Exit remedies for minority shareholders in close companies (IVOR nr. 82) 2011/3.3.3.3:3.3.3.3 Summary

Exit remedies for minority shareholders in close companies (IVOR nr. 82) 2011/3.3.3.3

3.3.3.3 Summary

Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.

The appraisal remedy originated from attempts in equity to balance the interests of different parties. It is a compromise between the interests of the majority shareholders and those of the minority shareholders. To be specific, this remedy strikes a balance between the desire of flexibly in entering new fields, acquiring new enterprises, and rearranging investors' rights on the one hand, and the desire of adhering to the fundamental investment expectations on the other.1 The goal evidenced by this remedy, in a broad sense, is minority protection, which can be achieved specifically in two ways:

1.

Protecting the fundamental expectations of the minority shareholders. The term fundamental expectations in the appraisal remedy contrasts with the term legitimate expectations, the standard employed by the oppression remedy, which will be explained in section 3.4. When fundamental expectations are employed, the appraisal triggers embodied in the statute should be fundamental changes to the corporations and have substantial impact on the interests of the dissenting shareholders. This is a useful indication for the question of which action can be listed in the statute. Once the triggers are laid down in the statute, little judicial discretion is required to decide when to grant the remedy.2 Regarding the oppression remedy, however, great discretion by the court is necessary to judge whether an expectation is legitimate or not.3 In this sense, the appraisal remedy can be termed an expedient remedy.

2.

Ensuring fair value to dissenting shareholders. The liquidity function remains viable, but the concern has been shifted to fair value because minority shareholders are often cashed out of the business.4 In this case, the availability of liquidity is a foregone conclusion. The protection needed by the minority shareholders is to leave with the "fair value" of their shares and, consequently, efforts should be made to explore the valuation issues concerning this remedy.

In short, the study in this section shows that judicial sympathy has shifted from compensation for loss of veto power to exit at fair value when fundamental changes have been made to the corporation. In the following section, we examine comparatively what those fundamental changes are, i.e., the appraisal triggers.

Deze functie is alleen te gebruiken als je bent ingelogd.