AMSTERDAM (Reuters) - A Dutch court on Monday rejected a request by Akzo Nobel AKZO.AS investors for it to take immediate action against the company over its rejection of a takeover bid by U.S. rival PPG Industries PPG.N, handing the Dutch company a victory in its efforts to repel the U.S. firm's 25 billion euro ($28 billion) proposed offer.

The decision ratchets up the pressure on PPG to decide whether to file formal bidding papers for Akzo with Dutch regulators by a June 1 deadline - or walk away for at least six months.

PPG said in a statement after the ruling it was still weighing whether to bid or not.

Presiding Judge Gijs Makkink said Akzo’s board had been within its rights to reject entering into talks with PPG. However, he noted the management faced dissent from a large group of shareholders which wanted it to engage in talks with PPG. A group representing around 18 percent of its equity had spoken out in support of the suit, launched by hedge fund Elliott Advisors.

“This is a problem that cannot be ignored by Akzo Nobel,” Makkink said, though he left it up to the company to decide what steps it should take to mend the rift.

Elliott Advisors had asked the court to order an extraordinary shareholders meeting to consider a motion to dismiss Chairman Antony Burgmans over the company’s decision to reject a proposed takeover offer from PPG worth 25.3 billion euros ($28.3 billion).

The judge rejected that, saying it amounted to an attempt to force the board of directors to change their strategic direction, which was not a right that shareholders have under Dutch law.

Elliott said in a statement it was “surprised and disappointed” by the ruling.

“Elliott is considering the implications of this judgment for shareholder rights in the Netherlands and for its next steps in relation to Akzo Nobel.”

FILE PHOTO: A view of Akzo Nobel's headquarters in Amsterdam, February 6, 2014. REUTERS/Toussaint Kluiters/United Photos/File Photo

PPG REVIEWING RULING

Makkink’s ruling leaves the door open for Elliott to pursue a larger case for mismanagement by Akzo’s boards, but in his remarks he also noted he had seen no evidence the boards did anything improper.

PPG, which has taken legal action with a different Dutch court in seeking to extend the June 1 deadline for filing bid papers, said it was “reviewing the Enterprise Chamber’s ruling”.

“PPG remains willing to meet with Akzo Nobel regarding a potential combination of the two companies, but without productive engagement (from Akzo’s boards), PPG will assess and decide whether or not to pursue an offer,” it said.

Akzo Nobel spokesman Leslie McGibbon said the company was “very pleased” with the decision.

He said it was too soon to say what more the company might do to explain its position to shareholders.

The ruling is a milestone in Dutch jurisprudence, and may preempt a debate scheduled for Thursday in parliament in which the government will discuss several ideas it is considering to protect Dutch companies from being taken over by foreign buyers.

Monday’s ruling “sets the tone for the coming years and shows that the government doesn’t need extra measures to protect companies (from hostile takeovers),” said attorney Jurjen Lemstra of Britain’s Universities Superannuation Scheme, a pension fund manager with a 1.28 percent stake in Akzo that had supported Elliott’s suit.

Lemstra said Akzo should still at hold a informational shareholder meeting to talk about PPG’s proposals, given the judge’s critical remarks.

PPG began its pursuit of Akzo Nobel in March, and has seen three takeover proposals rejected.

It initially signalled it planned to bid for Akzo with or without support of the company’s board, but on May 10 signalled it might also walk away.

Akzo Nobel shares closed Friday at 76.37 euros, well below PPG’s bid of above 95 euros per share in cash and shares.