Be careful when granting discharge in The Netherlands
Granting discharge in The Netherlands can be a risk, as is shown in the following case. In June 2014, a former shareholder who had already been granted discharge was found to have embezzled even more money than first assumed. The other shareholders tried to contest this in the court of Overijssel, but came away empty-handed. Therefore, never grant discharge lightly, or include a way out in the agreement. Forewarned is twice warned. Dutch corporate lawyer Hidde Reitsma explains.
Shareholder had to relinquish shares
In March 2011 shareholders discovered that large sums of money had been channelled to the (allied) companies of another shareholder. They acted quickly. The shareholder (likely under pressure) had to relinquish his
The portion of registered capital of a private or public limited company
» Meer over share shares to the other shareholders. The money that the shareholder had channelled was listed and a part of that money was set off against the purchase of the shares, while another part was converted into a debt.
Discharge granted to personal holding
All of these agreements were recorded in a notarial deed and discharge was granted to the personal holding of the shareholder (who was registered as managing director) for his management of GBL BV until 14 March 2011. This deed was signed by the parties in the presence of a civil-law notary.
Debt was found to be much more
Afterwards, the two remaining shareholders found that the debt was much more. In total, an amount of 143.538,63 euros was channelled off, more than had previously been assumed. In court, the remaining shareholders attempted to recover the amount as yet from the former shareholder. The other shareholders claimed that the discharge only applied to his actions as indirect manager of his personal holding GBL BV, and did not cover the private withdrawals of the former shareholder.
Payments can be seen in the accounts
The court did not agree. The court found, firstly, that these were professional parties that had received legal counsel from a civil-law notary. Therefore, the interpretation of the agreement had to be grammatical and linguistic (so in a restricted manner). This means that the discharge also covers the payments effected by the former shareholder. The court also stated that all payments could reasonably be deduced from the accounts of GBL BV.
Consequences for all parties foreseeable
The shareholders could therefore have been aware of these (additional) payments. Finally, the shareholders were aware of the consequences of a discharge condition, because the civil-law notary was required to explain this. Therefore, all parties could have foreseen the consequences.
Discharge: no right to claim
Although the former shareholder was not formally the managing director of GBL BV, she indirectly acted as actual managing director through her holding. In spite of the fact that the discharge was granted to former shareholder’s personal holding, this discharge therefore also covers a private discharge. This means that the shareholders no longer have any right to their claim.
Dutch law firm AMS: list the risks and include a clause
If a problem occurs, the notion of just getting rid of something or someone as soon as possible can often create more problems. It is important to investigate everything very thoroughly before granting discharge. If you are unaware of possible consequences, it is important to list the risks, and if necessary include a specific clause specifying the scope of the discharge. The sole reference to “managerial acts” was apparently sufficient in this case to cover all actions.