Who can vote at an AGM in the Netherlands?

A shareholders’ resolution is a resolution that is adopted by the AGM, in other words, by the shareholders of a company. In principle, each share The portion of registered capital of a private or public limited company
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entitles its holder to one vote. In the Netherlands, certain share The portion of registered capital of a private or public limited company
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do not confer voting rights in some cases. If they are nevertheless counted, a resolution will not be legally valid. Dutch Corporate Law Lawyer Hidde Reitsma explains the situation.

Legally valid resolution of Dutch AGM?

In a recent case, the key question was whether the AGM’s resolution to sell a shareholding had been made in a legally valid manner. The background to the case was as follows. A group of radiologists had set up a private limited company ( Ltd.) A legal person of which the registered capital is divided in shares
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private limited company
called DCP. Each radiologist was a shareholder, and everyone had an equal share. DCP had an 80% stake in the shares of Mitralis.

Voting on takeover bid for shares

An interested party had made a bid for DCP’s shares in Mitralis. The sale of the stake in Mitralis was put on the agenda of DCP’s AGM. This gave rise to a debate concerning the question as to whether all shareholders had voting rights. Some shareholders considered that certain shareholders who were no longer radiologists did not have voting rights. However, these objections were rejected by the board, and the proposal to accept the offer was put to the vote. All shareholders cast their votes, and a majority was in favour of the sale.

Proceedings concerning infringement of shareholders’ resolution

The shareholders who objected at the AGM then initiated court proceedings to prevent the sale. According to their lawyer, the resolution to sell the stake in Mitralis had not been made in a legally valid manner, among other things, because some shareholders without voting rights had voted.

Transfer restriction in Articles of Association

The objecting shareholders referred to Article 13 of 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
. As standard, Article 13 of the Articles of Association contains a transfer restriction, which means that the transfer of shares requires the approval of the AGM.

Pricing regime

Paragraph 6 contains a pricing regime. It also states that “this Article 13 does not apply to the following shareholders: […]” (followed by a list of named shareholders). The shareholders who were excluded were mainly retired radiologists.

Dutch lawyer in shareholders’ disputes

The court rejected the claim that there were no voting rights. According to the court, it had been wrongly asserted that paragraph 6 of article 13 should be read as meaning that the excluded shareholders did not have voting rights. The court was of the opinion that the addition in paragraph 6 only related to the pricing, and not to the entire transfer restriction. This is also evident from the minutes of the AGM in which this exception was discussed.

In the Netherlands, each share is entitled to one vote

Article 24 of the Articles of Association provides that each share is entitled to one vote. No exceptions are made. This means that the shareholders have voting rights, regardless of whether or not they still exercise the profession of radiologist. As there are no restrictions on voting rights, the votes were cast in a legally valid manner.