Can the court-appointed officers split up Nexperia against Wingtech’s will?

In the Nexperia case, the officers appointed by the Enterprise Chamber (Ondernemingskamer) of the Amsterdam Court of Appeal have proposed splitting the company into a Chinese and a non-Chinese part. Wingtech and Mr Wing oppose the plan. But can they actually block the proposed restructuring? In this blog, corporate lawyer Onno Hennis discusses the powers of the court-appointed officers and the limits on those powers.

What does the proposal involve?

A recent stock exchange announcement by Wingtech shows that the court-appointed officers at Nexperia consider it necessary to change the shareholding structure in the short term. To that end, they have proposed a ‘Two Circles’ structure: Wingtech would retain control of the Chinese Nexperia companies, while external investors would acquire a controlling interest in the remaining global operations. Wingtech would be left with only a minority interest in those operations. The announcement does not say how the restructuring would be implemented legally.

Is the split already a fact?

In practice, the Chinese and non-Chinese operations are already largely run separately. The Dutch arm previously suspended wafer supplies to China and is building alternative production chains, including through expansion in Malaysia and partnerships with Polar Semiconductor and Tata Electronics. The Chinese arm is also building its own production chain, with Chinese wafer suppliers. Moreover, according to Nexperia, the Chinese companies concerned operate outside its governance structure and evade its control. It had already emerged that there is hardly any consultation between the two sides.

Opposition from Wingtech and Mr Wing

The proposed ‘Two Circles’ structure would therefore bring the legal structure into line with the de facto separation. Nevertheless, Wingtech and Mr Wing firmly reject the plan. In their view, the plan goes much further. Wingtech claims that the officers’ aim is to deprive it of its legitimate investment interests in Nexperia on the basis of discrimination against Chinese investors and unreasonable geopolitical considerations. According to Wingtech, the ‘Two Circles’ plan amounts to expropriation.

Enterprise Chamber hearing

Wingtech apparently opposes the officers’ plans not only in word but also in deed. Last Friday, the Enterprise Chamber held a hearing on additional immediate measures. Nexperia asked the Enterprise Chamber to order Wingtech, Mr Wing and others involved, subject to a penalty payment, to support and tolerate the officers in the performance of their duties, including their work towards a structural solution such as the ‘Two Circles’ structure.

Role and powers of the court-appointed officers

But what exactly can the court-appointed officers do, and what are they permitted to do? After all, by their nature they are appointed only temporarily. Would it go too far if they were, for example, to issue new shares as a result of which the sole (indirect) shareholder, Wingtech, loses its position as controlling shareholder? Earlier cases before the Enterprise Chamber show where the scope and the limits for court-appointed officers lie.

Novero

The leading judgment on this point is Novero. In that case, two 50% shareholders were at odds and the company was in serious financial difficulty. The court-appointed director wanted to sell the subsidiaries, which one of the shareholders opposed. The Enterprise Chamber (ECLI:NL:GHAMS:2013:4769) and the Dutch Supreme Court (ECLI:NL:HR:2014:1652) held that a temporary director in principle has all the management powers conferred by law and by the articles of association. These may include decisions with far-reaching, irreversible consequences, provided the necessity is sufficiently established and a fair balancing of interests takes place. The director must, however, take account of his temporary position and of the interests of those whose powers have been restricted. In addition, an administrator of shares must safeguard the interests of the holders of the shares under administration. The temporary nature of the appointment does not, therefore, in itself preclude a proposed restructuring.

Centric

In the Sanderink saga, too, the court-appointed officers decided on a far-reaching measure: the sale of Centric’s entire business. As with Nexperia, all the shares were held by a single shareholder. The Enterprise Chamber considered that this amounted to ‘expropriation’ (Article 1 of the First Protocol to the ECHR), but that it was permitted because the applicable requirements had been met. In the Enterprise Chamber’s view, Article 2:349a(2) of the Dutch Civil Code provided a sufficient legal basis. The sale also served a legitimate general interest: the sound continuity of Centric and the protection of the public interests associated with it. Finally, the Enterprise Chamber found the intervention proportionate, given the transparent and competitive sale process, the safeguards for an appropriate sale price and the consideration of whether less far-reaching measures would suffice. The Enterprise Chamber therefore ordered Sanderink to permit and tolerate the sale and its implementation. This did not, however, prevent Sanderink from challenging the sale before the civil courts, as the Enterprise Chamber noted.

Cunico

The Cunico decision (ECLI:NL:GHAMS:2015:4379) may also be relevant to Nexperia. In that decision, the Enterprise Chamber held that a share issue may, in certain circumstances, be pushed through against a shareholder’s will, even if it results in substantial dilution of that shareholder. In many respects, however, the situation at Cunico was not comparable to that at Nexperia. Unlike Nexperia, Cunico had an acute need for financing, and the share issue, which diluted one of the shareholders, also served to resolve the deadlock.

Can Two Circles go ahead without Wingtech?

These decisions show that court-appointed officers may, in certain circumstances, take far-reaching measures, and that the absence of Wingtech’s consent therefore does not rule out a restructuring from the outset. Whether Nexperia’s court-appointed officers can actually implement the ‘Two Circles’ proposal will depend, first of all, on the chosen structure: a sale of subsidiaries differs from an issue of new shares at the level of Nexperia Holding or from a legal demerger of that company. In any event, the interests of Nexperia and its business, and the consequences for all those involved (including Wingtech), will be central. The need for restructuring and its proportionality will have to be sufficiently clear. The valuation and the financial terms are also of key importance.

Chinese court order

Chinese court measures are a further complication. According to Wingtech, on 2 November 2026, three days after the Enterprise Chamber hearing, it received an order from the court in Dongguan. The prohibitions set out in the order are directed at the Dutch Nexperia companies and three directors. Under that order, the disposal, dilution or encumbrance of shares and the disposal or encumbrance of intellectual property and other assets are, among other things, prohibited.

It is not yet clear whether these prohibitions will thwart the plans. The announcement does not name the court-appointed officers as parties against whom the prohibitions were issued, but that does not alter the fact that the prohibitions are also addressed to the companies on whose behalf they act. Nor is it clear whether, and to what extent, the Chinese court’s decision has effect outside China. These are legally interesting questions that complicate the matter. In any event, the measures may make it more difficult to implement Two Circles.

What next?

How matters will unfold is difficult to predict. The parties have already negotiated on a structural solution, and Wingtech says it remains open to one. A settlement would allow the parties to reach agreement not only on Nexperia’s future structure, but also on the other disputes and pending proceedings. Whether the parties can find common ground is uncertain. What does follow from the Enterprise Chamber case law discussed above is that Wingtech cannot simply block a restructuring by objecting to it. The court-appointed officers may therefore still have a stick to wield, although much will depend on the precise details of the restructuring plan and the latitude the Enterprise Chamber gives them. The forthcoming decision may shed more light on this.