6.13 Conclusions

The legislative history of the exit proceedings shows that the exit proceedings aim to provide a solution in the event that an oppressed shareholder cannot sell his shares in a regular and für way and in the event that cooperation within the company becomes or threatens to become impossible because of differences of opinion between shareholders.

It took a long time before the exit proceedings were introduced into Dutch law. The former Dutch exit proceedings have been heavily criticized in legal literature, mainly because the former proceedings were very time-consuming. The legislator has taken these criticisms seriously and significantly reviewed the exit proceedings.

The current criteria of Art. 2:335 DCC seem to be outdated, since a BV no longer must have a transfer restriction clause in its articles of association. Moreover, the criteria are not accurate enough to discera between closed NVs and open NVs. It is recommended to widen the scope of the proceedings to all BVs and NVs, except for listed companies. With respect to listed companies, further study is recommended.

Private arrangements relevant to the exit proceedings are arbitration clauses, jurisdiction clauses and valuation clauses. Unlike the company itself, shareholders are not bound by private arrangements without their consent. Because the exit proceedings are of mandatory nature, certain private arrangements remain inapplicable in the exit proceedings. Art. 2:337 paragraph 1 DCC stipulates that in the exit proceedings private arrangements cannot be invoked for as far as the arrangements make the transfer of the shares impossible or exceedingly onerous.

Art. 2:340 paragraph 3 DCC clarifies that the court may disregard private arrangements if these result in a manifestly unreasonable price. Whether a valuation clause results in a manifestly unreasonable price depends on the circumstances of the case. The word manifestly sets a high standard. As a starting point, the instance that a valuation clause leads to a low price for the shares in comparison with the value of these shares in the economie market is not sufficient. However, the larger the difference between the two, the sooner the price is manifestly unreasonable.

German law, in which a comparable approach is found, shows that it is very difficult for courts to determine if and to what extent valuation clauses have to be disregarded.1 The English approach towards valuation is more straightforward. In principle no discount is allowed.2 The English approach appeals to me. In my view, the court must be astute to ensure that a low price does not result in a bonus on oppressive conduct. If shares can be acquired at undervalue, this may form an incentive for the majority shareholder to oppress the minority shareholder. In this situation, interference by the court is justified.

In order to prevent foreign jurisdiction, shareholders are recommended to include a jurisdiction clause conferring jurisdiction on the District Court of the registered seat of the company in the articles of association. The European legislator could consider extending the matters listed in Art. 22 paragraph 2 of the Brussels I Convention with exit proceedings, because exit proceedings require knowledge of the laws that also govern the company. Shareholders that agree on arbitration clauses are wareed that the application of transfer restriction clauses may form a serious hick-up.

Parties have to be encouraged to settle their disputes out of court as much as possible, so that costly and time-consuming proceedings can be prevented. Therefore, I recommend that the legislator introduces the statutory tule that an irrevocable, unconditional and reasonable offer for the shares forens a bar for the exit proceedings.

The scope of the exit proceedings is given shape by Art. 2:343 DCC. As this article shows, an exit claim can be based on past and present prejudicial conduct. Although an exit cannot be claimed if it is only based on prejudicial conduct expected in the future, in my view, prospective prejudicial conduct can be relevant. It is relevant to keep in mind that prejudicial conduct does not necessarily denote a tort or misconduct. The word rights in Art. 2:343 DCC is superfluous.

Art. 2:343 DCC requires that there must be a causal connection between the prejudicial conduct and the intolerable situation. Consequently, facts that are not caused by the co-shareholders or by the company are not relevant in the exit proceedings. Therefore, an exit claim cannot be based on personal circumstances, such as the long illness of a shareholder or the personal financial need of a shareholder. Finally, Art. 2:343 DCC takes a liberal view on how prejudicial conduct must be performed. Prejudicial conduct is not necessarily constrained to conduct in the company's affürs and is not limited to conduct performed in capacity of shareholder.

If exit proceedings are started against the company and it is not certain whether the company will meet the balance test or liquidity test, it is recommended starting exit proceedings against co-shareholder(s) as well. In order to safeguard the interests of creditors, the court must decline an exit claim against the company if there are doubts that the test results are not satisfactory.

The exit proceedings can be applied if a shareholder is dismissed as a managing director provided that management participation was part of the fundamental understanding on which the cooperation was based. In this respect, a parallel can be drawn with the English unfür prejudice remedy, which can be applied in the case of dismissal of a managing director of a quasi-partnership. Other examples of prejudicial conduct that may cause an intolerable situation in which an exit is justified are tunnelling, competing activities, freeze-outs, dilution, breaches of statute or the articles of association and deadlocks.

A defendant in the exit proceedings must be allowed to vest a right of usufruct on his shares, provided that the usufructee is not allowed to dispose of the shares. I recommend the introduction of the tule that a notice must be filed with the trade register that exit proceedings are pending. This is a simple measure that protects ill-informed prospective transferees who have accepted shares from a defendant in exit proceedings. In my view, it is not necessary to include in this notice the names of disputing shareholders. Immediate remedies in interlocutory proceedings and provisional remedies in the exit proceedings may put pressure on the case, which may help to reach an amicable settlement.

If experts are appointed, it is practical that the court indicates if and to what extent valuation clauses remain applicable, so that experts can take this into consideration when preparing the experts' report. Moreover, for practical reasons, I recommend the introduction of a flexible valuation date. Although it is assumed that in the exit proceedings without applicable valuation clauses the shares have to be valued pro rata parte to the value of the company in the economie market, an explicit valuation standard provided by the legislator is desirable.

The power of the court to fürly increase the price of the shares provides the court with additional discretion to determine a price of the shares in fürness. The English unfür prejudice remedy shows that a für increase forms a practical alternative for claiming reflective loss in separate proceedings. Moreover, it strengthens the protection of the property rights of minority shareholders, as reflective loss is very difficult to claim. Nonetheless, a balance must be struck. When fürly increasing the price of the shares, the court must take into consideration the possibilities of the defendant-co-shareholder to press the company to claim its own loss.

The exit proceedings have a two-instance system. This system is justified by the fact that in the exit proceedings the court may also handle related claims involving civil liability. I expect that usually parties do not wish to combine an exit claim with a related claim for damages. In the event of reflective loss it is less complicated to request the court to increase the price of the shares than starting proceedings for a related claim and combine these proceedings with the exit proceedings. Therefore, I recommend limiting the exit proceedings to only one instance at the OK instead of maintaining two instances. Art. 6 ECHR allows a limitation to one instance. In order to offer sufficient safeguards, it is recommended maintaining the exit proceedings as proceedings started by summons.

The legislator has streamlined the current exit proceedings by way of the abolishment of the possibility for interim-appeal and the option to declare judgments provisionally enforceable. This adds to the attractiveness of the exit proceedings. Whether in practice the inquiry proceedings will be preferred above the exit proceedings is uncertain, but I have good hope. As always, the proof of the pudding is in the eating.

In general, application of the exit proceedings in interlocutory proceedings is not appropriate. Nonetheless, in very exceptional and urgent cases, application in interlocutory proceedings can lead to a reasonable result.