The Revised Statutory Dispute Settlement Procedure: Beating a Dead Horse or a Miraculous Resurrection?
As part of the new Flex BV Act that came into force in the Netherlands as per 1 October 2012, also a revised statutory dispute settlement procedure (wettelijke geschillenregeling) was introduced. This procedure can be used in two ways. Firstly, the procedure offers shareholders, under certain circumstances, the opportunity to force a shareholder to sell its shares (‘squeeze-out’ or uitstoting). The procedure also offers a shareholder, under certain circumstances, the opportunity to demand that the other shareholder(s) and/or the company acquire(s) its shares (‘retirement’ or uittreding). In both situations, the procedure is in first instance brought before the District Court. This Court also determines the price of the shares, normally based on an expert opinion.
The former statutory dispute settlement procedure was heavily criticized and scarcely used, mainly because of its very inefficient course of proceedings. Proceedings taking fifteen years or more were no exception. The vast majority of shareholders disputes was therefore brought before the Enterprise Section (Ondernemingskamer) in the context of so-called inquiry proceedings (enquêteprocedure).
The revised statutory dispute settlement procedure is furnished with a more efficient course of proceedings, thus making it a more attractive tool to settle shareholder disputes. In addition, shareholders are now free to agree on their own dispute settlement procedure, replacing the statutory procedure. Such ‘own’ procedure may even be subject to arbitration. However, the revised procedure also makes it possible to bring in related claims for damages and (in case of retirement) to claim that the price of the shares is increased so as to compensate the effect of any events (not attributable to the retiring shareholder) that have reduced the value of the shares. Especially these two new elements may seriously complicate and thus slow down the procedure. It therefore remains to be seen whether the revised statutory dispute settlement procedure will become a more popular tool to resolve shareholder disputes.