By: Hidde Reitsma @AMS Advocaten
According to Dutch corporate law, shareholders and depository receipt holders have the right to request the Enterprise Chamber to order an inquiry into the company’s affairs. Recently, the Dutch Supreme Court has confirmed that the provider of risk capital who has an own economic interest in the company in question can also invoke this right. Dutch corporate lawyer Hidde Reitsma explains.
Right of investigation shareholders of (public) limited
According to the Dutch Civil Code the following parties are entitled to request an inquiry into the affairs of a company:
– (in companies with subscribed capital of less than € 22.5m:) the shareholders and depositary receipt holders jointly of 10% of the subscribed capital, or of shares with a nominal value of at least € 225.000,-.
– (in companies with subscribed capital over € 22.5m:) the shareholders and depositary receipt holders jointly who represent at least 1% of the subscribed capital, or whose shares/depositary receipts represent a market value of at least € 20m.
Providers risk capital same status as shareholders
Strictly interpreted, the Civil Code only entitles the (direct) holders of shares and depositary receipts in a company to request inquiry proceedings into that company when they have met the applicable criteria (cause for investigation). However, the Supreme Court has decided in litigation that the ratio of the right of inquiry implies that the “the provider of risk capital” should be put on a par with shareholders and depositary receipt holders if their economic interests in the company concerned can be considered to be equivalent.
Dutch law firm for inquiry proceedings
This ruling means that also other parties than the directly involved can ask an investigation into a Dutch limited’s affairs. In this case the shareholder of a Chinese limited requested an inquiry in a Dutch limited. The Chinese limited held all the shares of the Dutch limited. As the shareholder concerned held 50% of the shares in the Chinese limited he was the indirect provider of risk capital. According the Enterprise Chamber (the court division that deals with inquiry proceedings) his interest could be considered equal to the interest of a (direct) shareholder. Therefore the request was granted.
This original article is available here
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