7.2.4 Scope

In order to determine the scope of the appraisal right, let us have a closer look at Art. 2:181 DCC. As clearly appears from Art. 2:181 paragraph 2 DCC, the shareholder who did not consent to adoption of the resolution is entitled to this appraisal right. Art. 2:181 paragraph 1 DCC regards the rule that in case of conversion of a BV into an association, cooperative or mutual insurance society, the shareholding is converted into a membership right. Art. 2:181 paragraph 1 DCC does not refer to the foundation. Although the rule of paragraph 2 follows the rule of paragraph 1, one could question whether both rules should be read in conjunction with each other.

The fact that paragraph 1 does not mention the legal form of the foundation has led to debate in legal literature. De Monchy has argued that Art. 2:181 paragraph 2 DCC does not have to be read as merely applying to the three legal forms mentioned in the first paragraph.1 According to De Monchy, the first reason is that the second paragraph states "unless the company converts itself into an NV", alludes to a broader scope of the appraisal right. When paragraph 2 only regards the conversion into an association, cooperative, or mutual insurance society, it does not make sense to exclude the NV. In addition, it should be noted that the foundation is not explicitly excluded in paragraph 2.

The second reason is that an interpretation including only the three legal forms mentioned means that in the case of the conversion of a BV into a foundation, non-consenting shareholders do not have the option to obtain indemnification for the loss of their shares. It is unlikely that the legislator has made that choice. De Monchy points to the parallel with other situations involving the expropriation of the property of shares, such as the squeeze-out proceedings (Art. 2:201a DCC) and the expulsion proceedings (Art. 2:336 DCC), in which the legislator took a prudent position towards the expropriation of shares. As to De Monchy, this parallel is legitimate, while the shareholder who does not consent to the conversion of the BV into a foundation is effectively forced to give up its relationship with the legal entity. He stresses that the effects for a shareholder of a BV converting into a foundation are even worse than in the case of conversion into an association, cooperative or mutual insurance society. After all, in the case of conversion into a foundation, not only the shares will be lost, but also a substitution by means of membership will not be received. Subsequently, De Monchy draws the conclusion that Art. 2:181 DCC confers an appraisal right in case of the conversion of a BV in any other legal form, except in the situation where a BV is converted into an NV.

I wholeheartedly agree with De Monchy that Art. 2:181 DCC confers an appraisal right in the case of conversion of a BV into any other legal entity for the reasons he mentioned, but for as far as these concern legal entities within the meaning of Book 2 DCC and except for conversion into an NV. This view is generally accepted in legal literature.2 It is of interest that the Minister of Justice took a similar view in the legislative history of the rules on the cross-border merger.3 The wording of Art. 2:181 paragraph 2 DCC is not necessarily limited to the situation of conversion into an association, cooperative, or mutual insurance society. Art. 2:181 paragraph 1 DCC does not necessarily need to be read in conjunction with paragraph 2. Art. 2:181 DCC elaborates on the rules of Art. 2:18 DCC. The latter article only applies to legal entities regulated in Book 2 DCC.4 In addition to the parallel with the squeeze-out proceedings and the expulsion proceedings, I stress that excluding the foundation in this respect very likely contravenes Article 1 First Protocol ECHR. To deprive a shareholder of his shares without granting indemnification is obviously not in proportion to the (legitimate) purpose of converting the legal entity.5

I also approve of the exception on the tule, as stated by De Monchy, that statute does not allocate an appraisal right in the case of the conversion of a BV into an NV. At the time De Monchy wrote his piece, statute was less clear about this than nowadays, though I am not aware of any legal author assuming that the appraisal right also applied in this situation.6 Nowadays, Art. 2:181 paragraph 2 DCC, first sentence expressly excludes the NV. A shareholder will not lose his shares in the case of the conversion of a BV into an NV, as will be the case when a BV is converted into a legal entity without a share capital. Yet, the shareholder will continue his shareholding. Therefore, the clause "indemnification for the loss of his shares" as included in Art. 2:181 paragraph 2 DCC does not apply.

Generally, converting a BV into an NV will be less drastic than the conversions mentioned above. The law acknowledges this, as the statutory rules regarding conversion of a BV into a NV (and vice versa) are less strict. The requirement of a resolution adopted by a 90% majority of the votes in the general meeting of shareholders does not apply (Art. 2:18 paragraph 3 DCC). Experience has shown that the conversion of a BV into an NV or vice versa takes place much more often than the conversion of a BV into any other legal form.7

In the case of the conversion of a BV into an OVR neither Art. 2:18 DCC nor the appraisal right of Art. 2:181 DCC applies, as Book 2 DCC does not regulate the conversion of a BV into an OVR. In this situation, the rules of Art. 7:835 DCC apply. The rules on the OVR are found in Book 7 DCC. Art. 7:802 paragraph 2 DCC excludes the application of the rules of Title 1 of Book 2 DCC, except when statute expressly refers to this book. Title 1 of Book 2 DCC includes general provisions applicable to legal entities, such as the conversion rules of Art. 2:18 DCC. With respect to Art. 2:18 DCC, an explicit statutory reference in Book 7 DCC is absent. This appraisal right will be explored in § 7.3.