Financial Times: Dutch diligence: “Another court ruling is due next month on whether to order an investigation into management at Dutch retailer Ahold following a bookkeeping scandal two years ago - not to mention the ongoing problems at Royal Dutch/Shell. (ShellNews.net) 22 Dec 04

By Paul Betts

Published: December 22 2004

By ordering an investigation into Unilever's decision to opt for a share swap rather than returning cash to its Dutch preference shareholders, an Amsterdam court yesterday gave some Christmas cheer to long-suffering shareholders. They may ultimately get the cash they want, instead of the shares they do not.

Individual investors and fund managers went to court after the Anglo-Dutch consumer group said it would next year convert into ordinary shares the preference shares issued in 1999 as a special tax-free dividend from the proceeds of selling the company's chemicals operations.

Investors and analysts claimed they were led to believe they would get cash. They also felt short-changed, since conversion is expected to cost Unilever €1bn, while cash would be about €1.4bn.

Although the court ruled that Unilever was not to blame for creating this expectation, it conceded that an average investor had reason to expect a cash payment. It also questioned Unilever's policy and thus ordered the investigation at Unilever's expense.

Another court ruling is due next month on whether to order an investigation into management at Dutch retailer Ahold following a bookkeeping scandal two years ago - not to mention the ongoing problems at Royal Dutch/Shell.

Once one of the most paternalistic systems in Europe, with all the influence concentrated around a handful of big shots, the Netherlands is having to adapt to some healthy shareholder activism.