Article 2:192 of the Dutch Civil Code (Burgerlijk Wetboek) allows the articles of association of a private limited company (BV) to attach obligations to shareholdership. These can be obligations of a contractual nature towards the company, third parties or other shareholders, requirements for holding shares, and obligations to offer or transfer shares in certain situations.
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Which obligations can the articles impose?
Examples are an obligation to supply goods or finance to the company, a non-compete obligation, a requirement that every shareholder also works in the business, or a duty to offer the shares when a shareholder leaves, retires, divorces or dies. The obligations can apply to all shares or only to shares of a certain class.
Can obligations be imposed on existing shareholders?
Not against their will. An obligation or requirement can only be introduced or tightened for a shareholder who has agreed to it. A majority resolution to amend the articles is therefore not enough for shareholders who voted against. This is why such obligations are best included at incorporation, or when a new shareholder joins.
What if a shareholder does not comply?
The articles may provide that the voting, meeting and dividend rights of that shareholder are suspended as long as he does not comply. A mandatory offer obligation must in principle give the shareholder a price that reflects the value of the shares, unless he agreed otherwise.
How does this differ from a shareholders’ agreement?
Statutory obligations bind every future shareholder automatically, because they are part of the articles. A shareholders’ agreement only binds its signatories, and a new shareholder must accede to it. Many companies use both, keeping the articles brief and the details in the agreement.
Frequently asked questions
Are the articles public?
Yes. They are filed with the trade register, while a shareholders’ agreement can remain confidential.
Is a statutory non-compete enforceable?
In principle yes, if it is clear and reasonable in scope and duration.
Related terms
- Articles of association
- Shareholders’ agreement
- Non-compete clause
- Article 2:195 Dutch Civil Code (share transfer restrictions)
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