A new dispute settlement approaching in the Netherlands?

25 september 2019 | Door:  Joost Blom

The Dutch civil law code knows a dispute settlement when shareholders have a (serious) dispute which is related to their shareholding and which dispute they cannot solve by negotiations. Special shareholders in a joint venture should be able to use these dispute settlement. After all, often the interests and wishes of shareholders in joint venture can change when times go by . However, this dispute settlement is a complicated procedure and knows a lot of legal complications. Therefore the Dutch government is planning to propose new rules for this dispute settlement.

The problems in the current arrangement

In the current dispute settlement a common problem is that the court can obligate a shareholder in a joint venture to sell his shares to the other shareholder(s), but the court can not fix the price for which the retiring shareholder should sell his shares.

Therefore parties have to negotiate. In practice you see that almost every time there rises a conflict about the valuation of the shares. It can take years (sometimes even decades) to resolve this conflict.

Another problem in the current arrangement is that the court can only obligate a shareholder to sell is shares when he misbehave as a shareholder. Other misbehave, for example enter in competition through another company which a shareholder fully owns, cannot be a ground to obligate him to sell his shares.

Because of these kind of problems, the current dispute settlement is not often used.

The new dispute settlement

Recently the Dutch minister concerned has published a new bill to solve most of the problems in the current dispute settlement.

In the proposed bill a shareholder can not only be obligated to sell his shares when he misbehave as a shareholder, but also other behavior can be a ground to force him to sell his shares. The example mentioned, enter in competition through another company which he fully owns, will then be a ground to force him to sell.

And when he is forced to sell his shares, he is obligated to sell his shares when he receives an irrevocable, unconditional and reasonable offer for his shares. Therefore most disadvantages of the current arrangement are missing and it is expected that the new arrangement will be used more often.

How to proceed

At this moment the new bill is only what we call a consultation version. This means that during a short period of time people and organizations can give their comments about this new bill. After collecting and studying this comments, the minister will come with a definite proposal which has, of course, to be approved by the Dutch parliament. At this moment we can not predict how much time this will take, but it is a good thing that the minister makes serious work of solving the problems of the current dispute settlement.

Of course we will keep you informed about this new legislation, as we also do with other new legislation which can be of value for you.