Buy out of shareholders in The Netherlands

Buy out of shareholders in The Netherlands

In his practice, Dutch corporate lawyer Hidde Reitsma frequently sees two or more (groups of) shareholders in a company being in a stalemate situation. They want to get rid of each other, but they cannot agree on the terms of a buy-out.

Legal proceedings on buy out of shareholders

The Dutch Civil Code offers detailed but complex proceedings on the buy out of shareholders. A majority shareholder may have legal grounds to buy-out a minority shareholder, and vice-versa (in which case the minority shareholder can force his buy-out). These proceedings are (in first instance) conducted before the District Court; the Enterprise Chamber of the Amsterdam Court of Appeal has exclusive jurisdiction in appeal cases.

Dutch corporate lawyers

Considering the complex and (for The Netherlands) relatively time-consuming nature of these buy-out proceedings, it is very uncommon for these proceedings to be conducted (and it is even more uncommon that they are completed and result in a forced buy-out). As a much more accessible alternative, fighting shareholders frequently come to a buy-out through pure corporate litigation, in the scope of inquiry proceedings before the Enterprise Chamber. These proceedings can be triggered by either shareholder holding at least 10% of the shares in a B.V. or an N.V., or that holds shares with a nominal value of at least €225,000.

Amsterdam law firm

In case a majority shareholder aims to get rid of a minority shareholder, he may propose a change in the corporate policy (such as the sale of an important division, financial restructuring, or (further) dilution of the minority shareholder) that urges the minority shareholder to initiate inquiry proceedings, and to ask for immediate relief measures in order to avoid these decisions being taken or executed.  In case a minority shareholder wishes to be bought-out, he can act as an activist shareholder, and initiate proceedings before the EC in order to have the policy of the majority shareholder ‘tested’. In such cases, the Enterprise Chamber will be fully aware of the underlying wish of the shareholders to realize a buy-out, and can – if all parties agree, of course – appoint an independent expert in order to have the shares valuated and to have the terms of the buy-out determined.

Hidde Reitsma - Advocatenkantoor AMS Advocaten
Hidde Reitsma Hidde has a varied consultancy and litigation practice, focusing on corporate law and insolvency law. He frequently acts in proceedings before the Enterprise Chamber of the Court of Appeal in Amsterdam and in cases on directors’ liability. Hidde also advises on drawing up and negotiating contracts, mergers and acquisitions and joint ventures. Follow Hidde also on Google or LinkedIn. Hidde is available via e-mail and +31 (0)20-3080315.
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