Private sale of Dutch shares with court approval
Besides the option of a public sale of Dutch shares, the pledgor and pledgee both have a right to submit application proceedings for approval of a private sale of the pledged
The portion of registered capital of a private or public limited company
» Meer over share shares at the court in interlocutory proceedings. An attorney in law can start this proceeding with a court in whose jurisdiction the goods are to be executed wholly or are largely located, or where the execution will take place. Dutch lawyer corporate law Sander Schouten explains.
Submission of an application under Dutch law
For the submission of an application the general rules of the application procedure need to be observed. Following the submission of an application the court will set a date for a hearing of the pledgee. It is not required to hear the pledgor or other interested parties at this point. However the court usually does inform the pledgor of the planned hearing date or will instruct the pledgee to inform the pledgor.
Offer should be substantiated to the Dutch court
Following Dutch case law, the court will look at three factors for its assessment of the application for approval of a private sale. First will be considered whether the pledgee has already found a potential buyer who has made an unconditional offer for the shares. A second factor is whether such offer is fair on the basis of independent valuation report or fairness opinions and the third factor is whether the potential buyer is creditworthy.
Price of shares should meet market value
A Dutch court can reject an application from a corporate lawyer if the pledgor for example is able to show that the price offered for the shares is less than market value. Merely submitting an expert report indicating a higher value will generally not be sufficient in that regard. It is furthermore not self-evident that the court consents to a sale of the shares to such alternative buyer, as such alternative bid does not form part of the original application. In order to get the alternative bid approved by the court, a further application must be submitted. Lastly, a court’s decision to approve or reject an application for the sale of the shares is in principle not open for appeal.
Private sale with consent of the pledgor
The third way to sell the pledged shares is by a private sale with consent of the pledgor. The sale with consent of the pledgor does not require judicial authorization. Only if the shares are subject to other security rights (like a second ranking right of pledge or attachments) the prior consent of these parties is required.