Ajax board chair also under fire for stock purchase irregularity; Urged to resign

Ajax Supervisory Board Chair Michael van Praag failed to register his own acquisition of 100 shares of common stock in the Amsterdam football club, Ajax confirmed on Friday. He should have reported this to the Dutch Authority for the Financial Markets (AFM) within two weeks after his nomination to take over the board was approved at a shareholders meeting in November. Investors’ association VEB is also pushing for Van Praag’s resignation.

He only reported his holdings in the Amsterdam club, which is publicly listed, after national broadcaster NOS began asking questions about the situation this week. This was an “administrative omission of a fact that was fully known to the market,” Van Praag said about the situation.

Ajax shares immediately fell nearly 2 percent on the Euronext Amsterdam stock exchange after the news broke, taking the price down 20 cents to 10.25 euros. The share price rebounded back to 10.45 euros before the market closed.

Van Praag’s mistake comes at an unfortunate time. The Ajax supervisory board, led by Van Praag, suspended CEO and Executive Board Chair Alex Kroes on Tuesday on accusations of insider trading. The suspension was with immediate effect, and the supervisory board said it was moving towards firing Kroes.

A week before his appointment was made public, Kroes purchased 17,000 shares in the football club. He said he did not do this to make a profit. “I thought it was a positive signal to radiate confidence in the club and to shareholders,” he responded.

The cases of Kroes and Van Praag are independent of each other, and not comparable in scope or nature. Kroes owns 42,500 Ajax shares, and trading shares based on having access to information that has not been made public is a criminal offense which can carry a prison term.

Failure to report share holdings and voting rights within two weeks of appointment is a violation of Chapter 5 of the Act on Financial Supervision (Wft), according to the AFM. This is punishable by a fine, but the AFM can also decide not to fine someone at their discretion.

Van Praag said on Tuesday he was very surprised that Kroes did not know the rules regarding listed companies. “He said it wasn’t a big deal and that he didn’t know all the rules,” Van Praag said.

“But of course you have to know the rules if you are so active on the stock exchange and you become CEO of a listed company. He was only allowed to start on March 15, and had more than six months to read up on it. Trading with insider information is a crime, we cannot tolerate that. We cannot sell that to our stakeholders either.”

Van Praag must resign from Ajax, investors' association says

“It is not a lot of shares, but it is about the principle,” Everts said to NOS about Van Praag’s misstep regarding 100 shares. "And the principle is what he has clearly explained to Kroes. At this level, you, as a stock exchange-listed company, are playing in the Champions League. And then you need to stick to the laws and regulations.”

Everts claims that Van Praag should have registered his shares in Ajax at the end of last year. His failure to do so could result in a fine for the director. Everts stated that the AFM could, in theory, issue a fine of half a million euros.

A spokesperson for the AFM emphasized that the watchdog has various measures to punish rule breakers. Parties that make a mistake could be let off with a warning letter, but in other cases, they could be issued a fine.

The AFM would not answer questions about specific cases. “In a general sense, it is stated that directors and commissioners must report their shares in their companies or companies affiliated with their companies to the AFM.”