What happens with contract clauses for the price-setting of shares in the context of forced sale proceedings?

The “geschillenregeling” (forced sale proceeding) is a special procedure in corporate law in which a shareholder can oblige another shareholder to sell shares (i.e. a put obligation) or purchase shares (i.e. a call obligation) if there are ‘justified reasons’. Although in practice this procedure is often used when a (serious) conflict between shareholders has arisen, there are some flaws in its practical application.

Perhaps one of the greatest shortcomings is the setting of the price of the shares concerned, in particular the low predictive value of the valuation exercises that are normally carried out by a court expert under supervision of the court. In fact, various experts often make (very) different valuations. The reason for this is obvious, as the result of the valuation exercise depends on the valuation method(s) used, the respective weight of the various valuation methods, the parameters used, and their concrete interpretation. In addition, there is often discussion on whether a minority discount or a control premium should be taken into account, on the concrete reference date based on which the value of the shares should be determined, on the moment from which interest is due, etc.

Taking into account this uncertainty, the question arises whether the parties can make agreements on the price in tempore non suspecto, either in the Articles of Association or in a shareholders agreement. In practice, such a price-setting clause could take the shape of (i) a fixed price, (ii) a price formula, (iii) the appointment of a third party that will be in charge of setting the price, or a combination of these possibilities.

The crucial question in this context is whether the judge is bound by such a price-setting clause. In this respect, a distinction needs to be made between price-setting clauses which have been drafted specifically with a view to forced sale proceedings, and price-setting clauses which have been drafted primarily for another purpose. For the latter type of clauses (e.g. a price-setting clause in the framework of a pre-emptive right or a promise to sell), it is generally assumed that the judge is not bound by them. However, such clauses can be an element that is taken into account in the price-setting process (e.g. the decision of the parties whether or not to take into account goodwill in the calculation). On the binding nature of clauses which are aimed specifically at forced sale proceedings, there is less agreement. Some emphasise that, in the absence of a legal provision, preference must be given to the autonomy of the parties, and hence the judge must respect the price agreements made at the time. Others point out the mandatory nature of the forced sale proceedings, claiming that this renders any binding prior price agreement impossible. A more nuanced view is that, in principle, the judge is bound by a price-setting clause, unless its application would lead to an unreasonable price under the concrete circumstances, in particular in view of the justified reasons that gave rise to the dispute.

Matthias Jans, intui attorneys



For a more extensive discussion of this issue, see: R. Tas, ‘Conventionele mechanismen voor de beslechting van conflicten tussen aandeelhouders. Hoe anticiperen op de toepassing van de wettelijke geschillenregeling (uitsluiting en uittreding) in statuten of aandeelhoudersovereenkomsten?’ in J.-J. Ackaert and J. Vananroye (eds.), Proactief ondernemingsrecht, Antwerp, Intersentia, 2011, 181-210.