Anyone who establishes a corporation must draw up statutes. Often, when a company is established or when the statutes are amended, the notary’s model statutes are used. If there are multiple shareholders, they sometimes enter into a shareholder agreement among themselves. But what happens if the statutes and the shareholder agreement conflict with each other?
Statutes
The statutes of a corporation contain the rules of the corporation and its bodies, including the board and the general meeting. The statutes must be deposited with the Chamber of Commerce and are therefore visible to everyone. They apply to everyone involved with the corporation. Statutes also have ‘corporate legal effect’. This means that if a decision is made that is contrary to the statutes, that decision is in principle null and void.
Shareholder Agreement
Shareholders often have good reasons not to include all mutual agreements in the statutes. Agreements about, for example, the distribution of dividends or the financing of the corporation do not need to be transparent to everyone. Such agreements are then recorded in a shareholder agreement. A shareholder agreement only binds the parties to that agreement.
Discrepancy
It happens occasionally that there is a discrepancy between the statutes and the shareholder agreement. An example is that the statutes stipulate that a certain decision must be made by a simple majority of votes (more than 50%), while according to the statutes a larger majority of votes (for example 67%) is required.
As long as the shareholders are on the same page, there is no problem. But as soon as a decision is made that one or more of the shareholders do not like, the focus will be on the rules in the statutes and the shareholder agreement. If these do not correspond with each other, this is fodder for discussion and sometimes also leads to a procedure. Which regulation takes precedence in such a case depends on all circumstances. This therefore leads to uncertainty.
Precedence Provision
However, such discussions can easily be prevented. Namely, by arranging in the shareholder agreement that the provisions in the shareholder agreement take precedence over the provisions in the statutes. Furthermore, it is advisable to include that the shareholders are obliged, if necessary, to bring the statutes into line with the shareholder agreement. A single provision can thus prevent a lot of uncertainty.
Wille Donker lawyers are happy to assist you in setting up a corporation or drafting a shareholder agreement. But also if you are dealing with a dispute about the interpretation of statutes or a shareholder agreement, Wille Donker lawyers advise you quickly and efficiently.
This news item was written by mr. Gerben Plomp, affiliated with, among others, the Corporate Law Practice Group.
