6.3.3 Transfer restriction clauses

Often, transfer restriction clauses apply in the case of the transfer of shares in a BV and, somewhat less frequently, in the case of the transfer of shares in NVs. The two most common types of transfer restriction clauses are (i) the right of first refusal (aanbiedingsregeling), and (ii) the right of prior approval (goedkeuringsregeling).

Before the introduction of the new BV rules, which are intended to be more flexible and relaxed, Art. 2:195 paragraph 2 DCC stipulated that articles of association of a BV must contain restrictions on the transfer of shares.1 Nowadays, further to Art. 2:195 paragraph 1 DCC, a BV can even have articles of association without any restriction on the transfer of shares.2 My expectation is that a large majority of the BVs will continue to include transfer restriction clauses in their articles of association, as in the situation of a company with few shareholders, the shareholders will usually have a say with respect to whom they cooperate with.3

Pursuant to Art. 2:195 paragraph 1 DCC, the right of first refusal applies as a default rule to the transfer of shares in a BV. This default rule means that a shareholder who wishes to transfer his shares must first offer his shares to his co-shareholders, pro rata to the shareholdings of those co-shareholders. The articles of association of a BV can also include another type of transfer restriction clause, such as the right of prior approval. This right usually means that a shareholder who wishes to transfer his shares can only do so if prior approval is obtained from an body of the company. This body is often the general meeting. The articles of association habitually stipulate that if application for approval is rejected, the general meeting is obliged to designate other prospective purchasers. This ensures that the transfer restriction clause can meet the requirement of Art. 2:195 paragraph 5 DCC stipulating that such clause is not applicable if it makes the transfer impossible or exceedingly onerous.

In principle, shares in an NV are freely transferable. No statutory default transfer restriction clause applies. Nonetheless, an NV is able to include transfer restriction clauses in the articles of association, further to Art. 2:87 DCC. As has been revealed by Wezeman and Winter, most NVs factually have a closed character.4

The transfer restriction clauses as mentioned onder (2) above do not only include the commonly spread transfer restriction roles, which are the right of first refusal (aanbiedingsregeling) and the right of prior approval (goedkeuringsregeling) based on Art. 2:195 DCC. As appears from the legislative history, a transfer restriction rule also includes the rule that no shareholder may hold more than a certain percentage of the issued shares included in the articles of association.5 This type of transfer restriction clause is also known as X%-rule (X%-regeling).

Two kinds of X%-rules are discerned: (a) the rule prohibiting a shareholder to hold more than X% of the share capital or (b) the rule that prohibits transferring shares to a shareholder resulting in holdership of X% or more of the shares.6 The question of whether an X%-rule represents a transfer restriction rule is subject to debate, although the leading opinion in legal literature seems to answer this question in the affirmative, at least for the X%-rule indicated onder (b).7 X%-rules are usually included in the articles of association in order to prevent hostile takeovers and are mainly found in open and listed companies. Moreover, X%-rules generally prevent the existence of a majority shareholder and consequently prevent oppression caused by a majority shareholder. For these two reasons, disputes between shareholders will not often occur in companies with X%-rules. Therefore, I doubt why proceedings for the settlement of disputes need to apply in this situation. Nonetheless, a situation in which X%-rules apply and shareholders are oppressed by the NV itself is not impossible. I will leave this topic aside as this research focuses on BVs.

As mentioned, the articles of association of a BV no longer have to include restriction clauses. Remarkably, proceedings for the settlement of disputes have not been altered to exclude such unrestricted BVs. According to the Minister of Justice, it was not desirable to narrow the scope of the proceedings, as it forms an important instrument for the protestion of minority shareholders.8 The Minister stressed that the new BV rules with respect to voting rights and dividend rights are more flexible than the present NV rules. Moreover, he held that the BV rules with regard to transfer restriction clauses are more flexible than the NV rules, ensuring that shareholders in BVs could suffer oppression more often. As a consequence thereof, there would be more need for the application of proceedings for the settlement of disputes in open BVs than in open NVs. I concur with the Minister's view that oppression in BVs, even if these are open, could occur more often due to more flexibility of the rules.

Conversely, the scope of the proceedings has neither been widened by the abolishment of the abovementioned rules applying only to NVs. Unfortunately, the Minister did not reflect on this observation. In line with his aforementioned comments, there would be less need for application of proceedings for the settlement of disputes in open NVs, whereas the NV mies, such as on voting rights and on distribution of profits, are currently stricter. However, as referred to above, many open NVs are effectively closed NVs, so these could potentially face the usual disputes closed companies are faced with. For the reason that effectively closed NVs may be confronted with disputes in a similar way to closed NVs, I propose to abandon the limits for NVs and replace them for the tule that proceedings for the settlement of disputes also apply to NVs, at least as far as these are not listed on the stock exchange. Moreover, even in open NVs a liquid market for shares may not be present. This fact is inter alia acknowledged by statute, namely in Art. 2:359d DCC that hands minority shareholders a valuation right after a takeover bid under certain conditions. As this study is restricted to private limited companies, I will not further investigate this issue.9