Content area
Full Text
European Business Organization Law Review 8: 103-119 103
2007 T.M.C.ASSER PRESS DOI10.1017/S1566752907001036
Private Ordering and Buy-Out Remedies Within Private Company Law: Towards a New Balance Between Fairness and Welfare?
Harm-Jan de Kluiver* 1. Introduction.............................................................................................. 104 1.1 Report of the expert group ....................................................................... 105 1.2 Draft Bill.................................................................................................. 105
2. Restructuring company law: core issues, background and objectives ..... 106 2.1 Genesis of the Dutch private company (BV.) ........................................... 106 2.2 Freedom to determine internal structure .................................................. 107 2.3 One type of private company or a number of corporate entities? ............ 108 2.4 No new legal forms but one flexible corporate instrument...................... 108 2.5 Objectives summarised ............................................................................ 110
3. Freedom of private ordering and protection of minority shareholders .... 110 3.1 Dispute resolution and rights of minority shareholders ........................... 110 3.2 Do we need statutory exit rights?............................................................. 111 3.3 Criticism and comments .......................................................................... 112
4. The buy-out remedy................................................................................. 113 4.1 Option (i) ................................................................................................. 113 4.2 Option (ii) ................................................................................................ 114 4.3 Making fairness more efficient ................................................................ 115
5. Do we need fairness? ............................................................................... 115
6. The discounted exit at will: an efficient and effective remedy? ......... 116 6.1 Option (iii) ............................................................................................... 117 6.2 An example.............................................................................................. 117 6.3 Additional actions in case of oppression and/or unfairly prejudicial conduct..................................................................................................... 118
7. Conclusion ............................................................................................... 119
Abstract
All over Europe, we see drastic changes being made to simplify company law and make it more flexible. A fundamental principle of this reform movement is the
* Professor of Law, University of Amsterdam; Attorney at Law, De Brauw Blackstone Westbroek, Amsterdam.
104
Harm-Jan de Kluiver EBOR 8 (2007)
freedom of shareholders to determine internal structure and power balance. At the same time, as a consequence thereof, we may see more situations in which minority shareholders at some point may feel trapped. More freedom and flexibility will therefore need to be supplemented with a credible and efficient level of minority protection. Until now, the general approach in Europe (but also to a certain extent in the United States) is that shareholders only have a right to exit through a buy-out if the conduct of the controlling shareholder(s) is unfair and/or oppressive. One can doubt whether this provides an acceptable level of protection in terms of efficiency and effectiveness. In this article, it will be...