The importance of the essence

1.           PREFACE

Reducing a seemingly complicated case to its essence. That is the added value that lawyers can offer and is often the route to success. Read our blog about the inquiry procedure between Median and WJG cs. at the Enterprise Chamber of the Amsterdam Court of Appeal. We explain what this case in essence was about and why the Enterprise Chamber decided to declare Median inadmissible in respect of three companies and to reject the inquiry request in respect of the fourth company because there were no grounds to doubt the correct policy in respect of the fourth company.

2.          BLOG

Reducing a seemingly complicated case to its essence. That is the value-add that lawyers can bring and is often the route to success. Take for example the recently published inquiry procedure between Median and WJG cs. at the Netherlands Enterprise Court of the Amsterdam Court of Appeal (https://uitspraken.rechtspraak.nl/inziendocument?id=ECLI:NL:GHAMS:2021:2848). A complex case at first sight, but relatively simple in fact. It concerned a participation in companies that make so-called cleanrooms for computer chips (see: https://www.eoswetenschap.eu/technologie/een-driesterrenkeuken-voor-computerchips if you’re wondering what cleanrooms are). Median requested the Enterprise Court to order an inquiry into the policies and affairs of four companies involved in the participation. I think that Median in essence was not really interested in this inquiry. Median seemed to be especially interested in halting the execution of a pledge on the participation. This execution would result in Median losing her shares in the participation to WJG cs. It seems to me that Median tried to prevent this by applying for an inquiry at the Enterprise Chamber. In another preliminary relief proceeding the Court already ruled about the execution of the pledge and an appeal against that judgement was still ongoing. With this application for inquiry, Median apparently tried to create additional proceedings. The Enterprise Chamber is an effective servant, meaning that it is willing to intervene by means of immediate measures and/or an inquiry if necessary. The Enterprise Court will do so if the inquiry request is admissible and if there are good reasons to doubt correct policy within the company. The bar that has to be met for admissibility is not very high nor is the condition ‘good reason to doubt policy’. Still, things went south for Median. First, the Enterprise Court declared three out of four companies inadmissible. Median held no (depositary receipts for) shares at all in two companies and only indirect shares in the third company, without the third company being organisationally linked. Therefore, it was logical that the inquire request was not possible. With regard to the fourth company Median was admissible, but the inquiry request was still rejected because the required minimum doubt of a correct policy was not met by Median. In fact, the Enterprise Chamber ruled that there was not much wrong with the policies and affairs per se, but rather there was a dispute about – right - the execution of the participation.

3.           LEGAL ASSISTANCE IN DUTCH DISPUTES WITHIN COMPANIES

The Dutch inquiry proceedings before the Enterprise Chamber are, under certain circumstances, suitable for correcting bad policies and/or affairs within companies and determining who should be held responsible for this. Moreover, provisional measures can be taken within a reasonably short term that can prevent (further) damages as much as possible.

4.           ATTORNEY-AT-LAW DUTCH CORPORATE LAW

The Stonewater team in Amsterdam has extensive experience in advising and litigating with respect to Dutch inquiry proceedings before the Enterprise Chamber of the Court of Appeal of Amsterdam. For further details, please contact Bart Zandbergen or Marc van Rijswijk at +31 20 20 90 800 or at bzandbergen@stonewater.nl or mvanrijswijk@stonewater.nl.

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