Triodos Bank, known for its commitment to sustainable banking, suspended trading in its Triodos depository receipts (TDRs) on two occasions for an extensive period of time. Once trading resumed after the second occasion, the prices of the TDRs were no longer tied to the net asset value of the underlying Triodos shares. Instead, prices were determined by supply and demand. The price of TDRs then dropped from EUR 84 to a staggering EUR 20.
Disgruntled TDR investors then organized themselves through representative bodies. One of these representative bodies reached a settlement agreement with Triodos Bank in January 2025. In addition to financial compensation, the settlement includes improvements in corporate governance and enhanced liquidity.
In Spain, however, litigation remains ongoing, with over 300 cases still pending. In Belgium, one individual lawsuits is ongoing, and collective litigation on behalf of at least 250 TDR holders is being prepared. Additionally, two other Dutch organizations are preparing to file a class action lawsuit or mass claim against Triodos Bank and/or its former directors or are exploring the possibility of doing so.
What are Triodos Depositary Receipts?
Triodos Bank is a Dutch bank with operations in the Netherlands, Belgium, the United Kingdom, France, Spain and Germany. While Triodos Bank (“Triodos”) is not one of the largest banks in the Netherlands in terms of assets or customer base, it is highly influential in the sustainable banking sector.
To raise capital and provide the public with an opportunity to invest in Triodos, a structure was established using Triodos depository receipts (“TDRs”). This kind of structure is relatively common in the Netherlands. The structure operates as follows.
Unlike shares, depository receipts do not carry voting rights. TDR holders are entitled to the dividend payments on the shares in the capital of Triodos. TDR holders can also trade in TDRs and benefit from potential capital gains on their TDRs.
The issued capital of Triodos amounted to approximately EUR 723 million as of December 31, 2022. This has been raised by approximately 43,500 TDR holders who jointly hold close to 14.5 million TDRs.
What is the background of the dispute?
Triodos has been facilitating the issuance of TDRs since 1980. The TDR prospectus indicated that Triodos would uphold a market for TDRs. Consequently, after 2007, Triodos became the sole counterparty for TDR holders seeking to sell their TDRs.
The bank’s practice was to purchase TDRs at a price based on the net asset value of its shares. Triodos then either resold the acquired TDRs to third parties or retained them on its own balance sheet.
On 18 March 2020, Triodos announced that, due to the economic uncertainties brought about by the COVID-19 pandemic, it was temporarily suspending the buying and selling of TDRs. The bank explained that this decision was made to assess the impact of the pandemic on both the economy and its operations. The initial suspension lasted until 12 October 2020
On 5 January 2021, Triodos imposed a second suspension of trading in TDRs. This time, the bank explained that the suspension was due to an imbalance between supply and demand, which strained the internal trading system. This second suspension lasted for an extended period, until 4 July 2023.
After the second suspension, on 5 July 2023, Triodos launched a Multilateral Trading Facility for TDR trading, enabling transactions to resume in an effort to restore liquidity. However, trading options remained limited. Additionally, since the bank was no longer the counterparty for TDR holders, TDR prices were no longer tied to the net asset value of the underlying Triodos shares. Instead, prices were determined by supply and demand. Whereas TDR shares were valued at EUR 84 on 5 January 2021 (at the time of the second suspension), they traded around EUR 20 as of 5 July 2023.
The sharp decrease in TDR value contributed to TDR holders feeling that their investments had been significantly devalued, and they were aggrieved by the lack of liquidity and transparency during the suspension periods. Many investors felt that they had been misled about the nature of the investment and the risks involved.
Triodos countered that it had explicitly warned TDR holders in the prospectuses about the risk of limited trading, which could result in delays in selling or the inability to sell at or above the purchase price. The bank also argued that it was only allowed to repurchase a maximum of 2 to 3 percent of the TDRs in cases of insufficient demand. Furthermore, Triodos maintained that its practice of repurchasing TDRs at the net asset value of its shares was voluntary and not a legal obligation.
Syndications of TDR Holder Groups and first collective settlement
Multiple groups of aggrieved TDR holders organized themselves through representative bodies to advocate for their interests. One such group was the foundation "Stichting Certificaathouders Triodos Bank". This foundation represented an unknown but significant amount of TDR holders.
In January 2025, Triodos and this foundation announced a settlement comprised of a comprehensive package of measures to address the concerns of TDR holders.
Central to this package is a settlement offer of EUR 10 per TDR to all holders who owned TDRs as of 28 June 2023, in exchange for full and final discharge of any legal claims related to the TDRs, including the suspension of trade and subsequent actions taken by the bank. This move is expected to result in a substantial provision of EUR 101 million in the bank's 2024 financial results, significantly impacting its profitability for that year.
The settlement furthermore includes enhancements in governance, communication and support to TDR holders:
- Governance Improvements: TDR holders now have the right to request voting proxies for General Meetings, enabling them to exercise voting rights attached to their TDRs. Additionally, Triodos, in consultation with SAAT, will implement changes to facilitate the proxy process, allowing DR holders to grant proxies to third parties or for SAAT to vote on their behalf.
- Enhanced Communication and Community Engagement: The bank has committed to improving its communication with TDR holders and strengthening community engagement activities for all stakeholders, including TDR holders, employees, and customers. Initiatives in this regard are slated for presentation during the Annual General Meeting in May 2025.
- Euronext Listing: Triodos will support depositary receipt holders in their transition to Euronext by making information available through multiple channels.
Ongoing efforts by other TDR Holder Groups
While the foundation "Stichting Certificaathouders Triodos Bank" settled, in Spain litigation remains ongoing with over 300 cases still pending. The Spanish “Plataforma de afectados Triodos” continues to pursue seeking further compensation and structural reforms within the bank litigation.
Also, in Belgium, one individual lawsuits is ongoing and collective litigation on behalf of at least 250 TDR holders is being prepared by “Trioforum”.
Additionally, the Dutch foundation “Stichting Red Triodos” and the Dutch foundation “Stichting Triodos Tragedie” have expressed dissatisfaction with the current settlement terms, arguing that they do not fully address the financial losses and governance issues experienced by TDR holders. These two Dutch foundation are preparing to file a class action lawsuit or mass claim against Triodos and/or its former directors on behalf of TDR holders or are exploring the possibility of doing so.
Conclusion
While the settlement between Triodos and a part of the TDR holders reinforces once again the Netherlands' position in Europe as an investor friendly jurisdiction with a good track record of securities related settlements, it must be made clear that this settlement will not bring finality for Triodos. Triodos challenges are far from over.
Deminor is not involved in the Triodos case, but we remain committed to monitoring its progress and will share updates on further developments.
