Within a company (BV or NV) various conflicts may arise. For example, between shareholders, or between one or more shareholders on the one hand and the board of the company on the other. If the shareholders end up in a stalemate, this poses particular problems. Such a deadlock causes a situation to arise where no decisions can be taken at a meeting, or even that the company cannot be controlled. Both the financial and operational consequences of this happening could have an immediate adverse effect on the company. These situations require a quick response in order to limit the damage as much as possible.
Enterprise Chamber of the Amsterdam Court of Appeal
Special procedures are stipulated by law for these kinds of disputes: the forced transfer of shares and the inquiry proceedings. An inquiry proceeding can only be held before the Enterprise Chamber of the Amsterdam Court of Appeal. In a relatively quick and simple procedure the shareholders (including holders of a depositary receipt) or the works council of a company, can request the Court of Appeal to order an investigation into the management of the company. In addition provisions/emergency measures may be requested such as the suspension of directors, the appointment of temporary directors or even the prohibition of voting for shares of (one or more) of the shareholders. The procedure is basically aimed at improving and restoring good relations.
The applicants must first have made their objections known to the board and to the supervisory board of the company so that the board has the opportunity to solve the problems without having the company immediately drawn into proceedings. If the objections have not been put in writing (for example during a general meeting) prior to the inquiry proceedings, the Enterprise Chamber will not hear the request to initiate such an investigation.
An inquiry proceeding is not only an appropriate means to resolve disputes within a company but it is also a good way to determine whether the board has properly performed its duties. If the examination of the expert reveals that the board is guilty of mismanagement, then that is a very solid basis for the recovery of damages from those directors in separate civil proceedings. An inquiry proceeding is a severe measure that is therefore not often used, but that usually does lead to the desired effect.
Do you have questions about inquiry proceedings or would you like to discuss a case? Please contact the Company and Insolvency section.