5.3 The inquiry proceedings in practice

In February 2009, Cools and Kroeze issued an empirical study on the inquiry proceedings.1 This report offers a good insight into how the inquiry proceedings function in practice. The Cools and Kroeze report shows that the impressive workload of the OK in recent years did not hinder the OK in proving itself to be a very efficient court. As appears from this empirical study, the inquiry proceedings are the most important proceedings for the settlement of disputes within Dutch companies. In so far as relevant to this research, I will highlight some of the findings of this interesting report.

Firstly, as appears from the Cools and Kroeze report, the inquiry proceedings are used mostly for the settlement of disputes in non-listed BVs or NVs. In about 93% of the cases investigated, the inquiry proceedings were used for nonlisted BVs and NVs.2 In about 24% of the cases related to non-listed BVs and NVs, several members of a family were associated in the company involved in the inquiry proceedings.3 This percentage may be even higher, because it can be assumed that it is not reported in all cases that a family business is involved.

Moreover, as the report published by Cools and Kroeze4 shows, the most common conflicts in non-listed companies (mostly BVs, but also NVs) dealt with under the inquiry proceedings concerned are:

Secondly, this empirical study reveals that during the inquiry proceedings, an amicable solution (oplossing in der minne) is often possible.5 At the first stage, if the petition to start inquiry proceedings is granted, immediate remedies can be ordered. These immediate remedies often assist in finding a solution to the conflict, or in other words, the immediate remedies put pressure on parties to settle their dispute amicably.6

In addition, a remarkable Onding of the report is that in a substantial number of cases only immediate remedies are ordered, while eventually no inquiry is ordered.7 With respect to non-listed NVs and BVs, in the period 1994-1999 in 45% of the cases immediate remedies were not followed by an inquiry. Dwing the period 2000-2007 this percentage was decreased to 23% of the cases. The researchers put forward that it is conceivable that if the immediate remedies lead to a (quick) solution of the dispute, there is no longer need for an inquiry.

With respect to non-listed companies, the numbers of amicable settlements, in both the first stage and the second stage of the inquiry proceedings, are:

These figures show that amicable settlements are on the increase. During the period 1994-1999, 20% of the cases were amicably solved. In the period 20002007, in 37% of the cases an amicable solution was reached. Most of the amicable settlements (more than 90%) are reached after the request for an inquiry has been granted by the OK and during the inquiry itself.8 While only the amicable solutions reported by the OK are involved in the empirical study, it may be assumed that factually these figures may be even higher. The numbers of amicable settlements before 2002 may be higher. Only as of the 1 st of January 2002, the OK consequently reports amicable settlements.9 In addition, cases that are withdrawn before a first judgment is provided by the OK are not reported and, therefore, are not involved in the empirical research. It can be assumed that, in some cases, the reason for withdrawal may be that an amicable settlement is reached, perhaps because of the threat of application of the inquiry proceedings. Lastly, the threat of using the inquiry proceedings may put pressure on parties to settle their dispute amicably.

How fast the OK works appears from the figures with respect to the duration of inquiry proceedings. The figures with respect to non-listed companies are:

The aforementioned figures show that the inquiry proceedings may often provide for a quick and relatively easy way to resolve a dispute, especially in a deadlock situation.10Nonetheless, the Cools and Kroeze report does not show what the contents of such amicable settlements have been. For instance, the report does not show how many amicable settlements involved a buy-out of one of the shareholders.

As I was particularly interested in the contents of amicable settlements,I took a closer look at the cases in which an amicable settlement was reached on a random sample basis. It appears that not all amicable settlements relate to a shareholder buy-out,11 although many amicable settlements do.12It is relevant to note that in the majority of cases it is not clear what kind of amicable settlement parties have reached, because in (final) judgments, the OK regularly does not elaborate the contents of amicable settlements, but only notices that an amicable settlement has been achieved.13 In my view, this can be explained by the fact that parties often prefer to keep their amicable settlement confidential instead of disclosing it to the OK, because by disclosing the settlement it could become public when included in a (final) judgment of the OK. Therefore, it is difficult to estimate the amount of amicable settlements that have resulted in an exit of a shareholder.

Cools and Kroeze notice that parties do not pursue an amicable solution in all cases.14 Sometimes, the mutual confidence is irretrievably broken down to such an extent that parties have no desire to resolve their dispute amicably. More-over, in some cases parties prefer to receive an inquiry report, which can be used for further proceedings on civil liability. Then, the inquiry proceedings are used as a fishing expedition; if the fishing net is wide enough it can catch relevant information. In addition, some inquiry proceedings deal with bankrupt companies, in which a transfer of shares is useless.

The report of Cools and Kroeze also focuses on the winding-up remedy. It reveals that in the period 1971-2007, final orders were given in only 13% of the cases onder the inquiry proceedings, which amounts to a total number of 66 cases.15 During the same period, in a total number of thirteen cases a winding-up was ordered. This means that in 20% of the cases in which final remedies were ordered, the winding-up remedy was applied.16 Since, for obvious reasons, no winding-up orders were directed at listed companies, the percentage relating to non-listed companies is even higher. With respect to the period 1994-1999 and 2000-2007, the percentage of winding-up orders as percentage of final remedies is 31% (four times) and 8% (two times), respectively. The reporters draw the conclusion that in recent times the OK is more reluctant to apply the winding-up remedy than before.17 Nonetheless, although the percentages are considerable, the actual amount of winding-up orders is not very high, especially in the most recent period. Therefore, solid conclusions cannot be drawn in this respect.