Developments in shareholder disclosure requirements
In a number of recent judgments, the Enterprise Chamber of the Amsterdam Court of Appeal established that a company’s duty of care towards its shareholders may require that such shareholders are duly and timely informed of conflict transactions. This may in turn require that the company proactively informs its shareholders prior to entering into the relevant transaction, even if the shareholders have not (yet) posed any questions.
Relevant cases generally related to transactions concluded between the company and its majority or controlling shareholders(s) that were represented at board level. The company’s duty of care is intended to protect (typically: minority) shareholders without board representation, who otherwise would not – or, at least, not timely – be informed of these transactions that could arguably prejudice their position.
Mitigating exposure to litigation
Noting a tendency towards broadening the scope of conflicts of interests doctrine regarding related party transactions, generally a more prudent approach should be taken. Duly observing such shareholder disclosure requirements, if applicable, and the other measures set out in this trend report may help mitigate the risk of shareholders successfully challenging related party transactions.
Want to learn more? A trend report in which we share our thoughts on how this development may impact Dutch corporate governance standards, is freely available below.