The Bottom Line
- The Amsterdam Enterprise Chamber has affirmed that a majority shareholder’s erratic, insulting, and overreaching conduct can make a minority shareholder’s position untenable, justifying a court-ordered forced buyout.
- A company’s internal buyout procedure will not prevent court intervention unless it includes an explicit and unconditional obligation for the company to purchase the shares. An obligation to merely offer them is not sufficient.
- While a company’s valuation is typically set at the time of the court’s decision, the court may order an “equitable price increase” if the majority shareholder’s actions caused a subsequent drop in the company’s value.
The Details
This case involved two senior executives—a CEO and CFO—who were also minority certificate holders in a successful digital marketing firm. They resigned after the company’s ultimate majority shareholder, who was previously hands-off, began interfering intensely in the business. The court noted the shareholder’s behavior created an unworkable situation, citing a stream of late-night demands, insulting and derogatory communications, and attempts to bypass the established management structure. After the executives resigned, the company escalated the conflict by labeling them “bad leavers,” withholding their rightful dividend payments, and threatening them with a baseless €6.1 million liability claim, which the court viewed as a pressure tactic.
The company argued that the court lacked jurisdiction, pointing to its internal procedures, which contained a process for departing employees to offer their certificates for sale. However, the Enterprise Chamber dismissed this argument. It reasoned that for a private arrangement to override the statutory right to a court-ordered exit, it must create a genuine and certain path to resolution. The company’s rules created an obligation for the executives to offer their certificates but, crucially, did not create a corresponding, unconditional obligation for the company to buy them. This lack of a guaranteed purchase meant the contractual mechanism was insufficient, opening the door for the court to intervene.
Once the exit was approved, the key issue became the valuation of the certificates. The executives argued for a valuation date of December 31, 2023—the time of their departure—since a third-party expert had already performed a valuation at that point. The court, however, adhered to the standard legal principle that the valuation date is the date of its own ruling. This created a risk for the executives, as the company’s value may have declined in the interim. In a significant move, the court addressed this risk by instructing its newly appointed expert to investigate whether any drop in value since December 2023 was caused by the majority shareholder’s actions. This leaves the door open for the court to apply an “equitable price increase,” effectively compensating the departing executives for any value destruction caused by the very behavior that forced them out.
Source
Gerechtshof Amsterdam (Enterprise Chamber)
