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Corporate law
Corporate law lawyer in Tilburg
Shareholder disputes and director liability. I know both sides, because I spent thirty years as a director and shareholder myself. I know what such a conflict does to a company, a workforce and a family.
Shareholder disputes
A falling out between shareholders is corrosive for returns and for continuity. It causes unrest on the work floor, tension at home, and decision making that becomes difficult or seizes up entirely.
Sometimes it concerns the direction of the company, sometimes personalities clash, and sometimes a majority shareholder disregards a minority shareholder until that position becomes untenable.
Dutch law offers remedies. The statutory dispute resolution procedure allows the court to compel one shareholder to sell their shares, or to compel the other to buy them. In addition there is the inquiry procedure before the Enterprise Chamber in Amsterdam, which permits interim measures such as suspending a director, appointing a supervisor, or temporarily suspending voting rights.
In many cases, though, negotiation is the fastest route. First attempt to restore the relationship. If that fails, part ways by agreement.
Director liability
Nobody can run a business without taking risks, and those risks drive the economy and employment. A director is therefore not readily liable for their management. There is, however, a line between entrepreneurship and reckless risk taking.
Under settled Dutch case law a director is liable only where they can be personally seriously blamed. That is generally the case where the director enters into obligations on behalf of the company while knowing or having reason to know that the company cannot meet them and offers no recourse, or where the director causes or permits the company to breach its statutory or contractual obligations.
Claims have increased sharply in recent years. I act both for directors who have been held liable or face that prospect, and for parties seeking to hold a director liable.
Eight ways to avoid liability
- Know the articles of association and any shareholders agreement, so you do not act in breach of them
- Intervene as soon as you see that board duties are not being properly performed, and be proactive
- Agree a clear division of duties within the board, and stay informed about duties that are not primarily yours
- Keep sound records. The annual accounts must not give a misleading picture and must be prepared and filed on time
- Stay informed about the financial position and do not enter into obligations the company cannot meet
- Be particularly careful in your decision making when insolvency threatens
- Notify inability to pay to the tax authorities and the pension fund in good time
- Take out proper directors and officers insurance
What I help with
Shareholder disputes
Deadlocked decision making, a minority shareholder squeezed out, or clashing views on direction. Through negotiation where possible, through the statutory procedure where necessary.
Director liability
Acting for directors who have been held liable or face that prospect, and for parties seeking to hold a director to account.
Inquiry proceedings
The route to the Enterprise Chamber, with interim measures such as suspending a director or the voting rights on shares.
Legal form and structure
Choosing the right legal form, and what that means for your liability, your tax position and your financing options.
Frequently asked questions
When am I personally liable as a director?
Only where you can be personally seriously blamed. That is a high threshold. The classic cases are entering into obligations knowing the company cannot meet them, and knowingly allowing the company to breach its obligations. Promising the proceeds of the company to one particular creditor and then not honouring that also carries risk.
My co shareholder blocks every decision. What are my options?
First check whether the articles or a shareholders agreement contain a deadlock or dispute clause. If not, the statutory dispute procedure and the inquiry procedure before the Enterprise Chamber are the routes available. The latter allows interim measures, including temporarily suspending voting rights.
What is an inquiry procedure?
A procedure before the Enterprise Chamber of the Amsterdam Court of Appeal examining whether there has been mismanagement. Far reaching interim measures can be granted while it is running. It is a heavy instrument that often produces movement through the threat of it alone.
Which legal form suits my business?
That choice determines your liability, your tax position, your financing options and how the business is run. There is no standard answer, but a handful of questions usually settles it quickly. I go through those with you in the first conversation.
Facing a dispute or a claim?
The earlier you deal with it, the more options remain. The first conversation is free.