Summary of the case
This case revolved around the sale of a family business focused on the construction, rental and sale of dredging equipment. The shares in the family business were held by a holding company, all of whose shares were certified. The certificates had been divided among three family members, who had inherited them after the death of their father, the original owner and director of the holding company. However, there was disagreement among the certificate holders about the family company's stock price. The majority agreed to the sale, in part because of their deteriorating relationship with the board of the trust office foundation ("STAK").
During the sale process, one of the certificate holders without meeting rights indicated that he wanted to take over the family business himself in order to keep the business within the family. However, the board of the STAK, which was in charge of the sale, decided to proceed with an external buyer because they doubted the certificate holder's suitability to lead the company.
Ultimately, the majority of the certificate holders agreed to the sale to an external buyer, while the certificate holder who wished to take over the company opposed it. He decided to challenge the case and primarily claimed - in brief - (i) annulment of the decisions of the STAK board that led to the sale of the company (ii) to rule that the sale and delivery of the shares was not legally valid, or at least to annul this sale and delivery (iii) to rule that the board and the other depositary receipt holders acted unlawfully towards the plaintiff (depositary receipt holder).
Judgment Court
If decisions by an organ of a legal entity are taken in violation of articles of association or statutory provisions, the reasonableness and fairness of article 2:8 DCC or regulations, there may be grounds to annul those decisions. It follows from Section 2:15(3) of the DCC that nullification is only at issue if the person bringing an action against that legal entity for that purpose has a reasonable interest in fulfilling the obligation that has not been fulfilled. However, the Rotterdam District Court ruled that the depositary receipt holder had no reasonable interest in having the resolutions set aside because the transaction of the shares had already taken place and setting aside the resolutions prior to the transaction would not benefit the depositary receipt holder.
Indeed, in a situation such as this, the purchaser of the shares is protected as a third party from having the decision set aside. Even if the decision were annulled, that annulment could not be held against the buyer of the shares.
Furthermore, the decisions of the STAK board to sell the family business do not qualify for annulment: the decision was not contrary to the articles of association or reasonableness and fairness. Moreover, the STAK board had regularly and sufficiently informed the depositary receipt holders about the sale process and the sale decision had been approved by the depositary receipt holders by a majority. It was also concluded that the board had acted carefully and that the rights of all concerned had been respected.
Based on these considerations, the District Court of Rotterdam rejects all of the certificate holder's claims. The certificate holder is left empty-handed.
Remarkable
What is striking about this ruling is that the Rotterdam District Court did not address the question of whether the depositary receipt holder without meeting rights is entitled to invoke the annulment of a decision (of an organ of the legal entity) at all.
Opinions are divided on this issue in the literature. On the one hand, the view is taken that the holder of a depositary receipt without meeting rights can bring an action for the annulment of a resolution because he has a reasonable interest because of the financial rights attached to the depositary receipt. On the other hand, the position is taken that when the articles of association were drafted, it was not chosen for nothing to grant the depositary receipt holder no meeting rights. The company wanted to prevent the certificate holder from being deprived of company law instruments to influence decision-making.
For the Rotterdam District Court, the first option apparently prevails.
What other resources does the certificate holder have without meeting rights?
If it is assumed that the certificate holder without meeting rights is not entitled to invoke the annulment of a resolution, other means of defending his rights and interests may be considered: an action for damages in tort, an action for suspension of the resolution in summary proceedings, or annulment of the resolution through the right of inquiry. Depending on the circumstances, a choice should be made as to which of the remedies is most appropriate.
