The Bottom Line
- Surplus value clauses imply a right to information: If your M&A or shareholder agreement includes an earn-out or surplus value clause, courts will likely uphold a party’s right to access the financial details needed to verify their payout, even if this right isn’t explicitly written into the contract.
- Confidentiality agreements are not an absolute shield: A confidentiality agreement with a buyer in an M&A deal will not automatically protect you from disclosure obligations to a third party who has a pre-existing legal right to that information, such as a former shareholder.
- Courts can craft creative, balanced solutions: To mitigate commercial risks, courts can order disclosure under strict conditions, such as limiting access to specific individuals (lawyers, experts) and imposing heavy financial penalties for any breach of confidentiality.
The Details
This dispute arose from a common M&A scenario. A company, the plaintiff, had previously sold its 25% stake in a holding company back to the majority shareholder, the defendant. Their agreement included a surplus value clause, entitling the plaintiff to a share of the profits if the defendant later sold the holding company for a higher price. When the defendant subsequently sold the holding company’s shares and assets to a large third-party competitor, the plaintiff requested the transaction details to calculate its entitlement. The defendant refused, citing a strict confidentiality agreement with the new buyer and arguing the deal terms were too commercially sensitive to disclose.
The District Court of Noord-Nederland sided with the plaintiff, grounding its decision in the Dutch Code of Civil Procedure (Art. 194 & 195 Rv), which grants a party with a legitimate interest the right to access information concerning their legal relationship. The court established that the surplus value clause created a clear legal relationship and that the plaintiff had a sufficient interest in the sale information to determine its contractual rights. Crucially, the court ruled that the confidentiality agreement between the defendant and the new buyer could not be used to deny the plaintiff’s pre-existing rights, as the plaintiff was not a party to that subsequent agreement.
However, the court acknowledged the defendant’s valid concerns about protecting sensitive commercial data. Instead of ordering an unconditional release of information, the judge crafted a carefully balanced remedy. The court ordered the defendant to provide full disclosure but restricted access to the plaintiff, its lawyer, and two named financial experts. To give this restriction teeth, the court attached a severe penalty: if the plaintiff or its representatives breach this court-ordered confidentiality, the plaintiff will be liable for an immediate penalty of €100,000 per violation. This practical solution upholds the right to information while creating a powerful deterrent against leaks, protecting the commercial interests of all parties involved.
Source
District Court of Noord-Nederland
