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The veto is a right inextricably linked to a form of democratic control. The veto has been around for so long that it dates all the way back to the Roman Republic, where the Roman tribunes (representation of the people) could keep senators in line (fun historical fact to find out over Christmas).

An essential addition to still give the minority a form of control; something that can be seen today, for example, in shareholder agreements and also central to an interesting ruling from Nov. 5, 2024. The veto right in principle allows minority shareholders to still oppose certain decisions without requiring a majority. The court ruled in the present ruling that in some circumstances reliance on a veto right may be unacceptable based on reasonableness and fairness.

For advance information, roughly speaking, a “simple” majority is 50+1, a “qualified” majority is then a deviation from that, for example, a 2/3 (66.67%) number of votes or 4/5 (80%) of votes (with possibly other conditions).

In the ruling, minority shareholders of the StudyPortals company VOC and Keen disagreed with the decision of the qualified majority of shareholders to distribute free reserves to shareholders. This was because the shareholders' agreement contained a provision that resolutions could be validly passed by qualified majority, but that in some cases consent of VOC and Keen was required to count as a valid resolution. These included decisions regarding distributions to shareholders. The provision that VOC and Keen had to consent to such decisions effectively meant that they had a veto power within the shareholders' meeting. 

 
Specifically, what happened in this case? The qualified majority of the shareholders voted to distribute free reserves to the shareholders. The distribution was in the amount of €4.5 million. This distribution was actually paid out several days after the resolution, even though VOC and Keen voted emphatically against the resolution and had a veto power. VOC and Keen then turned to the preliminary injunction court to reverse the distribution as soon as possible and to grant an express prohibition that no distributions could be made as long as they did not consent. Indeed, VOC and Keen believed that these free reserves should be used for any acquisitions or other major financial projects consistent with StudyPortals' goals. 

The preliminary injunction court first determined that the resolution was validly passed because there was a qualified majority. However, the question is to what extent VOC and Keen can claim performance of the shareholders' agreement. The defense put forward on this claim includes the fact that VOC and Keen's reliance on the right of veto should be considered unacceptable by the standards of reasonableness and fairness. The court goes along with this. 

The judge's considerations mainly focus on the fact that StudyPortals has not made distributions to shareholders since 2015, but has been making profits for years. The judge cites the point that according to established case law, the principle is that profits should be distributed to shareholders unless it is contrary to the interests of the company. A policy where reserves are held unnecessarily and for a considerable time is also not justified in principle. When looking at the party intentions during the conclusion of the shareholders' agreement, it does not explicitly appear that the shareholders wanted to deviate from this principle regarding the veto power for VOC and Keen. There is a balancing of interests by the court, with the interest of distributing the profits outweighing the interest of preserving a coercive power of VOC and Keen to use the profits for acquisitions, etc. So should this discussion arise in the future, another balancing of interests will have to be done to determine whether the veto is lawful. 

All in all, the right of veto is not an absolute means of making your mark as a minority shareholder. Although of course this only applies when it is unacceptable by the standards of reasonableness and fairness in the interest of the company. However, the right of veto remains of great importance to minority shareholders and will continue to play a major role in most cases and simply be legally valid if agreed upon in the agreement. Just as it has played a role since the Ancient Romans.

So for a minority shareholder, it is a good idea to include a veto right in a shareholder agreement.

Do you have a question about this topic or about corporate law? Please feel free to contact one of our corporate law specialists We are happy to help you! 

In a recent ruling, an employee asked that his summary dismissal be set aside. What was the reason for the dismissal? 

The managing director of the Dutch branch of Pentagon decided to light up a joint at home during a Teams meeting. At the moment the joint was lit, his camera unknowingly turned on, causing the colleagues present to see him with the joint. At first, the employee claimed it was actually a cigar, but then admitted it was a joint and then dismissed the incident as a "stupid mistake". 

That the employee made a mistake, the district judge agreed. Employer had a zero tolerance policy on alcohol and drugs. This policy is in the personnel regulations which was known to employee or at least should have been.

Employee indicated that due to severe neck pain he sometimes uses cannabis in private time and that he only planned to smoke the joint after the meeting. This does not negate the fact that drugs were used during working hours. Moreover, this employee held a senior position. Indeed, the notice of immediate dismissal reveals that he held “the most senior management position of our company in the Netherlands. This obviously goes hand in hand with being a role model within the organization. The employee's behavior showed insufficient respect towards his colleagues. 

The judgment of the subdistrict court is therefore clear: the instant dismissal was justified. The violation of company rules does not go up in smoke, even in an online meeting and even if from a home office. 

What can we learn from this? 

Establish your policy and enforce a zero tolerance policy, because then there can be no discussion about it. 

You can find the link of the ruling here.

Article 16:79(2) of the Environment Act lays down the power for the administrative body to determine that a granted environmental permit will not take effect until four weeks after the day of publication of the decision. This provision is particularly useful for decisions that may cause irreversible consequences.

Such a situation existed in the ruling of the preliminary relief judge of the Gelderland District Court of November 7, 2024. This case involved a granted environmental permit for the construction of a new tree nursery. Part of the permit included the construction of drainage at a depth of no more than 90 centimeters below ground level. The applicant had applied to the preliminary relief judge for injunctive relief, as she disagreed with the granted environmental permit and had lodged an objection. She wanted to avoid irreversible consequences already before her objection had been decided.

It emerged at the hearing that the permit holder had already carried out and completed the drainage work. Thus, irreversible consequences for the archaeological remains in the soil had already occurred because the context of the archaeological remains had been lost during the drainage work.

The court in preliminary relief proceedings ruled that in this case it would have been in the power of the Municipal Executive to make use of the power provided in Section 16:79 (2) of the Environmental Protection Act. Because the Municipal Executive failed to do so and the permit holder started the drainage works immediately after the environmental permit was granted, the applicant could therefore not make a successful request for a preliminary injunction in any case, because the Municipal Executive had given the permit holder the opportunity to immediately start works with irreversible consequences and a preliminary injunction would therefore no longer be effective.

Do you disagree with a granted environmental permit for a site near you and wonder whether it makes sense to file an objection or appeal and request a preliminary injunction? If so, please contact Gerard van der Wende or Fleur Huisman.

You can find the link to the ruling here.

This morning our Labor Law team hosted a special breakfast session for our clients on the topic of “ZZP” and the turnout was overwhelming! We were pleased to welcome a diverse group of clients and relations in an informal setting at the always hospitable Golf Club Capelle.

The subject of “ZZP” was the focus of this morning, which began with a warm welcome with coffee and tea, followed by an extensive breakfast buffet. Then the breakfast session got underway, in which there was plenty of room for knowledge sharing and questions. It was an interactive and inspiring morning in which knowledge sharing and connection were central.

We thank all participants for their presence and for taking the time to attend our breakfast session on this early morning.

In zoning proceedings, it is sometimes necessary to file a request for injunctive relief with the preliminary injunction court, for example, if a zoning ordinance is published for the construction of a new apartment complex right behind your home or business. You file an appeal against the zoning plan. However, an appeal has no suspensive effect, so you fear that construction will already begin during the appeal procedure. You can then request a preliminary injunction from the preliminary injunction court to prevent construction during the appeal procedure. To obtain a preliminary injunction, there must be an urgent interest.

In a ruling on November 12, 2024, the preliminary injunction judge of the Council of State ruled that from now on it will be less likely to be ruled that there is an urgent interest when no permit application has yet been submitted. This case involved an application for injunctive relief in a zoning case.  The applicant feared that an application for an environmental permit would be filed and decided on during the appeal process, resulting in irreversible consequences. The preliminary injunction judge denied the request, alleging no urgency. 

Indeed, at the time of the hearing no permit application had yet been submitted, nor had it become apparent that the building possibilities in the zoning plan gave cause to carry out preparatory work that would actually have irreversible consequences, or at least that could not be carried out without the zoning plan. 

The preliminary relief judge then ruled that the mere statement that there is an intention to submit a permit application is insufficient to assume urgency in a request for suspension of a zoning plan. After all, in practice it appears that only in exceptional cases is a permit application actually submitted in anticipation of the irrevocability of a zoning plan. 

In practice, this means that in zoning plan cases it becomes more difficult to obtain a preliminary injunction. This seems to be possible only when a permit application has already been filed for a (building) activity. 

Do you have questions about applying for preliminary injunctions or about zoning proceedings? If so, please contact Gerard van der Wende or Fleur Huisman. 

You can find the link to the ruling here.

On November 15, 2024, the Supreme Court issued a judgment in the Didam case. In this case, the Montferland municipality wanted to sell a piece of land in Didam, which was owned by the municipality, to a real estate developer. The municipality had also been approached by another real estate entrepreneur, who was also interested in buying the piece of land. The municipality eventually sold the land to the property developer and not to the real estate entrepreneur. The real estate entrepreneur disagreed and initiated summary proceedings against the municipality and the developer. This was because he believed that all candidates should have been given a chance to buy the piece of land. 

In 2021, the Supreme Court ruled on this issue. It considered that a public body seeking to sell a piece of real estate must give everyone interested an equal opportunity to buy the property. The Supreme Court established further rules for that process, known as the “Didam Rules". 

In the follow-up case, in which the Supreme Court has now delivered its judgment, it was necessary to rule on the real estate company's claim, which argued that the purchase agreement between the municipality and the developer should be annulled and that the municipality was allowed to sell the land only if it complied with the Didam rules. The court rejected the real estate company's claim at first instance. The court, on the other hand, granted the claim and set aside the purchase agreement between the municipality and the developer and prohibited the municipality from buying the land without complying with the Didam rules. In addition, the court ordered the municipality to pay damages to the real estate company. 

The municipality and the property developer have both appealed to the Supreme Court. They are of the opinion that the Didam Rules only apply from the date of the (first) Didam judgment, that the violation of the Didam Rules can at most lead to a wrongful act on the part of the government and not to the annulment of the purchase agreement. 

Advocate General Snijders has written an opinion, advising the Supreme Court to overturn the court's ruling. 

The Supreme Court then ruled as follows:

• The Didam Rules do not apply only from the date of the (first) judgment in 2021. The Didam Rules are partly based on general principles of proper administration and there is no reason to limit their applicability until after the (first) Didam judgment. 
• A purchase agreement entered into in violation of the Didam Rules is not void or voidable. Such an agreement is and remains valid even if the municipality did not (properly) follow the Didam Rules when concluding it. 
• However, the (potential) candidate who did not get the chance to buy the plot of land may be able to claim damages from the municipality on the grounds of tort. 

The Supreme Court annulled the judgment of the Arnhem Court of Appeal and referred the case to the Court of Appeal of The Hague for further consideration and decision. 

In practice, this means the following. Even for agreements concluded before the (first) ruling in 2021, governments had to comply with the Didam rules. If a contract was nevertheless concluded without compliance with the Didam Rules, this does not immediately mean that the contract is void or voidable, but it does mean that the prospective buyer who did not get a chance to buy the piece of land can claim compensation based on a wrongful act by the municipality. 

If you have any questions following the Supreme Court ruling, please contact Gerard van der Wende and Fleur Huisman.