Differences in vision or interests can arise between shareholders, which may lead to conflicts. Such disputes can put pressure on the continuity of the company and therefore require a careful and strategic approach. In this second part on shareholder disputes, we discuss the legal options for resolving such disputes.
irst of all, in the case of (impending) shareholder disputes it is of great importance to seek legal advice in a timely manner. It is advisable to engage a lawyer before such a conflict escalates, so that the dispute can be managed as effectively as possible. At an early stage, the situation can already be reviewed, allowing for possible de-escalation and for alternatives to be explored in order to avoid court proceedings. Examples include the buy-out of one shareholder by the other shareholder(s) or the sale of the entire company to a third party. It is also possible that a specific form of dispute resolution has already been included in the shareholders’ agreement to resolve the dispute.
If it is not possible to resolve the shareholder dispute out of court, proceedings before the Enterprise Chamber of the Amsterdam Court of Appeal may offer a solution. The following three types of proceedings are possible there:
The inquiry proceedings can also be combined with the withdrawal or the squeeze-out proceedings.
An entitled shareholder or holder of depositary receipts may request the Enterprise Chamber to order an investigation into the policy pursued and the current state of affairs within the company. In addition, a request may be made for interim measures, such as the suspension of a director or supervisory board member, or the appointment of a temporary director.
If the Enterprise Chamber is of the opinion that there are “well-founded reasons to doubt the correctness of the policy,” it will appoint one or more investigators who will conduct the investigation and draw up an investigation report. In the same phase, the Enterprise Chamber may decide to grant or reject the requested interim measures.
After completion of the investigation, the Enterprise Chamber will decide whether there has been mismanagement within the company. If this is the case, the Enterprise Chamber may also grant definitive measures, such as the annulment of a resolution or the dismissal of directors or supervisory board members.
Please note: Strict standing requirements apply for initiating inquiry proceedings. Not every shareholder or holder of depositary receipts may submit such a request. If you are considering initiating inquiry proceedings, we would be happy to discuss the possibilities with you.
A shareholder who finds himself in a locked-in position and whose co-shareholder(s) do not wish to acquire his shares may request the Enterprise Chamber to order the co-shareholder(s) or the company to acquire his shares. The locked-in shareholder must be harmed in his rights and/or interests by the conduct of the co-shareholder(s) or the company to such an extent that continuation of his shareholding cannot reasonably be required of him.
At least one third of the shareholders may request the Enterprise Chamber to expel a shareholder if his conduct (whether or not in his capacity as a shareholder) harms the interests of the company and continuation of his shareholding can no longer be tolerated. The company itself cannot submit such a request to the Enterprise Chamber.
If the Enterprise Chamber grants the request for withdrawal or expulsion, it will in principle appoint an expert to determine the value of the shares. The shares must then be acquired at this value. However, the Enterprise Chamber will not appoint an expert if the parties have already reached agreement on the valuation of the shares.
Shareholder disputes can have major consequences for the company. It is therefore essential to engage a lawyer in a timely manner, so that the conflict can be guided in the right direction and further escalation can be prevented. We are happy to think along with you about appropriate solutions and strategies.
Do you have questions about preventing shareholder disputes? Then contact Manon Hoekstra, lawyer Corporate Law.
This blog is part of a two-part series on shareholder disputes. The first part focused on preventing shareholder disputes.
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