Transfer restrictions and the appointment of an independent expert

Since 1 October 2012, the obligated nature of transfer restrictions has been abolished for a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid).

Although the starting principle of the law is that transfer restrictions are applicable, it is possible to depart from this principle in the articles of association.

The purpose of transfer restrictions is to prevent unwanted third parties to become a shareholder of a BV, by way of restriction of the transfer possibilities. The restriction can be effectuated by inclusion in the articles of association of (i) a right of first refusal, in which case it is determined that the shareholder wishing to transfer its shares shall first offer to sell those shares to his co-shareholders, or (ii) a right of approval, determining that the transfer of shares shall require the prior approval of a corporate body of the BV.

If the articles of association contain transfer restrictions, it is important to include a provision regarding the determination of the purchase price of the shares. It is advisable to  determine in such provision that if the parties cannot reach an agreement on the price, a certain authority will appoint one or more independent experts who  will set the value of the shares. By setting the value, the price of the shares will  be determined.

In the past, it was possible to designate the Chamber of Commerce (CoC) as the authority appointing an independent expert. However, as of 1 October 2013, the CoC does no longer attends such applications. There is no transitional arrangement applicable in this respect, as a result whereof an independent expert cannot be appointed if the CoC is still included in the articles of association of a BV as the designated authority. In that case, parties should try to reach an agreement regarding the purchase price of the shares or refer the dispute to court for decision, which is often not preferred.

Practice shows that in numerous articles of association the CoC is still designated as the authority to appoint an independent expert. It is advisable to amend these articles of association in the near future in order to update this provision. Alternatives for the CoC are for example the Netherlands Institute for Registered Valuators and the International Chamber of Commerce.

Heussen will be happy to advise and assist with regard to the amendment  of the articles of association.