Preventive advice shareholders

A clause that specifically addresses judicial exclusion or withdrawal binds the court when it values the shares; a general valuation formula does not.

The dispute resolution regime of the Belgian Code of Companies and Associations applies only to the private limited company and the non-listed public limited company. Article 2:63 lets a group of shareholders holding together 30% of the votes or, in a private limited company, 30% of the profit rights, apply to court for good cause to have a fellow shareholder excluded. Article 2:68 gives an individual shareholder, without any threshold, the right to apply for his own withdrawal. Preventive advice checks whether your articles make those two routes easier or, instead, harder.

Articles 2:67 and 2:69 bind the court, in setting the takeover price, to a contractual or statutory valuation clause, but only to the extent that clause specifically addresses judicial exclusion or withdrawal and does not lead to a manifestly unreasonable price. A general valuation formula that does not expressly name these two situations therefore does not bind the court. That is exactly where many articles of association and shareholders’ agreements fall short today.

Article 5:76 requires a director of a private limited company with an opposing proprietary interest to disclose it to the other directors and not to take part in the deliberation on that decision. Articles that already set out that process in advance, including who decides where every director has a conflict of interest, prevent a discussion that would otherwise only arise once the conflict is already under way.

A shareholders’ agreement can also include a mediation clause requiring the parties to try mediation first, before starting proceedings. Article 1725 of the Judicial Code requires the court to suspend the case where a party invokes that clause in time.

Everest (anti)fraud checks your articles of association and your shareholders’ agreement against the provisions a court will later apply, and rewrites the clauses that offer no grip today.

Where internal conflicts threaten to take over within your company, we look together with you at the paths towards a solution: mediation, court proceedings, or first a conversation between the shareholders themselves. Where you wish to check in advance whether your articles and your shareholders’ agreement contain the clauses needed to anticipate a conflict, we go through those documents with you. We listen to your situation and look with you for the best choice.

Where mediation looks like the right path, our page on conflict management through mediation sets out how that route runs. Where a procedure is unavoidable, our page on conflict management through court proceedings sets out the options, from an exclusion claim to the appointment of a corporate law expert.

Preventive advice also fits within a wider governance exercise: our page for company directors sets out the director liability your articles take account of. More on our approach to shareholder disputes sits among our practice areas, and a few closed files among our references.

Only where that clause specifically addresses judicial exclusion or withdrawal and does not lead to a manifestly unreasonable price. Article 2:67 of the Code of Companies and Associations does not bind the court to a general valuation formula that does not expressly name these two situations. Preventive advice checks whether your clause meets that test.

In a private limited company, 30% of the votes or 30% of the profit rights is enough. Article 2:63 of the Code of Companies and Associations lets a public limited company apply the same 30% voting test, but replaces the profit-rights test with 30% of the capital.

No, Article 2:60 of the Code of Companies and Associations limits that regime to the private limited company and the non-listed public limited company. A cooperative company or a general partnership falls outside it and remains subject to ordinary law.