Convening a shareholders' meeting correctly is essential for the legal validity of the decisions taken during that meeting. But what happens if a meeting starts earlier than announced, preventing shareholders from participating (on time)? In a recent ruling, the Dutch Supreme Court considered the validity of decisions taken during a meeting that started too early. In this article, you can read about the consequences this may have for decision-making within your company.
What happened in this case?
This case concerned a private limited company whose shares were held by the management companies of four brothers. There were all kinds of family tensions. At some point, one of the brothers convened a shareholders' meeting of his own management company, and this meeting may have started too early. As a result, not all the brothers were present when a decision was taken to amend the articles of association of this management company. This amendment meant that, in the event of death, shares in the management company could also be transferred to nephews and nieces without first having to be offered to the other brothers. In short: a significant change to the company structure.
When one of the brothers (who had no children) subsequently died and the shares were to pass to his nephews or nieces, the other three brothers took action. They argued that the decision to amend the articles of association was null and void and demanded that the shares be offered to them first.
What did the court and the court of appeal rule?
The court dismissed the claims of the three brothers. The court of appeal upheld this ruling. According to the court and the court of appeal, there were defects in the decision-making process if it was taken while the other brothers were not present, rendering the decision voidable. The defect cannot be regarded as a fundamental defect in the decision-making process, so there is no question of nullity.
Please note: the time limit for bringing an action to set aside a decision expires within one year of the end of the day on which the decision was made sufficiently known or the interested party took note of it or was notified of it (Section 2:15(5) of the Dutch Civil Code). And that time limit had already expired in this case.
What was the Supreme Court's ruling?
The Supreme Court ruled that decision-making by a body of a legal entity requires that everyone who has the right to attend meetings, vote or have an advisory vote be given the opportunity to participate in the consultation and decision-making process. According to the Supreme Court, acting in contravention of this rule – including starting a shareholders' meeting too early and taking a decision before other shareholders can participate – is contrary to statutory and/or articles of association rules governing the formation of decisions, as referred to in Section 2:15(1) of the Dutch Civil Code. The Supreme Court therefore also ruled that the resolution is voidable, but not null and void.
The full judgment can be read here: ECLI:NL:HR:2025:978, Hoge Raad, 24/01372
Conclusion
The Supreme Court's ruling makes it clear that starting a shareholders' meeting too early does not render a decision null and void, but voidable. This means that the decision remains valid unless an action for annulment is brought within the statutory period of one year. Shareholders must therefore be alert to procedural errors and take timely action if they feel aggrieved. When convening a shareholders' meeting, it is essential to strictly adhere to the notice period and meeting time in order not to jeopardise the validity of decisions.
Are you unsure whether your decision-making complies with all legal and statutory rules, or are you facing a conflict within your company? The corporate law specialists at SPEE advocaten & mediation are happy to assist you with expert advice.