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Well-founded reasons for doubting the correctness of the policy:
The lack of information provided to minority shareholders is an important reason for concluding that there were well-founded reasons for doubting the correctness of the policy.
This is the case with Steinhoff:
Apart from these fairly general grounds for assuming that there are well-founded reasons for doubting the correctness of the policy, there are also more specific grounds, related to the protection of the minority or other shareholder.
These can be divided in three categories:
• First, ignoring statutory rules or rules in the articles of association that protect minority or other shareholders. For example: In OK 26 January 1978, TVVS 1978, p. 251, the Enterprise Section decided 'that one of the reasons why well-founded reasons existed was that the company had not complied with provisions in the articles concerning the convocation of the general meeting and that it therefore ‘was doubtful whether the company had taken the legitimate interests of this shareholder sufficiently into account’.
• A second ground to doubt the correctness of the policy related to minority protection lies in a conflict between a majority and a minority shareholder, especially if this conflict results in adeadlock in the management of the company.
• Third, providing insufficient or incorrect information to the minority or other shareholder.
Note: This is the case with Steinhoff: Just read this example, but it seems to me this is exactly what's going wrong with Steinhoff too.
Fairly general grounds for assuming that there are well-founded reasons for doubting the correctness of the policy: Input for the special audit SdK
pure.rug.nl/ws/portalfiles/portal/120343702/minorityshh.pdf
Page 74
'One decision which is particularly relevant for the protection of minority shareholders is OK 11 January 1990, NJ 1991, 548. In this judgement, the Enterprise Section based its decision that there had been a case of misconduct on three grounds. These are the fact that continuation of the policy, resulting in decreasing turnover and very low profitability, would have led to serious problems for the company, the fact that the director had not taken adequate measures to secure a suitable successor and the fact that the director was not concerned with the interests of the minority shareholders,even though they owned nearly half of the shares in the company'.
Page 80
'53. Grounds for company to sue directors.Section 2:9There are three possible grounds on which the company could base its action against a director. The first is section 2:9. It states that each director is responsible to the legal person for the proper performance of the duties assigned to him. It is interesting that the second sentence of section 2:9 states that each director is individually responsible and liable should the board of directors collectively fail to perform properly, unless the individual director can prove that the shortcoming is not attributable to him and that he was not negligent in not acting to prevent the consequences.'
Page 93
'Section 2:201a(92a) in principle provides the large shareholder with the unrestricted right to demand the buying out of the minority shareholders. However, section 2:201a(92a) subsection 4 makes three exceptions to this rule:if, not withstanding compensation, a defendant would sustain serious tangible loss by the transfer, if a defendant is the holder of a share in which, under the articles,86a special right of control of the company is vested, or if a plaintiff has, as opposed to a defendant, renounced his power to institute such proceedings. In all these cases, the court disallows the proceedings against all minority shareholders.
Page 93
'Section 2:201a(92a) in principle provides the large shareholder with the unrestricted right to demand the buying out of the minority shareholders. However, section 2:201a(92a) subsection 4 makes three exceptions to this rule:if, not withstanding compensation, a defendant would sustain serious tangible loss by the transfer, if a defendant is the holder of a share in which, under the articles,86a special right of control of the company is vested, or if a plaintiff has, as opposed to a defendant, renounced his power to institute such proceedings. In all these cases, the court disallows the proceedings against all minority shareholders. Finally, it is theoretically possible that in exceptional circumstances section 3:13 (abuse of power) or 2:8 subsection 2(the ‘derogatory’ effect of the principles of reasonableness and fairness) prevent the buying out of the minority shareholders. Another difference compared with the rules concerning the settlement of disputes is that the court is under no obligation to appoint experts to report on the price of the shares to be transferred'.
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