Inquiry procedure

In an inquiry procedure, the Enterprise Chamber of the Amsterdam Court of Appeal (the “EC”) may, upon request, order an investigation into the policy and affairs of the association if there are well-founded reasons to doubt the propriety of its policy. Key aims of the inquiry procedure include remediation and restoration of sound relationships, transparency and establishing responsibility for potential mismanagement. In practice, the procedure is also frequently used to compel a resolution to internal disputes within a legal entity.

Application

Not everyone may file an application for an inquiry with the EC. Within an association, this right is held by the association itself, the person to whom the right is granted by the articles of association or an agreement and the Advocate General (in the public interest). The EC will allow the application if there are well-founded reasons to doubt proper governance.

An application for an inquiry can only be made where it concerns (a) an association with full legal capacity (a formal association) that (b) maintains a business for which the law requires the establishment of a works council. In principle, a works council must be established if the business employs 50 or more employees.

Standing

The right to file an application is held by a group of at least 300 members, or as many members as comprise at least one tenth of the total membership, or members who together are entitled to cast at least one tenth of the votes in the general meeting, or fewer if stipulated in the articles of association.

Provisional measures

The EC has the power to impose immediate provisional measures during the procedure if required by the state of the association or in the interest of the investigation. Examples of such measures include the suspension of board members and the appointment of temporary board members.

Investigation, mismanagement and measures

If the EC believes that there are well-founded reasons to order an investigation, it will appoint investigators. The task of the investigators is to examine the policy and course of affairs in the association under investigation. Based on their findings, the investigators draw up a report, after which the parties enter the second phase of the inquiry procedure and debate whether mismanagement has occurred.

If the outcome of the investigation indeed reveals mismanagement and the EC accepts this conclusion, it may impose definitive measures within the association’s internal relations. Examples of such measures include dismissal of directors or supervisory board members, annulment of resolutions, appointment of temporary directors or supervisory board members, derogation from certain provisions of the articles of association and dissolution of the association.