22.2.1 Starting point: the shareholder’s discretion to decide on the financing of the company

The two developments outlined above – the changes in the financing practice and the relaxation of the statutory system of standards for the private company – are the reasons for this study. The study aims to answer the central question to what extent,and how, the shareholder’s discretion to decide on the financing of the private company (de financieringsvrijheid van aandeelhouders) should be limited on behalf of the interests of the other parties involved in the company, in particular when the shareholder intervenes in the company’s capital structure.

In my opinion, the shareholder’s discretion to decide on the financing of the company applies to three financial options for the shareholder. Firstly, the shareholder can freely determine the extent to which he will finance the company; in other words, the total capital that he will make available to the company. Secondly, the shareholder can determine the legal form of the financing he furnishes in accordance with his own views: does he provide capital and in this way contribute to the company’s equity, or does he grant a loan to the company, possibly in exchange for security, resulting in an increase of the company’s debts? Finally, the shareholder is free to withdraw equity from the company by means of formal distributions, such as payments of dividends, the repurchasing of shares or payment in the scope of a reduction of capital. In addition, the shareholder can enter into other transactions with the company that result in a reduction of the company’s equity in favour of the shareholder.