Careful alignment between the shareholders’ agreement and the articles of association.
If you are in a B.V. (private limited company) with multiple shareholders, it is important, alongside the deed of incorporation (i.e. the original articles of association) as the formal rules of the game within the B.V., to also make sound partner arrangements. For example, you will want to record what each shareholder’s operational and financial contributions to the business will be. The method for valuing the shares, when the shares must be transferred. Also what happens to the relationships built up when the shareholding ends, and that no competition may take place. Such arrangements are not set out in the articles of association but in the shareholders’ agreement. Arrangements that further elaborate on the articles of association are also recorded in a shareholders’ agreement, which must then align well with the articles of association. These two documents are, so to speak, communicating vessels. This provides legal certainty and prevents conflicts over important company resolutions.
Court case, 20 November 2024.
On 20 November 2024, the Rotterdam District Court handed down an important ruling confirming the above. What was at issue? Two shareholders, shareholder A and B, held 49.75% and 50.25% of the shares in a private limited company respectively. During the general meeting, shareholder B, with an ordinary majority of votes, adopted the resolution to dissolve the company in accordance with the articles of association. Shareholder A, however, voted against this resolution and invoked the shareholders’ agreement, which prescribed a 60% majority for such a far-reaching resolution. Shareholder A subsequently sought annulment of the dissolution resolution in court.
The court’s considerations
The court sided with shareholder B and annulled the dissolution resolution. The court took the following into account.
- Decisive role of the shareholders’ agreement
Shareholder B argued that the articles of association — after the amendment to the articles — prescribed an ordinary majority for dissolution. The court rejected this defence. Email correspondence showed that the parties’ intention with the amendment to the articles was in fact to bring them into line with the shareholders’ agreement. That the amendment to the articles took place at a later point than the signing of the shareholders’ agreement does not change that. Moreover, the shareholders’ agreement explicitly provided that it would prevail in the event of a conflict with the articles of association.
- Article 2:204 of the Dutch Civil Code not applicable
Shareholder B also argued that shareholder A was not a party to the shareholders’ agreement. Shareholder A had signed it on behalf of her B.V. “in formation” (“in oprichting”), which meant, in B’s view, that the requirements of article 2:204 of the Dutch Civil Code were not met. The court rejected this argument. Article 2:204 of the Dutch Civil Code is intended to protect the capital of the company being incorporated and applies to specific legal acts, such as contributions in kind for shares other than in cash, or special obligations imposed on the company. The shareholders’ agreement did not fall into any of these categories.
- Reasonableness and fairness (article 2:8 of the Dutch Civil Code)
Finally, shareholder B argued that shareholder A’s reliance on the shareholders’ agreement would conflict with reasonableness and fairness. The court, however, ruled that it was precisely the failure to comply with the agreement that conflicted with reasonableness and fairness. The parties had deliberately agreed that both shareholders had to consent to a dissolution, and this arrangement could not simply be disregarded.
The shareholders’ agreement therefore prevails here over the articles of association, and this can be agreed as such, provided it is agreed explicitly enough! Have your shareholders’ agreement checked and reviewed. If you do not yet have a shareholders’ agreement but do have a fellow shareholder, it is high time to think about a shareholders’ agreement.
We are experts in reviewing and drafting shareholders’ agreements and in setting up and amending articles of association to suit your wishes. Feel free to contact the lawyers at The Legal Company for support via info@thelegalcompany.nl or call 020 345 0152.
This article was published on 3 March 2025.
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