Multinational sidelined in sale of their own shares

Multinational sidelined in sale of their own shares

In this action, a multinational in agricultural products in the Netherlands tried to prevent that the price of shares would be determined in a procedure over which it had no control. The multinational then took the matter to the Dutch Court of Appeal. Dutch corporate lawyer Marco Guit discusses the ruling of the Dutch Court.

 

 

Disagreement amongst shareholders about price of shares

The multinational’s shareholders had made an agreement. The minority shareholders (A-) subsequently wanted to sell their shares to the majority shareholders (A+). They could not agree on the price, which should be determined by the market value of the equity capital of the parent company (B). The International Chamber of Commerce (ICC) was asked to appoint an expert to determine the market value. The ICC was of the opinion that B was not a party to this. Furthermore, A- initiated arbitration proceedings to be able to determine the equity capital. B was a party to this.

The parent company took the matter to the Dutch Court

B felt sidelined and took the matter to the Dutch Court. B demanded that the expert’s appointment should be suspended until completion of the arbitration proceedings. B had strong interests in the shares’ value for reasons in connection with the continuity of the company. B’s lawyer also stated that it was a party to the expert’s appointment, as B had signed the shareholders’ agreement and would have to pay the expert to be appointed when it concerns the shares in B’s company.

Dutch Court: the parent company is involved, but not a party

The Dutch Court stated that B is involved but not a party to the expert’s appointment. The fact is that the shareholders’ agreement was mainly an agreement between the shareholders. By signing the agreement, B recognized its existence, but it does not give B any rights. The fact that B will have to pay the expert does not make it a party to this agreement.

The Dutch Court emphasised ICC’s role

The Dutch Court also added that even if B were a party to the expert’s appointment, the shareholders would be free to request the ICC to appoint an independent expert. The ICC’s operations are perfectly neutral and – regardless of who the parties are – respect the principles of secrecy and confidentiality. Also, this process can run parallel to the arbitration proceedings because the shares’ market value can also be determined without the outcome of the arbitration proceedings.

AMS provides legal advice in international corporate disputes

This case demonstrates the importance of having a clear picture of the interests of all parties. Who wants what and why? The parent company has an interest in the continuity of the operations. By demanding suspension of the expert’s appointment, it exercises control over the determination of the equity capital (using the arbitration proceedings). The majority shareholders share this interest. However, they also have an interest in the lowest possible price of the shares to be taken over. These interests are opposed to the interests of the minority shareholders, who want the highest possible price per share. Which interests take precedence and what control can be exercised at what time? AMS Advocaten have extensive experience in corporate law both at home and abroad, and are pleased to advise you on your business.

Marco Guit - Advocatenkantoor AMS Advocaten
Marco Guit Marco is generally described by his clients as motivated and solution-oriented. He advises – and, if necessary, litigates – mainly in the areas of corporate law, contract law, insolvency law, property law and construction law. Also follow Marco on Google or LinkedIn. Marco is available via e-mail and +31 (0)20-3080315.
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