7.4.7 Enforcement

Only the shareholders of a disappearing BV who voted against the proposal for merger are entitled to the appraisal right. In this respect, Dutch statute is in line with Article 4 of the Tenth EC Directive, which refers to minority members who have opposed the cross-border merger. This rule leaves less scope for the appraisal rights than the rules with respect to conversion of the legai entity. Shareholders who were not present at the general meeting, have abstained from voting, or have cast a blank or invalid vote are not shareholders that have opposed the cross-border merger. Hence, they do not qualify for appraisal right. It should be noted that a shareholder who was not present at the meeting, but was represented by means of a proxy and, consequently, voted against the proposal do qualify for the appraisal right.1

The limitation of the appraisal right with respect to opposing shareholders also expressly follows from the legislative history of Art. 2:333h DCC.2 The Minister of Justice was of the opinion that this would not impose a disproportionate burden on the minority shareholder:

The Minister held that in contrast to the situation of conversion of the legal entity, the shareholder will not lose his entitlement to the (conditional) liquidation surplus of the company further to the cross-border merger.4 According to the Minister of Justice, this justifies a different approach.

Van Veen and Snijder-Kuipers consent with the view of the Minister that the appraisal right only has to be available for shareholders who voted against the merger proposal.5 Van Veen points to the fact that the appraisal right complicates the merger process and may have a significant impact on the company, creditors, and co-shareholders. For this reason, he stresses that the legislator should be reticent in introducing appraisal rights.

I am not in favour of the view taken by the Minister, Van Veen and Snijder-Kuipers. I prefer drawing a parallel with the appraisal rights available in the situation of conversion and the impossibility to impose additional obligations on shareholders without their consent. In all the aforementioned situations, the consent of the minority shareholder is required. In my opinion, it is more consequential to take a similar stance with respect to the appraisal right in the case of a cross-border merger. Nonetheless, I admit that Article 4 of the Tenth EC Directive does not seem to allow extending the scope of Art. 2:333h DCC in this respect, as it refers to opposing members.

In order to invoke the appraisal right, the shareholder must request indemnification within one month after the date of adoption of the resolution for legal merger. The request must be addressed to the disappearing BV. After the period of one month has lapsed, the appraisal right can no longer be invoked. In my opinion, and in line with the legislative history, the request does not need to be accounted for other than with a reference to the fact that the shareholder voted against the cross-border merger.6

The shares for which indemnification is requested in a valid way will be cancelled upon the legai merger taking effect. Consequently, the shares of the shareholder using the appraisal right are not converted into English shares in an Ltd upon the merger taking effect. The indemnification can be compared with cancellation of shares with the consent of the shareholder, as referred to in Art. 2:208 paragraph 2 DCC. Nonetheless, the previous provision does not apply, as Art. 2:333h DCC conclusively provides for the cancellation of the shares (upon the merger taking effect) as well as the indemnification.

Statute does not contain a maximum with respect to the shareholders that may request for indemnification. Gepken-Jager submitted that further to Art. 2:325 paragraph 2 DCC, the total amount of indemnification must not exceed 10% of the shares allocated in the merger.7 I disagree with Gepken-Jager and put forward that this maximum cannot be based on Art. 2:325 paragraph 2 DCC. Art. 2:325 paragraph 2 DCC relates to payments based on the exchange ratio and regards payments to shareholders who become shareholder of the acquiring company. The indemnification pursuant to Art. 2:333h DCC is not based on Art. 2:325 paragraph 2 DCC, but on Art. 2:333h DCC itself. The shareholders of the disappearing company do not receive this indemnification pursuant to the exchange ratio.8

Similar to the rules for conversion, the shareholder and the BV may determine the amount of indemnification by mutual consent. If no consent is reached, the amount is determined by one or more independent experts to be appointed by the president of the OK at request of either party (the BV or a shareholder). The previous rule is explicitly arranged for in Art. 2:333h paragraph 2 DCC.

Unlike the rules on conversion, unfortunately, statute does not expressly stipulate that the Art. 351 and 352 apply mutatis mutandis to these experts. In my opinion, without any statutory ground, these far-reaching powers cannot be available. This leads to the undesirable result that the independent experts may have insufficient powers to be able to determine the value of the shares. As mentioned in § 7.2.6, it is also highly doubtful whether Artt. 194-200 RV apply in this situation. In addition, it is doubtful whether without the consent of all parties involved the determination of the indemnification can be assigned to independent experts, Compulsory arbitration usually does not meet the standards of Art. 6 ECHR.9 Therefore, I highly recommend that the legislator reconsider these matters.

In the situation in which foreign shareholders are involved, comparable problems may arise as elaborated in § 6.6.2. Again, I highly doubt whether Art. 22 paragraph 2 of the Brussels I Regulation applies in this situation.10 In order to prevent uncertainties with respect to jurisdiction, a jurisdiction clause included in the articles of association can be of help.11

A holder of shares without voting right cannot vote against the cross-border merger. Therefore, this shareholder cannot use the appraisal right. In order to create a solution, Van Solinge and Van Boxel suggested that this shareholder could be entitled to vote pursuant to Art. 2:330 paragraph 2 DCC.12 This provision entitles certain classes of shares to a right of prior approval, if the merger negatively affects the rights of those classes. By withholding the prior approval, shareholders without voting rights could veto the merger. Nonetheless, a minority shareholder within such class of shares could still be lelt without a remedy if the majority in that class approves of the merger.

I doubt whether Art. 2:330 paragraph 2 DCC provides a sufficient basis to entitle the holders of shares without voting right to vote. Moreover, it will not always be the case that the merger negatively affects the rights of the shareholders without voting rights. Thirdly, one could doubt whether the power to veto a cross-border merger is a better solution than an appraisal right. Nonetheless, I do not think that it would be reasonable that the holder of shares without voting right can be confronted with a foreign set of rules without his consent and would highly recommend introducing voting rights in this specific situation. I concur with Van Solinge and Van Boxel that it is recommended to entitle the holder of shares without voting rights to vote in case a resolution for cross-border merger is proposed, in order to be able to invoke the appraisal right at a later stage.

For the application of the rules for indemnification, a holder of depositary receipts for shares as referred to in Art. 2:118a DCC is treated in a similar way as shareholders. As this provision applies to NVs, I will not examine this subject further.13