Agreement on exit but not on share price? How about a flash exit?

When the Flex BV was introduced in the Netherlands in 2012, it became possible to achieve a quick and straightforward buy-out of a shareholder by using the so-called. Dutch corporate law lawyer Onno Hennis explains the scheme and argues that its unpopularity is undeserved.

Who determines a company’s value?

Under the new Dutch scheme, shareholders who have agreed on the buy-out of one of them can ask the court to set the price for the share The portion of registered capital of a private or public limited company
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to be transferred. In the Netherlands, the court can do this itself (for example if the articles of association A document, drawn up when a Dutch company or legal person is set up, and which regulates the operations of the company and defines its purpose.
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Articles of Association
or the shareholders’ agreement provide a clear calculation method) or appoint an expert to determine the company’s value (and the purchase price for the shares).

Flash exits not used in the Netherlands

To date, the scheme has not yet been used. This is probably because the parties – assisted by their lawyers – tend to arrive at similar solutions themselves. Shareholders typically wish to part ways because of a conflict between them. Usually, there is more to it than just the transfer of the shares. Sometimes a shareholder claims to have suffered a loss as a result of the actions of another shareholder or the board. In such cases, negotiations may also lead to the transfer of shares. However, as the parties themselves (or their lawyers) will draw up a settlement agreement, there is no need to go to court.

When is a Dutch flash exit appropriate?

In some cases, the relations between the shareholders may be much less overheated. The parties involved may have agreed to go their separate ways but have a difference of opinion about the price to be determined. In other cases, the parties may be unable to jointly appoint a third party who will determine the value of the company by way of a binding decision. In such cases, the Dutch flash exit may be a good option.

Benefits of flash exit in the Netherlands

There are some advantages to the Dutch flash exit. For example, the court will be able to determine the reference date for the valuation, the valuation method or basis, and other circumstances in a fair manner, if the parties disagree on this. Furthermore, speed is guaranteed because it is not open to appeal. Finally, if requested by the parties, the expert’s valuation could serve as a settlement agreement that binds the parties, except in very exceptional cases.

Joint application or no defence

A flash exit is only possible if the parties have agreed on the buy-out (but not on the price). The parties make a joint application to the court. This is particularly conceivable if shareholders jointly turn to a lawyer or civil-law notary with the request to help them with their “separation.” In that case, a good lawyer would also have to present the option of a flash exit to the parties. Another option is for each party to submit an application and a defence. This would require that the defendant states that he does not oppose the buyout.

Dutch lawyer in cases of shareholder’s exit

Are you a shareholder in a company where the parties agree on the exit of one of the shareholders, but the parties do not agree because they have a difference of opinion about the company’s value and therefore about the buy-out price? Our corporate law lawyers can assist you in the Netherlands.