Act on the Settlement of Disputes and Clarification of Admissibility Requirements (Wagevoe)

On 16 May 2024, the House of Representatives gave the green light and on 4 June 2024, the Senate followed suit: the Wagevoe Bill is now officially law. This new law brings a number of changes to dispute resolution and clarifies the requirements for shareholders and depositary receipt holders of listed companies who wish to initiate an inquiry procedure. As its name suggests, the Wagevoe Act provides greater clarity in this area.

The dispute resolution process

Dispute resolution refers to the ability of the court to rule on various disputes between shareholders. Based on the dispute resolution process, it is possible to claim that

1. The shareholder must transfer his shares to other shareholders (squeeze-out procedure);
2. The voting rights of the shares are transferred if the voting rights are held by a usufructuary or pledgee of the shares;
3. The shares of a particular shareholder must be taken over by the other shareholders (exit procedure);
4. The court determines a purchase price for the shares in cases where there is an agreement on the exit of a shareholder.

Of these four procedures, removal and expulsion are the most common.

Changes to dispute resolution

The above procedures do not have the same procedural requirements under current law. Proceedings under 1 to 3 start with a summons, while proceedings under 4 must start with a petition. The Wagevoe changes the procedural rules in that all proceedings now begin with a petition. Furthermore, from the entry into force of the Wagevoe, the proceedings described above will be conducted in a single instance before the Enterprise Chamber. Under current law, the first instance is the district court, and the court's decision can be appealed to the Enterprise Chamber. The designation of the Enterprise Chamber as the first instance and the unification of the formal requirements for initiating proceedings under the dispute resolution system will speed up the dispute resolution process and thereby improve its effectiveness.

The Wagevoe also provides for a broadening of the standard for expulsion. Under current law, expulsion can only be requested on the basis of conduct by the shareholder in his capacity as a shareholder that is so detrimental to the interests of the company that the continuation of his shareholding cannot reasonably be tolerated. Under the Wagevoe, the standard for expulsion is broadened in the sense that it no longer has to relate to conduct "in the capacity of a shareholder". This means that where a shareholder is also a director, conduct as a director may also be a ground for granting the application in the expulsion proceedings.

Wagevoe also extends the scope of the dispute resolution scheme. After the Wagevoe comes into force, the dispute resolution system can be applied to B.V.'s and N.V.'s that are not listed. The scope of the dispute resolution scheme will also be extended in that, unlike under current law, under the Wagevoe holders of depositary receipts will have the possibility of submitting a request for withdrawal or friendly exit. In a friendly exit, the parties agree that a depository receipt/shareholder should exit; only the court is required to determine the price of the depository receipts/share. Incidentally, according to the Wagevoe, the holders of depository receipts are only entitled to initiate a dispute procedure if they are holders of depository receipts issued with the cooperation of the N.V. (so-called assisted depository receipts) and holders of shares with meeting rights at the B.V. (B.V.).

Finally, with the entry into force of the Wagevoe, it will be possible to bring related claims before the Enterprise Chamber when dealing with the squeeze-out or exit claim. These are claims that would not normally be brought before the Enterprise Chamber, and it is therefore up to the Enterprise Chamber to assess whether the related claim can indeed be included in the handling of the squeeze-out or exit proceedings.

The enquiry process

With regard to the inquiry procedure, the eligibility requirements for listed companies will be modified. Under current law, shareholders of a listed company with an issued capital of more than €22.5 million are entitled to an inquiry if they own more than 1% of the issued capital or hold shares (including depositary receipts) with a market value of more than €20 million. For listed companies with an issued capital of less than €22.5 million, shareholders are entitled to be consulted if they own more than 1% of the issued capital or hold shares (including depositary receipts) with a nominal value of more than €225,000. Due to the threshold applied under current law, negative effects have been observed in practice. With the entry into force of the Wagevoe, for listed companies with an issued capital of less than €22.5 million, shareholders holding either 1% of the issued capital or shares with a value of €20 million or more will be able to initiate an inquiry procedure.

The law is expected to come into force on 1 January 2025.