Introduction
No doubt you have heard of the Enterprise Chamber. The Enterprise Chamber is a special chamber of the Amsterdam Court of Appeal and is located at the IJdok. You can go to the Enterprise Chamber for various procedures.
The Enterprise Chamber, however, is best known as the adjudicator of disputes within companies. Think of the situation where: i) there is an impasse within the general meeting or the management board which prevents important decisions from being made, ii) there is a conflict of interest, iii) a minority shareholder is compromised, iv) there is disagreement between shareholders, directors and/or supervisory directors, v) directors or shareholders are subjecting the company to unlawful competition, or vi) the management board is 'robbing' the company. Simply put, in all cases in which the shareholders and directors can no longer get along and the continuity of the company is in danger or relations are so disrupted that continuing is no longer an option.
Can you start proceedings?
You can start a so-called inquiry procedure if - in short - you own at least 10% of the shares (or depositary receipts thereof) in the company or your shares (or depositary receipts thereof) represent a nominal value of at least € 225,000. The management board and supervisory board are also authorized to file a request for an inquiry on behalf of the legal entity. There are other parties that may be authorized to file a request for an inquiry, but for the purposes of this article we will limit ourselves to the aforementioned parties. The foregoing applies to companies with an issued share capital of less than €22.5 million. For companies with an issued share capital exceeding this amount, other rules apply. In all cases there must be well-founded reasons to doubt a correct policy or proper course of affairs.
Please note that this is not the case.
How do you start an inquiry procedure?
You should file a petition through a lawyer. Prior to this, you should have made your objections to the policy known and given the company time to remove the objections.
In the second phase of the inquiry procedure, the petitioner can, on the basis of the investigator's report, request the Enterprise Chamber - within two months of its filing - to establish that there is (or has been) mismanagement. However, it usually does not get that far and a solution is often already found or a settlement reached between the parties in the first phase of the inquiry procedure. Especially since the petitioner can request injunctive relief during the first stage of the inquiry procedure. This possibility is widely used.
The Enterprise Chamber may grant a request for preliminary injunctions if, in its preliminary opinion, there are well-founded reasons to doubt correct policy. Among the possibilities are the following preliminary injunctions:
- suspension of management board member(s);
- suspension of supervisory director(s);
- appointment of independent director(s);
- appointment of independent auditor(s);
- temporary transfer of shares to independent manager;
- prohibition to make or implement resolutions;
Interim relief can be a very effective tool in shareholder disputes and breaking deadlocks in decision-making, among other things.
Conclusion
. An inquiry procedure offers interesting possibilities. Keep in mind that an inquiry procedure is a costly procedure. If the continuity of your company is at risk and your company is valuable, it is certainly worthwhile and can provide a quick and effective solution to disputes within your company.
Do you think that an inquiry procedure may be a possible solution for your company? If so, please contact Henk Brat or Ruben Herculeijns of the corporate litigation team at Banning Lawyers for more information.
