Inquiry proceedings are the investigation into the policy and course of affairs of a legal entity that the Enterprise Chamber of the Amsterdam Court of Appeal may order. If the investigation reveals mismanagement, the Chamber can intervene in the company.
Legal basis
The regime is in Articles 2:344 to 2:359 of the Dutch Civil Code. Article 2:346 sets out who may apply: for a BV, shareholders or depositary receipt holders representing at least ten per cent of the issued capital or holding shares worth 225,000 euros, and further among others the trade union and the trustee in bankruptcy. Article 2:349 requires the objections to have been put to the management board in writing first. Article 2:349a empowers the Chamber to grant immediate provisional measures even at the first stage: suspension of a director, appointment of a temporary director or supervisory director, or transfer of shares to a custodian. Articles 2:355 and 2:356 govern the second stage, in which mismanagement may be established and final measures follow.
How it works in practice
In practice the procedure is above all an instrument for deadlocked shareholder relationships. The immediate measures matter more than the investigation itself: a temporary director with a casting vote can break a deadlock within weeks. The Enterprise Chamber works quickly and decides on the basis of one written round and an oral hearing.
Where it goes wrong
Applicants skip the mandatory prior letter of objections, and the application fails. The procedure is also sometimes used to force a purely financial dispute, whereas the inquiry is intended for the conduct of affairs within the company. Third, directors underestimate that an investigation report can later be used in liability proceedings.
Related terms
The procedure connects to directors’ liability, the shareholders’ agreement and the general meeting.
Stuck in a shareholder conflict? Our corporate law specialists assess whether an inquiry is the right instrument.
