From friend to foe: what you need to know about the law on adjusting dispute resolution and clarifying admissibility requirements inquiry procedure (Wet aanpassing geschillenregeling en verduidelijking ontvankelijkheidseisen enquêteprocedure)

Imagine this: you start a company full of enthusiasm and confidence with a few close friends or business partners. You share the same dreams and goals. But what happens when you suddenly disagree?

Ending shareholder disputes

If you cannot manage to work things out together, then ending the shareholder dispute can be a huge challenge. Current legislation allows for the squeeze-out of another shareholder (uitstoting) or withdrawal (uittreding) (the “dispute resolution”) in circumstances, but the court procedures for doing so are not currently perceived as accessible or practical. They cost a lot of time and money. For the time being, the possibility of having an enquiry into the affairs and policies of a legal entity (the “inquiry procedure”, de enquêteprocedure) is more frequently used, as it is generally perceived as somewhat more accessible and effective. However, this procedure also involves costs and takes time.

The law on adjusting dispute resolution and clarifying admissibility requirements inquiry procedure (Wet Aanpassing geschillenregeling en verduidelijking ontvankelijkheidseisen enquêteprocedure)

The “Wet Aanpassing geschillenregeling en verduidelijking ontvankelijkheidseisen enquêteprocedure” (also called “Wagevoe”) is designed to solve disputes within legal entities faster and more efficiently:

Thus, the Enterprise Chamber becomes the body to conduct both dispute resolution and inquiry proceedings. Concentrating proceedings at the Enterprise Chamber is expected to save time and money.
Whereas previously a squeeze-out/withdrawal procedure had to be started with a writ of summons and an inquiry procedure with a petition, all the aforementioned procedures will now be started with a petition. This makes it possible to combine the litigation procedure with the inquiry procedure. This is expected to save time and money.
It will also (presumably) become easier to squeeze-out a shareholder: previously, the courts only looked at the conduct of the “obstructive” shareholder as such, but with the introduction of the new law, other conduct, for example his conduct as a director, will also be considered. This may make the squeeze-out regime more attractive for resolving disputes between, for example, two shareholders also directors, where there is a deadlock not only in the general meeting, but also in the board.
In addition to shareholders, certificate holders will now also have the possibility to initiate an exit procedure. Especially for certificate holders whose position is similar to that of a shareholder, this seems to be a favourable instrument.
Also, the access requirements for the inquiry procedure with regard to capital providers of listed companies with an issued share capital not exceeding €22.5 million will be clarified: a capital provider will in principle have access to the inquiry procedure if it represents 1% or more of the issued capital or represents a value of at least €20 million.

Prevent escalation

Although the arrival of the new law is expected to make dispute resolution and the inquiry procedure more attractive, it is preferable to stay in control yourself. After all, litigation costs time and money. By drawing up your own arrangement, you can avoid ending up in court. After all, you will have a script ready for when shareholders get into conflict with each other. But even if you do end up in court, having your own arrangement is useful. After all, your preferred and tailor-made arrangement usually takes precedence over the legal dispute resolution scheme, unless a share transfer on the basis of that own scheme is not possible or extremely objectionable. So it is definitely worth making one.

Possibilities

For example, include your own arrangement in the articles of association and/or make a shareholder agreement stating what happens if there is a deadlock situation. For example, you can stipulate that each of the two shareholders in a deadlock situation has the right to initiate a bidding procedure in which one shareholder (X) has to offer his shares to the other shareholder (Y), in which the shareholder Y has the choice of taking over the shares or transferring his own shares to shareholder X for that price (“Russian roulette clause”) or that both shareholders make a closed bid for each other’s shares where the highest bidder is obliged to take over the other shareholder’s shares (as, for example, in the “Texas shoot-out clause” or the “Mexican shoot out clausule”).

There are numerous possibilities to make your own arrangement. Wieringa Advocaten will be happy to advise you on this and can draft a tailor-made arrangement for you. Feel free to contact us.

Are you already involved in a (shareholder) dispute? We will be happy to advise you and, if necessary, assist you in court.

Questions?