If disputes have arisen within your company that cannot be resolved internally, a procedure before the Enterprise Chamber may be a suitable means of resolving them. Such a procedure is called a survey procedure. In this procedure, the Enterprise Chamber is asked to investigate the policy and course of affairs within a legal entity. This article will briefly discuss the survey procedure and what you can expect from it.
Admissibility in the survey procedure
A survey request cannot be submitted by everyone. The applicant’s interest must be sufficient to justify access to the inquiry procedure and hence the intervention of the Enterprise Chamber. That is why those authorised to do so with the relevant requirements are listed exhaustively in the law:
- Shareholders and certificate holders of the N.V. and B.V. The law distinguishes between N.V. and B.V.’s with a capital of maximum €22.5 million or more. In the former case the shareholders and certificate holders hold 10% of the issued capital. In the case of N.V.’s and B.V.’s with a higher issued capital, a threshold of 1% of the issued capital shall apply, or if the shares and depositary receipts for shares are admitted to a regulated market, a minimum price value of € 20 million. A lower threshold may also be set in the articles of association.
- The legal entity itself, via the management board or the supervisory board, or the trustee in bankruptcy of the legal entity.
- Members of an association, cooperative or mutual society if they represent at least 10% of the members or those entitled to vote at the general meeting. This is subject to a maximum of 300 persons.
- Associations of workers, if the members of the association work in the undertaking and the association has had full legal capacity for at least two years.
- Other contractual or statutory powers. For example, the works council.
It is important that a person entitled to institute an inquiry has first made his objections about the policy and the course of affairs within the company known to the management board and the supervisory board. If this has not been done, the Enterprise Division will not consider the request for an inquiry. Those involved within the company must first have had the opportunity to respond to the objections before the procedure is started.
The procedure: two stages
The procedure starts with the submission of the petition and the opportunity for the parties involved in the company (e.g. the shareholders and the management board) to respond to it. The Enterprise Chamber will grant the petition if the legal requirements have been met and it appears that there are ‘reasonable grounds to doubt the correct policy’. After this, the two phases of the inquiry procedure will start. In the first phase, the policy and the course of events within the company are examined. This investigation is carried out by one or more persons appointed by the Enterprise Division. The company, its management board members, supervisory board members and (former) employees must cooperate and grant access to the entire administration. The costs of the investigation shall in principle be borne by the company (or the applicant if the company is unable to bear them). Depending on the outcome of the investigation, these costs may be recovered from the applicant or the management board. On the basis of the report of the investigation, the Enterprise Division may establish in the second phase that there is maladministration. In that case, the Enterprise Division can take a number of far-reaching measures.
During the procedure and (even before the first investigative phase of the procedure has started) the Enterprise Chamber may, at the request of the person entitled to be questioned, make provisional provisions. In this respect, the Enterprise Chamber has a great deal of freedom, as long as the provision is justified by the situation of the legal entity or in the interest of the investigation. If maladministration has been established, the Enterprise Chamber may also take definitive measures. These are laid down by law and are limited to:
- suspension or annulment of a resolution of the managing directors, the supervisory directors, the general meeting or any other body of the legal entity;
- suspension or dismissal of one or more managing or supervisory directors;
- temporary appointment of one or more managing or supervisory directors;
- temporary deviation from the provisions of the articles of association as indicated by the Enterprise Chamber;
- temporary transfer of shares by way of management;
- dissolution of the legal person.
Only an appeal in cassation can be lodged against a decision of the Enterprise Chamber. Jurisdiction to do so lies with those who have appeared before the Enterprise Division in the proceedings, and also with the legal entity if it has not appeared. The time limit for cassation is three months. Cassation does not have suspensory effect. As a result, the order of the Enterprise Division remains in force until a decision to the contrary is made by the Supreme Court. This may mean that the decision of the Supreme Court may be too late because the Enterprise Section has already made provisions. However, cassation may be useful in connection with the liability of management board members and supervisory board members in connection with the maladministration adopted by the Enterprise Division.
Are you dealing with disputes in a company and are you thinking about starting a survey procedure? The Law & More team has a great deal of knowledge of corporate law. Together with you we can assess the situation and the possibilities. On the basis of this analysis, we can advise you on the appropriate next steps. We will also be happy to provide you with advice and assistance during any proceedings (at the Enterprise Division).