Why a seller should make sure that non fully paid-up shares are paid up before transfer
The Companies and Associations Code provides in Article 5:66 for private limited companies (“besloten vennootschap” or “BV”’) and Article 7:77 for public limited companies (“naamloze vennootschap” or “NV”) for the joint and several liability of both the transferor and the transferee for paying up not fully paid-up shares. This joint and several liability applies with regard to both the company (or the administrator (“curator”) in the event of bankruptcy) and to third parties (e.g. creditors). This legal provision is mandatory and does not allow parties to contractually determine otherwise. The transferor is only released from this joint and several liability after five years have passed since the (opposability of the) transfer.
The company, the administrator or the creditors can therefore choose which of the two they will hold liable to pay in full: the transferor, the transferee or both jointly and severally.
In case the transferor is held liable, he can seek recourse against the transferee (unless such was contractually excluded). Of course, this recourse claim only offers relief if the transferee is sufficiently solvent.
If a seller wants to be sure that he can no longer be held liable to pay up in full after the transfer of his not fully paid-up shares, he can only obtain this certainty by making the payment in full himself before the transfer of ownership takes place, or by ensuring that the buyer on the day of the transfer, by way of closing action, proceeds to the payment in full.
The most easy option will consist in a payment in full by the buyer as a closing action. Since the buyer most likely will have taken into account in his price determination that the shares have not been fully paid up (and will therefore have deducted the amount still to be paid up from the offered price) a payment in full by the seller before the transfer date will in any case give rise to a higher price to be paid by the buyer. In that case, the buyer can just as well proceed immediately to the payment in full at the transfer date.
In both cases, the payment in full will mean that the buyer will have to make more resources available: he will have to pay a higher price or fully pay-up himself. If the amount to be paid up is substantial, parties should think about this in a timely manner so that the buyer can include this prospect of payment in full in his financing and cash flow plan.
Anneleen Steeno, intui attorneys
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