Legislative proposal to change the right of inquiry of shareholders of large public and private limited companies

Access of shareholders of large public and private limited companies (NVs and BVs) to the Enterprise Section of the Amsterdam Court of Appeal will be restricted. In future, they must represent more shares to have the day-to-day operations of the company investigated. The Council of Ministers has agreed to a legislative proposal of Minister of Security and Justice Opstelten to that effect.

Currently, shareholders may go to court if the nominal value of their shares is at least EUR 225,000 (or if they represent 10% of the issued share capital of the company). The Cabinet finds this limit too low for enterprises having a large share capital. Therefore, shareholders must from now on represent at least 1 per cent of the share capital, if the public or private limited company has an issued share capital of 22.5 million Euro or more. Alternatively, their interest must have a market value of at least 20 million Euro. For companies with a lower issued share capital nothing will change. The new limits are in line with the recommendations of the Social and Economic Council in its ‘Balanced Corporate Governance’ report.

The right of inquiry is an important instrument to solve internal disputes in companies. The Enterprise Section of the Court of Appeal can take swift and effective action in the case of disputes between shareholders and problems between shareholders and directors. The Court may, for instance, decide to appoint temporary directors and to suspend resolutions. The recommendation of the SER to allow the NV or BV – represented by its Board of Directors - to request an inquiry itself, because of the policy of the shareholders' meeting or the behaviour of individual shareholders, has also been adopted. The position of the Works Council does not change. The employees have access to the investigation proceedings via the unions or based on agreements with the legal entity.

The investigation proceedings will be improved in various aspects. This includes the substantiation of immediate relief ordered by the court, the possibility of making comments about the report of the investigators and supervision of the investigation by a justice and examining magistrate. In addition, the legislative proposal restricts the liability risk of investigators and sees to it that temporary directors or supervisory directors who set to work at the court's request are no longer charged with the costs of defence, if they are held liable because of their activities.

The Council of Ministers has agreed to send the legislative proposal to the Council of State for its opinion. The text of the legislative proposal and the advice of the Council of State will be made public on submission to the Lower House.