1.1.5 Exit and voice

In various countries, if a shareholder suffers oppression he is allowed to exit the company at für compensation, typically by way of legal proceedings. It is of interest that in various legal systems, the exit right is not limited to the situation of oppression, but is also available in other situations. This study explores the range of exit rights of shareholders in private limited companies organized onder the laws of the Netherlands, Germany, England and Wales as well as rules on exit rights found in regulations of the European Union.

A less far-reaching response compared with an exit right concerns using a voice right. For example, the shareholder may raise his voice by way of speaking out in the general meeting, by exercising his voting right in the general meeting, or by appealing on the voidance of resolutions adopted by the company. The subject of voice rights and their relationship to exit rights is addressed to the extent that this is relevant to this research.

In this context, reference may be made to the study of Hirschman to exit, voice and loyalty in firms, organizations and states.1 An observation from the theory of Hirschman is that an optimal mix of exit, voice, and loyalty can improve or stabilize the quantity (growth) and quality (output/product) of the farm, organization, or state involved, rather than the dependence on exit or voice solely.

The following quote from the Supreme Court of Ohio illustrates what impact a company-law system may have that does not provide for the protection of shareholders by means of elaborated voice or exit mechanisms: