The Dutch right of inquiry as an export product
New regulation, which introduces a right of inquiry in Curacao, took effect from 1 January 2012. Although the regulation follows the same path as its Dutch counterpart, there are some interesting differences.
The flagship of Dutch company law, namely the Dutch right of inquiry, has moored in Curacao. An amended Corporate Code of Curacao took effect from 1 January 2012. The amended Code introduces an inquiry procedure for, inter alia, limited liability companies and foundations. Such a procedure can result in an order of the Joint Court of Justice of Aruba, Curacao and St. Maarten, and of Bonaire, St. Eustatius and Saba for an investigation into the affairs of a company.
First of all, it is important to comprehend which parties are eligible to request an investigation. As far as limited liability companies are concerned, shareholders may file a petition with the Joint Court if they hold at least ten percent of the (issued) stock and/or voting rights in the company. Other parties that may file a petition, are
- the public prosecutor in the general interest
- the trustee in bankruptcy proceedings and
- any person to whom this authority has been granted by the articles of association or in an agreement with the company.
Such an inquiry into the affairs of the company can be ordered by the Joint Court if there are justified reasons to question the soundness of the company’s policy. In addition, the Joint Court can take interim measures. A deadlock at board level is, for example, a justified reason. In case of such a deadlock, the Joint Court can decide to suspend the board member that is, for instance, sabotaging important decisions and thereby proves to be a threat to the continuity of the company.
After having granted the request for an inquiry, the Joint Court will appoint investigators who have full access to all the corporation’s records. The current and former board members, the employees, and the shareholders are legally obliged to fully cooperate with the inquiry. The investigators will present their findings in a report submitted to the Joint Court on which the latter can base a judgment of corporate misuse. Then again, it can, if so requested, order (permanent) measures such as the dismissal of the obstructive board member.
Although the inquiry process follows the same pattern as its Dutch counterpart, it is interesting to see that there are some differences. The Corporate Code of Curacao allows for instance a restrictive amount of interim measures, whereas Dutch law does not give any restrictions concerning such measures. The Joint Court can also impose a penalty if someone, who is legally obliged to cooperate, refuses to cooperate with the investigation. This Court can also rule for a temporary dispossession of one’s voting rights and may order the division of the legal entity. These three measures are not provided for in Dutch law.
It will be interesting to see, as for Dutch practitioners, how the Joint Court will make use of its competences and how it will apply them. The first request for an inquiry, however, has been declared inadmissible.