AMSTERDAM (Reuters) - Elliott Advisors, the hedge fund that has been pushing Dutch paint maker Akzo Nobel AKZO.AS to enter takeover talks with U.S. rival PPG Industries PPG.N, said on Tuesday it has begun legal proceedings to try to oust Akzo Chairman Antony Burgmans.

FILE PHOTO: Cans of Dulux paint, an Akzo Nobel brand, are seen on the shelves of a hardware store near Manchester, Britain, April 24, 2017. REUTERS/Phil Noble/File Photo

Elliott said it had filed a suit with Amsterdam’s Enterprise Chamber petitioning judges to order an extraordinary general meeting (EGM) of shareholders to debate the proposal.

In an open letter, the fund said Akzo’s flat rejection of PPG’s third takeover proposal, worth 26.3 billion euros ($28.7 billion), was “a flagrant breach of Akzo Nobel’s boards’ fiduciary duties and of Dutch corporate law, and ... an arrogant dismissal of recognized principles of proper corporate governance.”

Akzo has said PPG’s bid is too low and lacks firm commitments to the company’s stakeholders, including employees and environmental interests. The company’s boards prefer their own plan to avoid a PPG takeover by issuing extra dividends and selling or floating Akzo’s chemicals division, representing about a third of profits.

Analysts say Akzo’s plan is not as attractive for shareholders as PPG’s 96.75 euro per share offer. Akzo shares were trading 1.2 percent higher at 77.77 euros on Tuesday.

Under Dutch law shareholders representing a 10 percent stake have the right to ask the company to call an EGM. Elliott, with a 3.25 percent stake, had earlier assembled a group of investors meeting the threshold and requested that Akzo call such a meeting. The company declined, saying it supported Burgmans and an EGM would not be in the company’s best interests.

Akzo spokesman Leslie McGibbon said Elliott’s decision to go to court was “incredibly disappointing.”

“We’ve conducted an extremely thorough review of all proposals from PPG, including engagement ... exactly as Elliott requested,” McGibbon said.

Elliott’s legal action also complicates PPG’s decisionmaking as the U.S. company faces a June 1 deadline to make a formal bid for Akzo or walk away for a six-month cooling-off period under Dutch takeover rules.

However, if PPG has not won the support of Akzo’s boards, a bid would be deemed as hostile.

Successful hostile takeovers of Dutch companies by foreign buyers are extremely rare, and face an array of difficulties, not least Akzo’s constitutional defense mechanism put in place in 1926 which can be activated to repel unwanted takeovers as well as some board changes.

In addition, the country’s economy minister and other politicians have said they oppose a takeover of Akzo.

A hearing date for Elliott’s complaint has not been set. If judges rule in the fund’s favor, the minimum period before which an EGM can be held is 15 days.

That means that unless Elliott’s plea is granted within the coming six days, an EGM on Burgmans’ future would only come after PPG’s bid deadline.

However, a person familiar with the matter said Elliott was aiming for the EGM to be held on June 6.

Regardless of whether the plea is granted, the level of shareholder support for Elliott’s position is unclear.

At Akzo’s annual general meeting on April 25 around 33 percent of shareholders voted against granting the company the ability to issue new shares, which analysts said could be some indication of the level of opposition among Akzo’s shareholder base, 93 percent of which is non-Dutch, to the course plotted by Akzo’s boards.

But it remains unclear whether a majority of shareholders would actually support the ousting of Burgmans, a former chief executive of Unilever, or how many would accept a hostile PPG bid.

Elliott is no stranger to using the courts to achieve its goals. Last summer, it brought legal proceedings against Bank of East Asia, the majority of the bank’s directors and its chairman and CEO in Hong Kong, claiming “unfair prejudice”.

The hedge fund firm also tried to take South Korea’s Samsung C&T Corp to court in 2015 over a merger with Cheil Industries.