federal Republic of Germany and the measures

adopted by the competent authority of the United Kingdom have entered into effect. If

for instance one competent authority has not yet adopted such a measure, the moment

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when the Minister’s decision will enter into effect will depend on the moment when the

measure adopted by this competent authority enters into effect.

Pursuant to paragraph 4 the designated enterprise is obliged to comply with a

designation order; if it fails to do so, sanctions may be imposed.

The Minister or the competent authorities of the Federal Republic of Germany and of

the United Kingdom may, in respect of designation orders issued pursuant to Article

72(1) or (2)(b) or (c), each individually impose a designation order. But also in this

respect does it stand to reason that such an instruction is given in consultation with the

other Contracting States and that they are prepared by the supervisory committee. For

instance, if the competent authority of the United Kingdom finds that the security of a

facility of the designated enterprise located in a third country should be increased, the

designated enterprise must comply with an instruction in this regard, without the

Minister having to issue an additional designation order. In view of this, paragraph 5

provides that a designated enterprise is also obliged to obey an instruction given by a

competent authority of the Federal Republic of Germany or of the United Kingdom.

Compliance with an instruction will usually involve extra costs for the designated

enterprise. If the Minister exercises his authority to issue an instruction, the obligation

is provided to compensate the costs incurred in the execution of that instruction (see

Article 72(6)). As is also explained in paragraph 3.8.1., these costs include the costs of

materials, raw materials, staff, energy, and properly allocated relevant overhead costs.

On top of this, the designated enterprise is entitled to a reasonable profit margin. Where

obeying an instruction will demand a considerable expansion of a production facility, or

even the construction of a new production facility, the compensation will also include

the costs of this expansion or new construction. Lastly, the compensation of the costs

and the profit margin will also take into account the proceeds enjoyed by the designated

enterprise from the execution of the instruction. In connection with this, the market

value of the expanded or new production capacity may for example be looked at in so

far as this can also be used for other activities than following the instruction.

The Minister does not award compensation for costs incurred further to an instruction

given by a competent authority either of the Federal Republic of Germany or of the

United Kingdom on the principle that he who pays the piper calls the tune. Since

instructions are prepared by the supervisory committee, that committee will typically

also consider the matter of compensation.

Article 73

Article 73 provides for the appointment of an administrator to a designated

enterprise in the event that the enterprise finds itself in dire financial straits and

immediate intervention is required. This will be the case if the enterprise no longer has

the credit rating level required pursuant to Article 51, or has notified the Minister that

its inability to meet this requirement is threatening. In addition, an administrator may

only be appointed if the Minister, in consultation with the competent authorities of the

Federal Republic of Germany and the United Kingdom, concludes that as a result of the

business activities the continuity is at risk, because a suspension of payments is highly

likely or inevitable (see paragraph 1). Most likely this conclusion will be based on

information provided by the enterprise itself, e.g. by way of a status report. However, it

is conceivable that the conclusion is based on other, possibly external circumstances.

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The administrator is appointed in order to protect the public interest. As also stated

in paragraph 3.9., Article 73 is derived from Article 13a of the Electricity Act 1998 and

Article 5a of the Gas Act and adapted to this specific situation.

The powers of the administrator do not go beyond what is stipulated in his remit. The

administrator may only give the designated enterprise instructions that serve to protect

the public interest (see paragraph 4). Specifically, these instructions may relate to

concluding or terminating agreements, the staff policy, or the position or deployment of

the enterprise within the holding as a whole.

Appointing an administrator will have a drastic effect not only on the designated

enterprise, but also on its shareholders. Article 4:8 of the General Administrative Law

Act provides that these parties will, in principle, be given the opportunity to express

their views. However, this obligation may be dispensed with if an urgent interest

opposes this (Article 4:11 of the General Administrative Law Act). Since the Minister will

only appoint an administrator when immediate intervention is required, this exception

will most likely be invoked, or the parties involved will only be granted a very brief

period to express their view.

A designated enterprise is obliged to implement an instruction from the Minister and

consequently to carry out orders given by the administrator (Article 73(1) and (2))

The administrator is obliged, pursuant to paragraph 4, to take into account

instructions given by a competent authority of the Federal Republic of Germany or of

the United Kingdom to an ancillary company that are comparable with the instruction

given by the Minister. This ensures that the administrator takes into consideration the

wishes of both of the other two Contracting States in his acts and that the ancillary

company is similarly bound to the instruction given by the Minister via the special

provisions included in the articles of association of URENCO Holding GmbH and of

URENCO Holding Ltd..

The designated enterprise and its subsidiaries are obliged, pursuant to paragraph 5,

to fully cooperate with the administrator. If they fail to cooperate, an administrative

order will be imposed (see Article 91). In addition sanctions may be imposed in

accordance with the Economic Offences Act (see Article 93).

From paragraph 7 it follows that the Minister will also stipulate a period during which

the administrator will perform his tasks. The maximum term is six months, with the

possibility of an extension of another six months. The duration of the appointment will

also depend on the severity of the problems.

Directors who act in breach of an instruction and by doing so cause damage will be

personally liable, pursuant to paragraph 8, towards the designated enterprise. This is an

effective instrument to ensure compliance with instructions. Naturally, directors may

still be able, on the basis of their expertise, to advise the administrator to help him to

execute his tasks to the best of his abilities and it is possible that the instruction will be

amended in order to take this into account.

The appointment and the conditions subject to which it is made, as well as the

instructions given by the administrator pursuant to paragraph 9, are classified in

accordance with the security and classification policy included in the Treaty of Almelo

and the Treaty of Cardiff.

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Article 74

In the event of bankruptcy, the court will appoint a trustee in accordance with Article

14 Bankruptcy Act. Article 74 provides that only someone who has been subjected in

advance to a security screening may be appointed, provided nothing is found that would

oppose the appointment. To this end, the court may ask the Minister of the Interior and

Kingdom Relations to issue a statement as referred to in Article 13(1) of the Security

Screening Act. This ensures that this Minister may make statements to the court

concerning the person subjected to the security screening. The notes to Article 9 discuss

the significance of declaring the Security Screening Act applicable by analogy to carrying

out a security screening. Paragraph 4, lastly, provides that the court will not appoint a

trustee if the result of the security screening advises against this.

Articles 75 and 76

The trustee must comply with all statutory obligations, instructions, restrictions and

requirements that are applicable to a designated enterprise by or pursuant to this Act. It

is not to be ruled out that he will have obligations under the Bankruptcy Act that are

incompatible with provisions under this Act. For instance, reporting every three months

on the state of the bankrupt’s assets, as required pursuant to Article 73a of the

Bankruptcy Act, might conflict with the obligation of secrecy under this Act or may be

contrary to the public interest in other respects. In view of this, Article 75 includes the

phrase “if necessary in derogation from the Bankruptcy Act”.

In the event of suspension of payments an administrator will be appointed in

accordance with Article 215 of the Bankruptcy Act. This appointment will be made upon

the granting of a provisional suspension of payment, which will be granted by the court

immediately upon receiving the application. This implies that there will reasonably be

very little time before the appointment of an administrator to issue the statement as

referred to in Article 13(1) of the Security Screening Act. This will be provided for by

preparing a list of persons who have already been successfully subjected to a security

screening.

Article 77

In paragraph 3.9., an explanation is given of what is intended with Article 77.

Declaring paragraph 2 of Articles IIA, IV and V of the Protection of State Secrets Act

applicable implies the following. The designation of a restricted area may not only take

place in order to protect the security of the Dutch State, but also to protect the security

of an ally. This may for instance be the other Contracting States to the Treaties of

Almelo, Cardiff and Washington, but it is not limited to these.

Pursuant to Article IV, each decision to designate a restricted area must state how it

will be communicated that the location concerned is a restricted area. It is important to

ensure that this is known, because only certain persons may have access to restricted

areas and violation of the restriction is subject to sanctions. The designated restricted

area may be a production facility, but also other locations of the designated enterprise

and its subsidiaries, e.g. offices.

Article V of the Protection of State Secrets Act requires that a person who is

authorised to access a location against the will of the rights holder may only do so,

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where this location is designated a restricted area, with the prior written authorisation

from the procurator general's office at the court of appeal.

Article 78

Article 78 concerns the situation in which the entire board suddenly resigns or is

dismissed pursuant to a decision of the body that is authorised to take that decision in

accordance with applicable company law, and in the event that all directors are

suspended or dismissed in accordance with Article 10. Since such a decision does not

only affect the Contracting States, but other private parties as well, it is desirable to

provide for another body, rather than the Minister, to provide for the management. The

most obvious judicial authority in the Netherlands to consider this matter is the

Enterprise Chamber of the Court of Appeal of Amsterdam. The Enterprise Chamber may

fill vacancies in the board, subject to the quality requirements stipulated in the articles

of association (the requirements of Article 6(a)) and the other relevant provisions of the

articles of association (see paragraph 2). Any appointments to be made by the

Enterprise Chamber are also subject to a prior security screening (paragraph 3). Given

the urgency with which the appointment will undoubtedly have to be made, it is

important to prepare a list of candidates who are eligible for the appointment in respect

of whom such (favourable) security screening has already been conducted. In this

connection, the Enterprise Chamber may ask the Minister for the Interior and Kingdom

Relations for a notification within the meaning of Article 13(1) of the Security Screening

Act (paragraph 4). This provides for the possibility that this Minister informs the

Enterprise Chamber about the person who was the object of the security screening. The

notes to Article 9 discuss the significance of declaring the Security Screening Act

applicable in paragraph 5 by analogy to carrying out a security screening. From

paragraph 6 it follows that the Enterprise Chamber will not make an appointment if the

security screening gives reason not to do so. This both concerns the security screenings

done under the responsibility of the Minister for the Interior and Kingdom Relations as

well as the security screenings carried out by the competent authorities of the German

Federal Republic and the United Kingdom.

An appointment will be made at the request of an interested party (at any event a

shareholder holding at least ten percent of the shares, the Minister, or the competent

authority of either the Federal Republic of Germany or of the United Kingdom). In view

of the responsibilities the Minister and the competent authorities of the other

Contracting States have towards the designated enterprise and the ancillary companies,

paragraph 1 imposes the duty to simultaneously notify these. In case of non-compliance

with this duty, the request will be void.

The application procedure in the first instance, within the meaning of Title III of the

Dutch Code of Civil Procedure (hereinafter referred to as: “DCCP”) is applicable to the

request (see Article 261 DCCP). During this procedure all interested parties will have the

opportunity, pursuant to Article 282 DCCP, to file a defence prior to the hearing, or even

during the hearing if the court so allows. In the event of an appointment as referred to

in Article 78 it is desirable, in view of the requirements stipulated, that the Enterprise

Chamber takes note of the defence in advance. Therefore it is provided in Article 78(8)

that the Enterprise Chamber sets a date before which the defence must be filed, which

date will be prior to the date of the hearing.

230

Pursuant to paragraph 9, the Enterprise Chamber may set a maximum term for the

appointment. If the court does not stipulate a maximum term for the appointment, the

appointment will be effective until a new board is installed in accordance with the

articles of association (and the provisions of this Act). The rules for suspension and

dismissal of Article 10 will also apply to the temporary board, which is expressed by the

phrase “without prejudice to Article 10”.

Paragraph 11 provides that the employee representative body will be consulted in the

event that an application for the appointment of a new board is filed. In view of the fact

that the enterprises that form the object of this Act deal with highly specific materials

and operating processes, requiring in many instances highly qualified staff, it is

important that they who are working at these enterprises be given the opportunity to

express their views concerning appointments to the board. Consulting the staff is

furthermore in line with Article 134a, Book 2, of the Dutch Civil Code, which prescribes

that for each appointment of a director of a public limited company (NV), the works

council will be granted the opportunity to advise, which advice will subsequently be

presented to the general meeting of shareholders prior to making the appointment.

If, in the instance of a one-tier board, either all executive directors or all non-

executive directors are absent, the situation of Article 78 refers does not arise. In that

event a temporary solution must be found within the company. If all executive directors

are absent, the non-executive directors will appoint temporary directors, for which the

same quality and security requirements must be applied. These positions will therefore

be designated by order in council pursuant to Article 11 as positions to which Article 7 to

11, inclusive, are applicable.

Article 79

The supervision required in connection with the public interest and in order to have

proper insight into the course of affairs as needed to ensure that the Minister (and the

competent authorities of the Federal Republic of Germany and of the United Kingdom) is

able to properly execute his authority in respect of a designated enterprise, requires an

adequate and regular submission of information. Paragraph 3.10., above, already

explains that Article 79 contains the codification of the submission of information as it

currently takes place under the Treaty of Almelo, including the recipients of the

information.

Paragraphs 2 and 3 stipulate what the status overview pertains to. Concerning the

subjects of paragraph 4, an overview is given, in accordance with paragraph 2(a), of the

developments since the last status overview. Thus, it is not necessary to submit a full

status quo.

As regards the business strategy and intended activities (paragraph 2(b)), a

comprehensive overview is required. Confining the overview in this regard to changes

since a previous overview will offer insufficient insight, where the public interest is

concerned, into the actions of the enterprise and its approach of the (international)

market.

Paragraph 3(b) concerns investments and divestments (as defined in Article 1).

The status overviews are to be submitted twice annually. Pursuant to paragraph 4(a),

however, an interim updated status overview may be requested. This will for instance

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be the case in the event of international developments which require an updated

picture.

In order to be able to properly execute his responsibility and powers under this Act

towards the designated enterprise, the Minister must have access to all information he

requires in order to apply the Act and to implement the Treaties of Almelo, Cardiff and

Washington. The same holds for the competent authorities of the Federal Republic of

Germany and the United Kingdom. The designated enterprise is required, in light of

these responsibilities and powers, to submit information on its own volition as well,

where it believes that this may be necessary for the execution of its responsibilities and

powers (paragraph 5).

Paragraph 6 provides inter alia for the possibility to lay down additional rules

regarding the content of the status overview and the manner in which it will be

explained by the designated enterprise. These rules might be desirable if it emerges

that the information submitted by the designated enterprise and the explanation of this

information are insufficient given the situation of the designated enterprise, or if it

becomes clear, in due time, that more information is needed in view of altered

circumstances.

Article 80

The presence of an executive or non-executive director at a meeting of a supervisory

committee may be required or desired given his knowledge, or in order to advise or

present a status overview, or to provide information or explanations in general. This is

current already the case for the supervisory committees.

Article 81

Paragraph 3.10.1., above, sets forth why it is expressly provided that information

about the remuneration policy of the designated enterprise must be submitted. This

refers to the regular submission of information (concerning the policy) on an annual or

six-monthly basis and submitting information when the need arises, for instance

recommendations regarding recommendations about remuneration and the minutes of

the remuneration committee.

Articles 82, 83 and 84

Reference is made to paragraph 3.10.2.

Article 85

When designating a subsidiary of ETC – itself a joint venture that is governed by the

Treaty of Cardiff - established in the Netherlands, not all provisions of the Act may be

fully applied. Nor will this be necessary, since it does not involve an obligation under the

Treaty to harmonise the decisions with the other Contracting States, as discussed in

paragraph 3.2.3.2. Article 85 contains the provisions that do not apply in this instance.

Put succinctly, the provisions concerned are those that provide for the pass-on effect to

and the shared involvement of the competent authorities of the Federal Republic of

Germany and of the United Kingdom; the articles regulating the financial management –

with the exception of Article 71 which contains a prohibition to stand surety for third

parties and guarantee the compliance with obligations by third parties. The other

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Articles concerning financial management are immaterial or unnecessary, since such

enterprise will not require a credit rating of its own, or, where the nuclear management

is concerned, other national legislation already applies (Nuclear Energy Act).

Furthermore, the specific duties to disclose (e.g. status overview) do not apply.

Article 86

With the designation of ETC Holding, which is governed by the Treaty of Cardiff, a

different constellation applies than is the case with the designation of URENCO Holding

NV, which is (solely) governed by the Treaty of Almelo. Under the Treaty of Cardiff, all

four Contracting States are required to supervise the joint venture between URENCO

and Areva as expressed in ETC. The direct or indirect powers of the French State

towards that enterprise under that Treaty have to be reckoned with. Furthermore, the

relationship of the competent authorities of the Federal Republic of Germany and the

United Kingdom with ETC Holding differs from that with URENCO.

The foregoing implies that unlike in respect of the URENCO group, the term ‘ancillary

company’ cannot be used as it is understood to mean according to Article 1. Instead,

this entity should be understood to be a legal entity that holds shares in a designated

enterprise. This implies in respect of France that partly as a result of the influence it

exerts via its majority shareholding in Areva, it partakes in the decision-forming

concerning ETC Holding. Through their legal construct in respect of URENCO Holding

Ltd. and URENCO Holding GmbH, the Federal Republic of Germany and the United

Kingdom respectively provide for possibilities of control that URENCO Ltd. (as legal

entity holding shares) has in respect of ETC Holding. In addition, each time when the

authority of a competent authority is concerned by way of paragraph 2(b) to (f)

inclusive, the competent authority of France is included as well.

Since in respect of ETC Holding there are not three enterprises existing side by side

(namely URENCO Holding NV and the German and British ancillary companies), but only

one enterprise, the phrases pertaining to decision-making in respect of ancillary

companies do not apply as such. This does not affect the decision-making of the

competent authorities concerned, albeit that it will pertain to the designated enterprise

itself and not to an ancillary company. Article 86(g) through (k) provides for this.

Article 86(l) takes into account the more indirect influence the competent authorities

of the Federal Republic of Germany and the United Kingdom exert in respect of ETC

holding. This means that an instruction may be given to the shareholder of URENCO Ltd,

which falls under the jurisdiction of the relevant competent authority.

Article 88

Paragraph 6.2.1. discusses the bodies that supervise compliance with the Act. The

official charged with this supervision will be designated by the Minister in consultation

with the Minister of Security and Justice.

Article 89

The legislative proposal contains several procedures that require the Minister, in

order to be able to effectively exercise his powers , to collect and process information

about parties that have or enter into ties with the designated enterprise. In particular in

order to review and assess potential or existing shareholders, as provided for in Section

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4 of the legislative proposal, a considerable need for information exists, specifically in

respect of legal entities that have offices both in the Netherlands and abroad. Legal

entities in particular possess the financial resources necessary to acquire considerable

numbers of shares in the designated enterprise. Furthermore, according to the

assessment criteria of Article 17(7), the composition, share ownership, and the ties

these legal entities maintain with third parties are relevant factors that must be taken

into account when assessing whether a declaration of no objection may be issued in

respect of a proposed investor. This information is also material when considering

whether the controlling rights of a shareholder must be suspended or whether a

shareholder must even be forced to sell his shares.

In the Netherlands, the Minister of Security and Justice already has information about

the legal entities concerned at his disposal pursuant to the Legal Entities (Supervision)

Act, which also provides a system for analysing and assessing risks. Where this

concerns information about the composition, share ownership, and ties maintained by

legal entities with third parties, this information may also be relevant and useful for the

Minister.

However, the Legal Entities (Supervision) Act only focuses on Dutch legal entities,

who have their corporate offices in the Netherlands, or on subsidiaries of foreign legal

entities with their central management or a branch office in the Netherlands (Article

1(e) of the Legal Entities (Supervision) Act). Nor is the purpose limitation of the Legal

Entities (Supervision) Act aimed at protecting the public interest as defined in this

legislative proposal. Thus, not all of the provisions of the Legal Entities (Supervision) Act

are suitable as regards the information requirement of the Minister, in particular in view

of the multinational nature of the designated enterprise and the special nature of the

powers vis-à-vis shareholders set out in this legislative proposal.

Article 89 of this legislative proposal introduces a specific regime that is linked to the

objectives of the legislative proposal, whereby only those provisions of the Legal Entities

(Supervision) Act are declared applicable by analogy that the Minister of Security and

Justice needs to be able to share the requested information with the Minister by way of

an alert while simultaneously protecting the information and incorporation of the

procedures to be followed for the collection and processing of information.

Article 89(1) authorises the Minister to ask the Minister of Security and Justice, within

the context of the implementation and supervision of compliance with the provisions

under or pursuant to this Act, to issue an alert to him. This authority is made subject to

certain conditions, to ensure that the request specifically involves a specific legal entity.

Furthermore, the request must be made in in connection with a concern that the legal

entity is or can be used or abused to evade the obligations and restrictions included in

this legislative proposal.

Article 89(2) requires the Minister of Security and Justice to respond favourably to

the request of the Minister. This imposes on the Minister of Security and Justice the

statutory task to issue alerts at the request of the Minister and to process the relevant

information in this respect. The term ‘alert’ is different from the term risk report as

defined in the Legal Entities (Supervision) Act and also has a different scope of

application, i.e. providing information from the registration referred to in Article 1(b) of

the Legal Entities (Supervision) Act, a summary of this information, plus a risk analysis

(see the definition of ‘alert’ in Article 1). Moreover, the reference to the registration as

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defined in Article 1(b) of the Legal Entities (Supervision) Act must be interpreted thus

that it refers to a collection of data that is processed in order to be able to issue an alert

to the Minister (see Article 89(3)(a)).

The alert also concerns the provision of the information itself, not merely a summary

and risk analysis. This is because in view of the specific powers he has under this

legislative proposal, the Minister is responsible for deciding whether or not a declaration

of no objection may be issued for taking an equity interest, to suspend the rights of a

shareholder, or even to order a compulsory sale. In order to be able to take this

responsibility and to properly weigh all interests involved, the Minister must be able to

have all available data at his disposal. In addition to the information he receives from

the Minister of Security and Justice, the Minister may also obtain information from other

sources, both in the Netherlands and abroad. The aggregate of all this information,

viewed together, will enable the Minister to come to a balanced decision.

In addition to the nature of the alert, the scope of applicability of the powers of the

Minister of Security and Justice has been widened compared with the Legal Entities

(Supervision) Act: collecting, processing, and analysing information about legal entities

is no longer restricted to Dutch legal entities that have their registered offices in the

Netherlands or to subsidiaries of foreign legal entities having their central management

or a branch office in the Netherlands. Article 89(3)(b) makes it possible to collect,

process and analyse information about foreign legal entities having their registered

office outside the Netherlands as well. It is expected that within the context of reviewing

shareholders in accordance with this legislative proposal, the Minister will specifically

have to deal with foreign legal entities that have their registered office abroad. By also

granting the Minister of Security and Justice the possibility to collect and process

information about foreign legal entities having their registered offices outside the

Netherlands, the Minister will be able to profit from the expertise and analyses of the

Minister of Security and Justice.

The possibilities the Minister of Security and Justice has to gather information about

these legal entities are much smaller than obtaining information about Dutch legal

entities having their registered offices in the Netherlands. Often, public sources or

publicly accessible sources like commercial registers will have to be used. The possibility

is furthermore provided for the Minister of Security and Justice to request foreign

authorities for information. Lastly, the Minister or the National Coordinator for

Counterterrorism may provide information to the Minister of Security and Justice (see

Article 89(3)(e)) as well.

Article 90

In certain situations, the Minister will obtain and process personal data when

exercising his powers. For this reason, Article 90 expressly provides that the minister

processes personal data as provided in Article 1(b) of the Personal Data Protection Act,

to be further specified in those chapters of this legislative proposal in which reference is

made to such processing. For instance, the procedure for issuing a declaration of no

objection in connection with the appointment of a natural person as director of the

designated enterprise, as provided in Article 7, will inevitably result in the processing of

personal data.

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The processing of personal data is directly linked to the necessity to effectively

safeguard the public interest as defined in Article 1 of the legislative proposal. Article 6

of the Personal Data Protection Act provides that data must be processed in accordance

with that Act and must be proper and prudent. Article 7 of the Personal Data Protection

Act provides that collecting personal data is only authorised for well-defined and

explicitly described and justified purposes. Article 8 of the Personal Data Protection Act

provides that at least one of the grounds for data processing exhaustively listed in that

Article must apply. Relevant for this legislative proposal are the grounds listed in Article

8(c) and (e) of the Personal Data Protection Act.

As regards Article 8(c) of the Personal Data Protection Act, it is noted that the

Minister is obliged by law to ensure that the obligations under the Treaty of Almelo, the

Treaty of Cardiff, the Treaty of Washington, and the Treaty of Paris concerning the

access of persons to classified information are complied with. As regards Article 8(e) of

the Personal Data Protection Act, it is noted that the processing of personal data is

necessary in order to ensure the proper execution by the Minister of his public-law

duties. The Minister is charged with safeguarding the public interest, for which purpose

he is provided with both ex ante and ex post review and enforcement powers.

These obligations entail that the Minister is to process data when deciding whether or

not a declaration of no objection may be issued in respect of a natural person who is

nominated for the position of executive or non-executive director, or appointed as

officer of the designated enterprise as referred to in Articles 7 to 9 of the legislative

proposal. In addition, he is to process data about this person if he wishes to exercise

the power to suspend an incumbent executive or non-executive director or officer

(Article 10(1) of the legislative proposal) or to relieve him of his duties (Article 10(2) of

the legislative proposal). This is because these persons may – in certain circumstances

– have access to classified information. This applies by analogy to the Minister’s

authority under Chapter 6 (Article 47 of the legislative proposal) to review the

appointment of persons in a joint venture in which the designated enterprise is involved.

The processing of data within the context of this authority will specifically focus on

information the Minister receives and considers in addition to the notification pursuant

to Article 13 of the Security Screening Act (see Article 9 of the legislative proposal).

Article 13(4) of the Security Screening Act specifies which personal data are processed

when preparing the notification. In addition, the Minister will also process personal data

that pertain to the suitability of candidates. This may for instance include publicly

available information about their track record in international commerce, relevant work

experience and ties with third parties, where this has not already been considered in the

aforementioned notification pursuant to the Security Screening Act.

In addition to the data processed pursuant to Chapter 3 of the legislative proposal,

which regulates the review of executive and non-executive directors and officers,

personal data may also be processed when reviewing natural persons or legal entities

who wish to become shareholder of the designated enterprise, or if the shareholders’

rights of existing shareholders are suspended or if they are compelled to dispose of their

equity interest pursuant to Chapter 4 of the legislative proposal.

Imposing a ban on a shareholder to exercise his rights attached to a share, for

instance, requires a thorough substantiation why this shareholder and the exercise of

these rights put the public interest at risk. This requires, among other things, a

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consideration of the ties this shareholder maintains with persons included on the UN

sanctions list (see Article 21(1) and (3) and Article 17(7)(d)). In many instances this

will involve the processing of personal data since it must as a rule be determined what

kind of family ties, business relationships, etc., these shareholders maintain with other

(identified) natural persons.

The kind of personal data to be processed in this context may be directly inferred

from the assessment criteria included in Article 17(7) of the legislative proposal. These

pertain to the identity of the directors and owners of the shareholder (Article 17(7)(a))

of the legislative proposal); possible sanctions and other measures imposed on a

shareholder in connection with his previous involvement in nuclear non-proliferation,

nuclear security, or nuclear safety, and compliance with the relevant statutory

requirements (Article 17(7)(c)) of the legislative proposal); the identity of a natural

person on whom restrictive measures are imposed (Article 17(7)(d)); the identity of

natural persons of whom it is known or in respect of whom there is reason to suspect

that they possess or have the intention to develop weapons of mass destruction (Article

17(7)(e)); or the nature and content of the ties through contacts the shareholder

maintains with a natural person representing a State (Article 17(7)(h) and (i) of the

legislative proposal).

Chapter 9 of the legislative proposal includes a number of special statutory measures

aimed at protecting the public interest in the event of a moratorium, bankruptcy, or

other risks to the continuity. Within this context personal data are also processed by the

Enterprise Chamber of the Court of Appeal in Amsterdam and by the Minister in the

event the procedure is followed to have the Enterprise Chamber fill vacancies in the

absence of directors of the designated enterprise (see Article 78). The processing of

personal data and the nature of the personal data concerned correspond with the

processing of personal data as provided in Chapter 3 of the legislative proposal.

The processing of personal data as part of the statutory powers laid down in Chapter

10 of the legislative proposal refers to information concerning natural persons as may

be included in the status overview supplied by the designated enterprise, as provided in

Article 79 of the legislative proposal, or in response to questions or a request from the

Minister. Very specifically, personal data may also be processed when the designated

enterprise provides details about the remuneration policy and when the remuneration

committee of the designated enterprise makes remuneration recommendations and in

the minutes of the remuneration committee (see Article 81 of the legislative proposal).

It is possible to trace this information, which may include details about income, to

specific natural persons.

Paragraph 2 of Article 2 of the Personal Data Protection Act provides for a special

strict regime in respect of special (sensitive) personal data, including information about

race, health, or criminal record. Article 16 of the Personal Data Protection Act prohibits,

in principle, the processing of such sensitive personal data.

Article 22(1) of the Personal Data Protection Act provides that the ban on processing

criminal personal data as referred to in Article 16 does not apply if these are processed

by parties that are charged with the responsibility of processing these under the Judicial

Data and Criminal Records Act. This exception will be applicable in those instances in

which the supervisors designated pursuant to Article 88 of the legislative proposal,

exercising their powers under the Economic Offences Act, gather information. Officials

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of Justis, the Ministry of Justice Agency for Scrutiny, Integrity and Screening, charged

with the implementation of the Legal Entities (Supervision) Act are authorised by law to

take note of this information as well.

Article 22(2)(a) of that Personal Data Protection Act provides that the ban on

processing criminal personal data as referred to in Article 16 is not applicable to the

person who is charged with processing these data at the request of the party involved in

order for that party’s own benefit, i.e. in order to be able to take a decision concerning

that party or to provide a service to that party. This exception will regularly apply.

Concerning the appointment of a person nominated for the position of director or for

acquiring shares in the designated enterprise, for instance, a declaration of no objection

must first be obtained.

The exception of Article 23(1)(e) of the Personal Data Protection Act is relevant as

well. This provision offers the possibility to process sensitive personal data where this is

necessary in view of a compelling general interest and provided that adequate

safeguards are in place to protect the privacy, and provided this is stipulated by law.

The compelling interest at stake is the safeguarding of the public interest as defined in

this legislative proposal.

At the same time a provision is made for adequate guarantees. For instance, the

Security Screening Act, the guarantees included therein regarding the processing of

personal data is applicable in the context of the application for a declaration of no

objection in respect of a prospective director (see Article 7(4) and Article 9). A similar

situation occurs when investigating shareholders as provided in Article 13(5) and (6),

whereby Article 49d of the Securities (Bank Giro Transactions) Act is declared applicable

by analogy and in respect of information obtained via an alert given by the Minister of

Security and Justice, as provided in Article 89. This investigation and information are

obtained in order to safeguard the public interest and also include the safeguards

offered by the Securities (Bank Giro Transactions) Act and the Legal Entities

(Supervision) Act for the protection of the privacy.

Article 91

Article 91 offers the Minister the possibility to enforce administrative law by way of

imposing an administrative fine or an administrative enforcement order.

Paragraph 1 lists the articles the violation of which grants the Minister the authority

to impose both an administrative fine and an administrative enforcement order. These

articles include the articles containing prohibitions for the designated enterprise or

instruction to be complied with, or imposing other obligations. Paragraph 2 lists the

articles the violation of which grants the Minister the authority to impose an

administrative enforcement order. These are articles the violation of which does not

make it logical to impose an administrative fine, since the aim of these articles is to

force the designated enterprise to perform the necessary act or to cease certain

behaviour. If a recurring fine is imposed, it will become increasingly expensive not to

comply with the statutory obligations, whereas the instrument of imposing an order

allows the Minister to indicate precisely which act the designated enterprise is to

perform or which behaviour it has to cease.

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The Minister may only impose an administrative fine in the event of a violation of the

articles listed in paragraph 3. These concern, for instance, non-compliance with a duty

to disclose stipulated in this Act and a number of specific provisions of Chapter 7.

Paragraph 4 contains a specific provision in the event that conditions attached to

decisions taken by the Minister pursuant to Article 95(3) are not complied with. If this

situation occurs, both an administrative fine and an administrative enforcement order

may be imposed.

Article 92

Article 92 provides rules concerning the amount of the administrative fine to be

imposed. The principal rule is that of paragraph 1. The principal rule is that the

administrative fine shall not exceed EUR 100,000,000, or, if higher, 10% of the turnover

of the designated enterprise concerned. This rule is obtained from the maximum fines

that may be imposed by the Consumer and Market Authority for violations of the

Competition Act as they applied until 1 July. The URENCO group is a multinational

enterprise that is supervised by three Contracting States. Given this international

context a fine of 10% of the turnover is a recognisable fine, which is also applied in the

competition law of the Federal Republic of Germany and the United Kingdom. The

amount of €100 million is based on the URENCO group’s current turnover and is meant

as a deterrent.

Paragraph 2 provides a derogation from paragraph 1 and refers to the situation in

which Article 51(2) sub 2° Criminal Code is applied pursuant to Article 5:1(3) of the

General Administrative Law Act. This entails that in the event of a violation by a legal

entity, an administrative fine, with a maximum of EUR 1,000,000, may be imposed on

the persons who ordered the offence, as well as on the persons who were de facto in

charge of the offence. In other words, paragraph 2 provides a different amount for an

administrative fine to be imposed on directors.

Paragraph 3 provides how to calculate the turnover of the designated enterprise.

Article 377(6), Book 2, of the Dutch Civil Code serves as basis in this respect.

Paragraph 4 provides a different regime for violations of Articles 13(7), 21(6), 22(2),

24(4) or 26(2). This concerns non-compliance with the duty to cooperate imposed in

these articles on parties in the chain of securities custody in the event of a listed


The maximum administrative fine that may be imposed in this instance amounts to

10% of the turnover of the group of which the perpetrator forms part.

Article 93

Article 93 contains a derogation from the Economic Offences Act. As a result of this

derogation, violations of the articles mentioned in this Article are economic offences

within the meaning of Article 1(1°) of the Economic Offences Act. Article 2(1) of the

Economic Offences Act provides that these economic offences are criminal offences in so

far as they are committed intentionally. Where these economic offences are not to be

regarded as crimes, they are minor offences. Article 6(1)(1°) of the Economic Offences

Act provides that a crime is punishable with a maximum term of imprisonment of six

years, or with community service, or with a fine of the fifth category. A minor offence is

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punishable pursuant to Article 6(1)(4°) of the Economic Offences Act with a maximum

term of imprisonment of one year, or with community service, or with a fine of the

fourth category.

Article 94

As a result of Article 94(1) a decision taken by the Minister pursuant to Article 2(1)

will be included on the negative list of Annex 2 to the General Administrative Law Act.

This means that it will not be possible to object to or appeal against a decision of the

Minister taken pursuant to Article 2(1). The reason for including Article 94(1) is that the

decision to designate an enterprise ensures that the Netherlands will comply with the

obligations that rest on it under the Treaty of Almelo, the Treaty of Cardiff, and the

Treaty of Washington. If such decision is open to appeal, this might result in the

Netherlands being unable to comply with these obligations. Furthermore, it might create

uncertainty during an extended period of time as to whether the designated enterprise

is in fact regulated at all and is effectively supervised by the three Contracting States.

This uncertainty is undesirable in respect of an enterprise that applies proliferation-

sensitive technology.

As a result of Article 94(2), all other objections to decisions taken under or pursuant

to this Act may be filed with the Minister; appeal may be lodged before the court, and

subsequent appeal before the Trade and Industry Appeals Tribunal (CBb). It is proposed

to allow appeal to the CBb because this legislative proposal affects the business

operations of a designated enterprise. Since the intervention is carried out by the State,

the CBb is the competent body to hear any disputes arising from this Act.

Article 95

Paragraph 2 authorises the Minister to set terms within which the Minister will take a

decision under or pursuant to this Act. This authority is stipulated because

harmonisation with the other Contracting States may result in the Minister not being

able to take a decision within the period stipulated in Article 4:13(2) of the General

Administrative Law Act.

Paragraph 3 offers the possibility of stipulating rules for decisions taken by or

pursuant to this Act. A number of exceptions have been provided for in this respect,

which have been agreed between the Contracting States. The first type of exception is

related to the nature of the decision: The decision to designate the designated

enterprise pursuant to Article 2(1) makes that the frameworks and powers enshrined in

this legislative proposal become applicable. It is not possible to easily reconcile

stipulating requirements for such a decision with this.

The second type of exception relates to the declarations of no objection that are

issued in connection with the disposal or acquisition of shares or controlling rights in the

designated enterprise. In these instances Articles 17 to 20 inclusive, offer the Minister a

wide array of reviewing instruments to allow him to determine whether a shareholder

poses a risk for the public interest. It is left to the Minister (and to the competent

authorities of the Federal Republic of Germany and the United Kingdom) to make this

assessment. The Minister must be able to refuse shareholders that pose a risk, and

should not be able to select shareholders. Due to his authority to attach conditions to

the issue of a declaration of no objection, the Minister would still have the possibility to

intervene and to decide who may and who may not be shareholder of the designated

240

enterprise. This would go beyond what is necessary in order to secure the public

interest.

The third type of exception relates to various decisions connected with the financial

management of the designated enterprise. In view of the close relationship between the

statutory obligations concerning the financial management and the commercial and

financial considerations made by the designated enterprise and its shareholders, it is

desirable to confine the effects and possibility of government intervention to what is

necessary to secure the public interest. Imposing rules on most of the decisions

provided for in Chapter 7 of the legislative proposal goes beyond what is necessary. It

creates the risk for the designated enterprise that its business plan or finance plans is

frustrated by rules that take the specific commercial context insufficiently into account.

Article 95(3) therefore excludes a large number of decisions under Chapter 7 from

the possibility of imposing rules for them.

Article 96

Pursuant to Article 28 of the Services Act, paragraph 4.1.3.3. of the General

Administrative Law Act applies, unless otherwise provided by way of a statutory

provision. Article 96 renders inoperative paragraph 4.1.3.3. of the General

Administrative Law Act, which stipulates the lex silencio positivo. A positive decision

without substantively assessing an application is difficult to reconcile with the objective

of this Act, i.e. the protection of the public interest.

Article 97

Pursuant to Article 97, Chapter 4 does not apply to the direct or indirect holding or

acquisition of shares or controlling rights in a designated enterprise by the State, the

Federal Republic of Germany or the United Kingdom. This exception is in line with Article

I(3) of the Treaty of Almelo, which stipulates that the three Contracting States are

entitled to directly participate in the joint industrial enterprise. In addition, it provides

an exception to the current regime, in the situation in which the State is required to

hold a stake in view of securing the public interest.

Article 98

In view of the provisions of Article 89(2), it was proposed to amend Article 28(3)(a)

of the Commercial Register Act 2007. This Article ensures that providing information

about the structure of companies and legal entities may be categorised, in accordance

with the Commercial Register Act, as to natural persons, should the Minister of Security

and Justice submit a request to do so in connection with an alert.

Articles 99 to 101 inclusive

Articles 99 to 101 inclusive, contain transitional provisions concerning the existing

executive and non-executive directors, existing holders of shares or controlling rights

and existing joint ventures of a designated enterprise at the time of a designation of an

enterprise pursuant to Article 2(1). These Articles aim at clearly providing that existing

situations will not be reassessed by virtue of this legislative proposal.

Pursuant to Article 99 the current executive and non-executive directors will possess

a declaration of no objection as referred to in Article 7(3)(a) by operation of law.

241

Although the Minister or one of the Contracting States will therefore not reassess

whether or not the appointment raises objections, in view of the protection of the public

interest, the Minister or the competent authority of either the Federal Republic of

Germany or of the United Kingdom will nevertheless be authorised to revoke this

declaration – should there be a reason to do so - pursuant to Article 10, or to decide to

relieve an executive or non-executive director from his duties. Both the Minister and the

competent authorities will furthermore still be authorised to suspend the executive or

non-executive director in accordance with Article 10.

Article 100(1) provides that, as is the case in respect of executive and non-executive

directors at the time of the designation in accordance with Article 2(1), holders of

shares or controlling rights in an unlisted designated company will possess a declaration

of no objection as mentioned in Article 17(4)(a) by operation of law for shares and

controlling rights they hold at that time. The foregoing is without prejudice to the

powers of the Minister and of the competent authorities of the other Contracting States

pursuant to Articles 23 and 24(b).

Article 100(2) provides for the situation in respect of a listed designated enterprise.

Pursuant to sub (a), a holder of an equity interest who already holds that interest at the

time when the listed enterprise is designated, automatically holds a declaration of no

objection within the meaning of Article 19(3)(a). Sub (b) concerns the situation that the

designated enterprise receives a listing after it has been designated. In that event as

well will the existing holder of an equity interest of the (now) listed designated

enterprise automatically hold a declaration of no objection.

Article 101 provides transitional provisions for joint ventures that already exist on the

date on which an enterprise is designated pursuant to Article 2(1). The designated

enterprise possesses a declaration of no objection as referred to in Article 45(3)(a) by

operation of law in respect of such a joint venture as of that date. This would remove

the need for an initial assessment. This is without prejudice to the powers of the

Minister and the competent authority of the Federal Republic of Germany and of the

United Kingdom to revoke the declaration of no objection.

The Minister of Economic Affairs,

act implementing the treaty of almelo and … · proliferation of nuclear weapons; c. as a natural...

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