Exit rights of minority shareholders in a private limited company (IVOR nr. 72) 2010/6.2.5.2:6.2.5.2 Legislative proposal

Exit rights of minority shareholders in a private limited company (IVOR nr. 72) 2010/6.2.5.2

6.2.5.2 Legislative proposal

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On the 31st of May 2007, a draft statute for the simplification and relaxation of the law concerning the BV was presented in the House of Representatives, together with an explanatory memorandum and a recommendation and report of the Council of State.1 The legislative proposal included significant changes to BV law in several respects. Amongst other matters, the proposal included a significant revision of proceedings for the settlement of disputes. These changes will be exposed below. In the legislative proposal several changes as proposed in the preliminary draft were included. Nevertheless, the following proposals contained in the preliminary draft were not included in the legislative proposal:

1.

In the preliminary draft, Art. 2:343 paragraph 2 DCC held three specific circumstances in which a shareholder would have the right to exit the company. This exit right was at the shareholder 's disposal after having notified the company and his co-shareholders of his wish to exit and provided that an exit cannot be achieved, and the transfer of the shares would be impossible or exceedingly onerous due to:

a.

an additional obligation attached to the shares which obligation should be clearly defined in the articles of association;

b.

a transfer restriction clause in the articles of association, unless the articles of association stipulate that there is a certain lockup period for any transfer of shares; or

c.

qualitative requirements applying to shareholders as set out in the articles of association.

2.

The preliminary draft included the rule that the court only had to take valuation clauses into regard if it considered that such would be für. In the final proposal, the legislator chose to leave more space for arrangements included in the articles of association or in a shareholders' agreement, especially with respect to the valuation of shares.

3.

The rule contained in the preliminary draft held that, at start of the exit proceedings, a defendant should declare his intention to submit a writ of defence in proceedings (verweer voeren) within fourteen days after the start of the proceedings was abandoned.

4.

The preliminary draft stipulated that in the exit proceedings it would not be possible to bring third parties into proceedings (vrijwaring), to join proceedings (voeging) or to intervene in proceedings (tussenkomst).

The proposal under (1) was deleted because, according to the Minister, there would be no need for such a rule. In the opinion of the Minister, other roles would already provide for enough minority shareholder protection.2 The roles under (a) and (c) would not be necessary, as the legislative draft embodied the rule that additional obligations cannot be imposed on or requirements cannot apply to a shareholder who has not consented to that obligation or requirement. It would not make sense to protect a shareholder that consented to the additional obligations or requirements. With respect to circumstance (b), the legislative draft stipulated that a transfer restriction clause in the articles of association does not apply if it makes transfer of the shares impossible or exceedingly onerous Nonetheless, for a limited period the articles of association may expressly provide for a lockup period.

The second proposal was reversed in such way that valuation clauses apply, unless their application would lead to a manifestly unreasonable price of the shares.3 The third proposal was not prolonged, as it could complicate or even delay proceedings, as the fourteen days period had to be awaited.4

The fourth proposal was intended to accelerate the proceedings. However, in the public consultation, this rule was highly criticized as it would prohibit a defendant from bringing another shareholder into the proceedings which later shareholder could have caused the prejudicial conduct as well. In that situation, separate proceedings must be started and this would, of course, be impractical. The legislator now thought that allowing these incidents could lead to a more reasonable result, which would be of more value than speeding up the proceedings.5

Several amendments to the initial legislative proposal were published in October 2008 and in February 2009.6 These changes had almost no material consequences for the section of the legislative proposal dealing with proceedings for the settlement of disputes.

The legislative proposal shows that several recommendations of the Company Law Committee were not included. As the Minister explained, only the most pressing issues with respect to proceedings for the settlement of disputes were addressed in this review. Even more changes can be expected in the future, as the Minister emphasized that recommendations not included in the legislative proposal will be further scrutinized in a broader legal review of dispute resolution within companies.7 In this broader review, the relationship between the inquiry proceedings and proceedings for the settlement of disputes will be considered.8 The report of Cools and Kroeze, containing empirical data with respect to the inquiry proceedings, and further consultations with experts will form the basis for this review.9

At the time of writing this study, it is expected that the legislative proposals will be enacted soon. As explained in § 1.8, this study assumes that the legislative proposals as available in December 2009 are enacted.

Deze functie is alleen te gebruiken als je bent ingelogd.