Access to the inquiry procedure

Applicable entities

The inquiry procedure is set out in Section 2 of Title 8, Book 2 BW. The provisions of this section apply to a cooperative, mutual insurance association, public limited company (NV), private limited company (BV) and foundation and association with full legal capacity that operate an enterprise for which a works council must be established pursuant to the law. In practice, it almost always concerns a BV or an NV.

Access to the inquiry procedure

Articles 2:346 and 2:347 BW grant certain parties entitled to request an inquiry (‘inquiry-entitled parties’) the authority to petition the Enterprise Chamber for an inquiry, namely:

• one or more shareholders or holders of depositary receipts for shares in an NV or BV who, individually or jointly, represent at least 10% of the issued capital if the issued capital amounts to a maximum of €22.5 million, or who are entitled to an amount thereof with a nominal value of €225,000;
• one or more shareholders or holders of depositary receipts for shares in an NV or BV who, individually or jointly, represent at least 1% of the issued capital if the issued capital exceeds €22.5 million;
• the company itself;
• those who have been granted such authority in the articles of association or by agreement with the legal entity;
• the Advocate General for reasons of public interest;
• a trade union.

Relevant date for meeting capital thresholds

Whether a petitioner meets the capital thresholds referred to in Article 2:346 BW is assessed both at the time of submitting the request for an inquiry and at the time of the Enterprise Chamber’s decision. In practice, this means that the date of the oral hearing serves as the relevant date.

The Enterprise Chamber will, on the basis of the information available up to that point, assess the admissibility of the petitioner(s). It will determine admissibility at the time of the filing of the petition and assess whether such admissibility has remained intact until the date of the oral hearing. The Emba decision establishes that where the diminution of the interest of the petitioner(s) is due to external circumstances, this cannot affect the admissibility of the petitioners. If the reduction results from another cause – for example because the petitioner has disposed of their interest after filing the request – then a reasonable interpretation of Article 2:346 BW means that they are inadmissible.

Economic beneficiaries

The so-called circle of inquiry-entitled parties has been somewhat expanded in the case law of the Enterprise Chamber and the Supreme Court.

The rationale for granting inquiry rights to the parties named in the law is that both shareholders and holders of depositary receipts for shares provide risk-bearing capital to the company concerned. However, they are not the only parties who provide risk-bearing capital. As a result, case law has developed in which certain parties who provide risk-bearing capital have been equated with shareholders and holders of depositary receipts for shares.

In the important Chinese Workers judgment of 2013, the Supreme Court held that although Article 2:346 in principle contains an exhaustive list (De Vries/Robbé), equating providers of risk-bearing capital is permissible if, and to the extent that, based on the facts and circumstances of the case, it can be determined that the provider’s own economic interest in the company to which the petition relates is such that it can be equated with the interest of a shareholder or a holder of depositary receipts for shares in that company.

Group inquiry

The provisions on the inquiry procedure are drafted for the single legal entity, whereas many businesses are in fact not housed in a single legal entity but in a group of interconnected legal entities (also referred to as a group). In order to do justice to the economic reality of the group, the Enterprise Chamber and the Supreme Court have given a broad interpretation of access to the inquiry procedure by means of the concept of so-called ‘piercing of jurisdiction’ (Chinese Workers).

Another instrument developed in the Supreme Court’s case law is the group inquiry. A petitioner can use this to request, in addition to an inquiry and measures in the legal entity in which they are directly entitled to request an inquiry, also an inquiry and measures in one or more legal entities affiliated with that entity. In the SNS decision, the Supreme Court formulated two requirements for ordering an inquiry procedure: (i) there must be group affiliation within the meaning of Article 2:24b, and (ii) the legal entity meeting the capital requirement must have co-determined the policy and course of affairs of the group-affiliated legal entity in respect of the matters underlying the request. The fact that the subsidiary company has a certain degree of policy freedom does not preclude this.

Letter of objection as an admissibility requirement

Article 2:349 BW provides that, before a petitioner can request the Enterprise Chamber to order an inquiry, they must first have stated their objections to the policy or course of affairs in writing. These objections are set out in what is known as a letter of objection, which thus constitutes an admissibility requirement for the inquiry procedure. A reasonable period (depending on the circumstances of the case) must be allowed to enable compliance with the obligations. Only objections to the course of affairs and policy that were raised during the objection stage can form the basis for granting a request to order an inquiry.

Act Amending the Law on Dispute Resolution Adjustment and Clarification of Admissibility Requirements for Inquiry Procedures (Wagevoe)

Under the current scheme, it is practically impossible to meet the requirement of Article 2:346(1)(b) BW for certain ‘small’ (listed) companies due to the limited nominal value of the shares in such companies. By structuring the issued capital so that the company qualifies as a ‘small’ company, it falls outside the scope of Article 2:346(1)(c) BW. This in turn reduces the ability of capital providers to initiate inquiries – something which, in the eyes of (the board of) the company, also reduces the associated risk of undesirable inquiry procedures. This problem is addressed in the WAGEVOE by introducing a separate access requirement for listed companies. Capital providers of listed companies who represent 1% of the issued capital or at least a value of €20 million thus gain access to the inquiry procedure.