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In January 2013, the Netherlands amended the Market Abuse (Financial Supervision Act) Decree to include new obligations for Dutch financial institutions regarding cluster munitions. Financial institutions must now take adequate measures to ensure that they do not conduct or commission transactions for the purpose of acquiring or offering a financial instrument that has been issued by a company that produces, sells, or distributes cluster munitions or critical components of them, and that they do not provide loans to or acquire nonmarketable holdings in the capital of such companies.[1] The rules also prohibit indirect investments via parent (holding) companies  that hold more than 50% of the share capital of prohibited companies.[2] The prohibition does not apply to clearing institutions.[3]

There are three exceptions to the prohibition. A financial institution is allowed to execute transactions based on an index if less than 5% represent individual companies that are subject to the investment prohibition. In addition, the prohibition does not apply to transactions in a collective investment scheme if less than 5% of the investments are in individual companies that are subject to the investment prohibition. Lastly, investments can be made in clearly described projects of cluster munition companies insofar as the financing is not used for the manufacture, sale, or distribution of cluster munitions.[4]

The implementation of the law is overseen by the Financial Market Authority (Autoriteit Financiële Markten, AFM). The AFM has published “Frequently Asked Questions” on the interpretation and monitoring of the prohibition on its website.[5] In case of a violation of the prohibition on investing in or granting loans to prohibited companies, the AFM may impose a fine or report the matter to the Public Prosecution Service.[6]  The violation of the prohibition is categorized as a “category 2” violation, which carries a fine with a base amount of €500,000 (around US$553,325) and a maximum of €1 million (around US$1.11 million).[7] The base  amount for category 2 and 3 fines is flexible and may be doubled or reduced to zero if the seriousness and duration of the offense and/or the degree of culpability of the offender give reason to do so.[8]

The AFM uses an indicative list of prohibited companies for its supervision. The list is updated towards the end of each calendar year. It is created at the request of the AFM by a representative selection of market parties and interest groups, which meet to agree on the list of companies that should be subject to the prohibition.[9] The original list of prohibited companies was published by the financial sector,[10] but updates have not been made publicly available by the AFM. The list included the following companies: Aeroteh (Romania), Alliant Techsystems (US), Aryt Industries (Israel), Ashot Ashkelon (Israel), Hanwha Corporation (South Korea), Kaman Corp. (US), Lockheed Martin Corp. (US), Norinco (China), Poongsan Corporation (South Korea), Singapore Technologies Engineering (Singapore),  Splav  State  Research  (Russia),  and  Textron (US).[11]

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Prepared by Jenny Gesley
Foreign Law Specialist
November 2016

[1] Besluit van 12 oktober 2006, houdende regels tot uitvoering van diverse bepalingen van hoofdstuk 5.4 van de Wet op het financieel toezicht (Besluit marktmisbruik Wft) [Decree of October 12, 2006 Containing Rules Implementing Various Provisions of Chapter 5.4 of the Act on Financial Supervision (Market Abuse (Financial Supervision Act) Decree), STAATSBLAD VAN HET KONINKRIJK DER NEDERLANDEN [STB.] [OFFICIAL GAZETTE OF THE KINGDOM OF THE NETHERLANDS] 2006, No. 510, art. 21a,, archived at

[2]  Id. art. 21a, para. 2.

[3]  Id. art. 21a, para. 1.

[4]  Id. art. 21a, para. 3.

[5] Frequently Asked Questions – Clustermunitions, AFM, (last visited Nov. 8, 2016), archived at

[6] Wet van 28 september 2006, houdende regels met betrekking tot de financiële markten en het toezicht daarop (Wet op het financieel toezicht) [Act of September 28, 2006 on Rules Regarding the Financial Markets and Their Supervision (Financial Supervision Act)], STB. 2006, No. 475, art. 1:80,, archived at; Wet van 22 juni 1950, houdende vaststelling van regelen voor de opsporing, de vervolging en de berechting van economische delicten [Wet op de economische delicten] [Economic Offenses Act], STB. 1950, No. 258, art. 1,, archived at

[7] Besluit van 11 juni 2009, houdende regels voor het vaststellen van de op grond van de Wet op het financieel toezicht en enige andere wetten op te leggen bestuurlijke boetes (Besluit bestuurlijke boetes financiële sector) [Decree of June 11, 2009 on Rules for Determining Administrative Fines on the Basis of the Act on Financial Supervision and Other Laws (Decree on Administrative Fines in the Financial Sector)], STB. 2009, No. 329, art. 10,, archived at; Financial Supervision Act art. 1:81, para. 2.

[8] Decree on Administrative Fines in the Financial Sector art. 2.

[9] AFM, supra note 5.

[10] Nieuwsbrief [Newsletter], EUMEDION, CORPORATE GOVERNANCE FORUM, Dec. 2012, at 4,, archived at

[11] Id.

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Last Updated: 12/30/2020