In 2023, a draft bill to amend dispute resolution proceedings with shareholders and clarify access to inquiry proceedings (“Wet aanpassing geschillenregeling en verduidelijking ontvankelijkheidseisen enquêteprocedure”) was sent to the Council of State for advice in order to make the existing dispute resolution system more effective and to clarify the accessibility of the inquiry procedure.
Amendment of dispute resolution proceedings
The dispute resolution proceedings framework provides for four types of proceedings that offer permanent relief in the event that shareholders of a BV or NV cannot resolve their dispute themselves.
Changes to access of dispute resolution proceedings
Under current law, the dispute resolution rules apply to all BVs and private NVs. In the bill, the dis-pute resolution rules will apply to all BVs and NVs except BVs or NVs whose shares or depositary receipts for shares are traded on a stock exchange or via a multilateral trading facility anywhere in the world.
Changes to the expulsion proceedings
Under current law, only acts performed in the capacity of shareholder can lead to fulfilment of the criterion for expulsion. The bill provides that conduct by a shareholder in another capacity can also be taken into account by the court in its weighing of interests. With regard to usufructuaries or pledgees with voting rights, it remains the case that only their conduct in that capacity is relevant.
Introduction Dutch inquiry proceedings
Shareholder litigation regarding Dutch companies mostly takes place in inquiry proceedings before a specialist court, the Dutch Enterprise Court. Inquiry proceedings allow shareholders (above a statutory share ownership threshold) to request the Enterprise Court to appoint experts to conduct an investigation into the policy and affairs of the company and to impose certain measures of a definitive or preliminary nature. The Enterprise Court may order an inquiry if the applicant demonstrates that there are well-founded reasons to doubt the soundness and propriety of the company’s policy and affairs (e.g., deadlock situations, unacceptable conflicts of interest, disturbed relationships and unjustified use of takeover defenses). Based on the reported findings of the court-appointed investigators, the applicant may file a petition for a declaratory judgment that mismanagement occurred. At any point during inquiry proceedings, the Enterprise Court may be requested to impose (far-reaching) interim measures by way of injunctive relief (e.g., enjoining the execution of board resolutions, appointing one or more independent directors to the board, suspending voting rights of a shareholder or delaying a shareholder vote).
Clarification of access to the inquiry proceedings at large listed companies
Under current law, a distinction is made between the requirements applicable to access of inquiry proceedings at listed companies according to the size of the issued capital. For listed companies with an issued capital in excess of EUR 22.5 million, the admissibility requirement is that these are holders of shares or depositary receipts for shares representing at least 1% of the issued capital or a market value of EUR 20 million. For listed companies with an issued capital up to EUR 22.5 million, the admissibility requirement is that these are holders of shares or depositary receipts for shares representing at least 10% of the issued capital or a nominal value of EUR 225,000. At large listed companies having shares with a very low nominal value (e.g. one euro cent), this may result in the issued capital being less than EUR 22.5 million and therefore access to inquiry proceedings only with a shareholding having a market value of (much) more than EUR 20 million. The bill removes this inequality by stipulating that all listed companies will be subject to what currently applies to listed companies with an issued capital of more than EUR 22.5 million. Specifically, there will be access to inquiry proceedings at 1% of the issued capital, or at a market value of EUR 20 million.
On 3 July 2023, the Council of State published its opinion on the draft bill. It merely asks for a further explanation of two points, without a specific request for amendment of the bill or other feed-back on the content. When the legislative proposal will be submitted to the Dutch parliament is as yet unknown. We will update this blog as soon as there are new developments.