Disputes between shareholders

The relationships amongst shareholders can have their ups and downs. Difficult situations can be at the expense of the company.

The regulations on disputes in the civil code

The civil code regulates disputes which briefly cover that the shareholder can ask the court to compel another shareholder to sell his shares (also known as a forced sale) or to compel the other shareholder to buy the shares from the shareholder making the demand (also known as enforced withdrawal). The idea behind this is that shareholders who disagree with each other and are unable to resolve their conflict, jeopardising the survival of the company, must have the opportunity to go their separate ways. These demands must be submitted to the court. If the court also agrees that the claims should be upheld, the judge shall appoint an expert, generally an accountant, who determines the value of the shares. The parties are then obliged to provide and/or purchase the shares for the price determined.

Flexible legislation for private companies

The legislation which entered into effect with the introduction of the Act for the simplification and flexibility of private company law (“Flex BV”) is aimed at speeding up the process and making it more flexible, amongst other things, by providing the possibility for contractual or statutory provisions to supersede legal regulations. This means that parties can determine an arrangement for the settlement of disputes as they see fit. It can, for example, make it possible for a conflict to be settled by arbitrators or by the Netherlands Enterprise Court at the Amsterdam Court of Appeal.

The parties can also make arrangements in the articles of association about the valuation of shares. If parties have agreed on a sufficiently clear standard for measuring the value and the court can determine the price itself on this basis, the appointment of experts may not be necessary. In that case, the court can determine the price directly in its decision about the transfer of shares. If the parties are already in agreement about the transfer, but need to agree on the price, it is also possible for the determination of the price to be left to the court.

If you have a question about this or a related topic, please contact us; we will be glad to assist you.

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