Powers of investigators in inquiry proceedings

What can be expected if, after a hearing of the Enterprise Division, an investigator is appointed? Is this investigator subject to certain rules? At first glance this appears not to be the case. A court-appointed investigator in a company has a large degree of freedom in his operation, and is free to choose his own methods, as long as procedural care is taken. This is shown from a recent ruling by the Enterprise Division. Dutch corporate lawyer Hidde Reitsma, corporate litigator at AMS, explains.


Appointed investigator has a great deal of freedom

If the Enterprise Division has reason to doubt the policy of the company concerned, the Enterprise Division can appoint an investigator, as defined by law in article 2:345 of the Civil Code of The Netherlands. Although the Enterprise Division gives the investigator specific assignments, he has a great deal of freedom to investigate all the facts, especially at the start of the investigation.

Scope of investigation expanded

The above was the subject of a dispute at the Enterprise Division. The company to be investigated was of the opinion that the investigator concerned was out of line by expanding the scope of the investigation. The company once again requested the Enterprise Division by letter to give indications about the scope of the investigation, but also how the investigator had to deal with audio recordings. There was a debate about the correctness of the reports based on audio recordings. Obviously the purpose of the letter was to set new limits to the investigation.

Each investigator deals with questions and ambiguities

However, the Enterprise Division states that the investigator has a great deal of freedom in conducting the investigation. The relevance of the questions and ambiguities that each investigator has to deal with can only be determined after (some) investigation. The investigator is therefore free to include facts and circumstances that can reasonably be of interest to the investigation. It is impossible to state in advance what is relevant and what is irrelevant.

Interviewee can ask for the audio recording

Concerning the audio recordings, the Enterprise Division states that the investigator is free to determine how he records the interviews with the persons involved. This is in line with the recent Greenchoice ruling. If one of interviewees disagrees with the report of the interview, it seems reasonable in this case that he can ask the investigator for the audio recording.

Procedural care is required

This ruling once again shows that such an inquiry interferes with the order of business of the company. The company is investigated and the investigator will get to the bottom of things, without knowing what is relevant and what is irrelevant. Directors and managers are interviewed and the administration is completely delved into. The guarantees that the investigator has to comply with are minimal. The investigator has to take procedural care. The investigator therefore has a huge freedom. Although it would seem that this freedom is possibly restricted by the different guidelines of 2011, it was also explicitly states that these guidelines can only be considered rules.

Investigator can be held liable

What if an investigator goes beyond his remit? The investigator could possibly be held liable based on a wrongful act (article 6:162 of the Civil Code of The Netherlands). In that case it would have to be proven that the investigator breached the procedural care that he has to take during the investigation. Because of the extensive powers of an investigator, this will be hard to prove. It will therefore not come as a surprise if the investigator’s freedom are gradually restricted in future.

Corporate law firm in The Netherlands

The lawyers with Dutch law firm AMS in Amsterdam have a wide experience in advising and litigating in Dutch corporate law. Our lawyers are both advisors and litigators in all corporate matters, such as directors’ liability.  If the managing director or the board of management incur debts that they know cannot be paid, or take so much money from the BV that debtors can no longer be paid, the managing director himself can be (personally) held liable for those debts. Furthermore, our team of Dutch corporate lawyers act in all kind of shareholders’ disputes, the buy-out of shareholders, transfer of shares and the dismissal of a director. If a BV has more than one shareholder, usually the agreements between the shareholders are recorded in a shareholders’ agreement.