Shareholders’ disputes

Shareholders’ disputes

Legal advice from a Dutch law firm

The shareholders of a private limited company (BV) decide important issues in the general meeting of shareholders. In most BV’s the board of management (executive board) is appointed by the shareholders’ meeting and the shareholders’ meeting determines the salary of the managing director(s). The shareholders’ meeting also decides on issues such as profit appropriation (division of profits) and issuing new shares. It can also decide that a certain shareholder cannot participate in issuing new shares (‘diluting’ this shareholder). In practice therefore, not the board of management but the shareholders’ meeting holds the true power in a company.

Deadlock

A shareholders’ dispute often not only has a huge impact on the shareholders involved, but also on the company and its business operations. So, a great deal is at stake. There are many varieties and degrees of shareholders’ disputes. There can be a complete stalemate in decision-making, because two (groups of) shareholders each have exactly 50% of the shares. This is also called a ‘deadlock’. But also if a shareholder disagrees with the company’s policy, this can often lead to disagreements in the general meeting of shareholders. A situation can even occur where a majority shareholder tries to ‘smoke out’ a minority shareholder and refuses to take this shareholder’s interest into account. A dispute between shareholders can therefore be extremely detrimental for the company. If a shareholder uses his voting right to obstruct the minority shareholder or to serve his own interests, and the interest of the company or of the minority shareholder is at stake, this often requires immediate action.

Shareholders’ agreement: Dutch lawyer

Because an ounce of prevention is worth a pound of cure, AMS attorneys advises clients starting a company, on establishing the company, to record agreements between shareholders in a shareholders’ agreement. These can be all kinds of arrangements: how to handle the sale of the company, dividing profits, investing or exercising voting rights. The proper shareholders’ agreement can save many problems and costs down the road.

Buying out a shareholder

If, in the course of time, a shareholder obtained an ever-increasing interest in the company, eventually he will often want a 100% in the company. Sometimes, however, a minority shareholder will not cooperate in this. On the other hand, sometimes a minority shareholder finds that the conduct of the majority shareholder warrants him being bought out. The Civil Code of The Netherlands (BW) includes a buy-out arrangement for both situations. Because these arrangements can be fairly complex and extended, buy-outs in other manners can also be tried.

Dutch corporate lawyers

Our attorneys have years of experience in cases involving shareholders’ disputes. They have acted many times in cases and proceedings where an urgent remedy had to be requested at the Enterprise Division of the Amsterdam Court of Appeal or in cases where a party no longer complied with the arrangements in a shareholders’ agreement. We can advise you on the best approach and strategy, and always tries to prevent problems. But if we have to, we are not afraid to take the case to court.

Dutch law firm AMS

Law firm AMS is based in Amsterdam, The Netherlands. The corporate attorneys have gained a broad experience in advising and litigating for (international) companies and individuals. The attorneys are highly involved with their client’s interests and offer a sharp and transparent fee structure. Should you require more information on summary proceedings, or should you have any question with respect to litigation in The Netherlands, please feel free to contact us.