An inquiry proceeding offers shareholders and directors the possibility of forcing certain changes of course. For example, do you, as a shareholder disagree with the actions of the company’s board? Or do you believe that a shareholder is not acting in the interests of the company? In such a case, you can turn to the Netherlands Enterprise Court at the Amsterdam Court of Appeal (Ondernemingskamer) to institute inquiry proceedings. The purpose of the inquiry proceedings is to restore the company’s balance of interests.
Principles of the inquiry proceeding
The following principles of the inquiry proceeding have been established in law and in case law:
- Inquiry proceedings start with a petition drawn up by a lawyer;
- The Netherlands Enterprise Court will decide on the requests in the petition within a number of weeks and take measures, for example by suspending directors;
- The Netherlands Enterprise Court will also institute an investigation to establish the problems within the company;
- The purpose of the inquiry proceeding is to identify the person(s) responsible for possible mismanagement and to restore healthy relations within the company.
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The Enterprise Court has a number of ways of restoring “healthy relations” within the company. On the basis of the petition, the Enterprise Court can decide that a shareholder must surrender his or her shares to a custodian for a certain period of time, or it may suspend a director. Everything is aimed at restoring relations within the company. This way, the Enterprise Court prevents certain undesirable (and irreversible) decisions from being made.
Duration and costs of inquiry proceedings
A decision of the Enterprise Court can be obtained relatively quickly. If required, the Enterprise Court can suspend a director or prohibit a shareholder from making certain decisions within two weeks. This is also known as “phase 1” of the inquiry proceedings.
After that, “phase 2” will start and an investigator will be appointed. This investigation usually takes six months to one year (or sometimes longer). The budget for the investigator is provided by the company. The minimum budget is normally EUR 10,000, but is capped. An appointed director is paid by the company on an hourly basis. If the company does not have sufficient cash on hand to meet these costs, the Enterprise Court usually rejects the request for an investigation “for lack of assets”.
VIOTTA supports your company in an inquiry procedure
VIOTTA’s litigation lawyers have extensive experience in inquiry proceedings. Not only do they assist directors and shareholders in such proceedings, VIOTTA’s lawyers are also regularly appointed by the Enterprise Court as temporary directors or custodians of shares. They know the tricks of the trade.
Need advice regarding inquiry proceedings? VIOTTA is here for you
Are things tense at your company? And are you looking for information about possible inquiry proceedings? If so, contact VIOTTA’s litigation lawyers. Thanks to our knowledge of and experience in investigation proceedings, we can assist you effectively and efficiently. From start to finish. And always taking into account the costs, so you will not be confronted with an unpleasant surprise afterwards. Contact us, we are pleased to help you.
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VIOTTA is a law firm based in Amsterdam, specialising in providing advice in the areas of corporate law, mergers and acquisitions, contract law and corporate & commercial dispute resolution. We advise in transactional matters and litigate in commercial disputes. VIOTTA provides legal advice to its clients on Dutch corporate law matters, such as corporate governance, board structures, directors’ duties and liabilities, joint ventures and other collaborations. VIOTTA advises purchasers, sellers, management and other stakeholders in domestic and cross-border mergers and acquisitions (M&A).