Dutch Court Refers Questions on Sanctioned Party's Voting Rights to EU Court of Justice

The Dutch Supreme Court on April 24 said it will refer two preliminary questions to the European Court of Justice concerning the effect of EU Russia sanctions on sanctioned parties' shareholder voting rights, according to an unofficial translation.

The court asked the European court two questions, the first of which asked if "freezing of assets" within the meaning of EU's Russia sanctions "in the case of depositary receipts for shares belonging to, owned, held or controlled by" sanctioned individuals should "be interpreted as meaning that the meeting and voting rights attached to share certificates cannot be exercised, in any case as long as this does not lead to disproportionate damage for the relevant certificate holder."

The second question asked if the answer to the first question is impacted by whether exercising the meeting and voting rights "can lead to mutation, transfer, modification, use or deployment of or dealing with funds, in any way whatsoever, resulting in a change in their size, amount, location, owner, possession, distinctive features, destination or other changes that affect the use of the said funds, including the management of an investment portfolio."

The questions came in a spat between SBK, a subsidiary of sanctioned Russian bank Sberbank, and Dutch conglomerate Fortenova Group STAK Foundation. SBK is a minority owner of the depositary receipts for shares in Fortenova TopCo issued by STAK. STAK's board held a shareholder meeting regarding changes to corporate governance in 2022, excluding SBK from both voting and attending because Sberbank was sanctioned by the EU.

The Dutch court said there's "reasonable doubt about the answer to the question whether the meeting and voting rights attached to (depositary receipts for) shares belonging to a sanctioned person or entity have been frozen." The meeting and voting rights depend on circumstances, including "the nature or content of the agenda decision and the position on it of the sanctioned holder of the (depositary receipts for) shares."