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Sedated animals in company law? Exclusion of a shareholder!

Gepubliceerd op 23/12/2024

Running a company – and acting as joint shareholders – is an incredibly close form of collaboration.

Married partners (often the case in liberal professions) will often jointly set up a company to work together. However, if the shareholding partners then decide to divorce, there is certainly a lot more involved to divide up the business.

In the court ruling below, it was especially the facts unrelated to the divorce that were put forward to decide in favour of an exclusion in accordance with Art. 2:63 of Company Law [Wetboek van Vennootschappen en Verenigingen (WVV)].

Art. 2:63.

One or several shareholders of a private limited company who jointly own securities representing 30% of the votes connected to the total existing securities, or representing 30% of the profit sharing rights, can demand the court to order a shareholder to transfer their securities to the claimants providing there are well-founded legal reasons.

One or several shareholders of a public limited company who jointly own securities representing 30% of the votes connected to the total existing securities, or shares whose nominal value or book value represents 30% of the company’s capital, can demand the court to order a shareholder to transfer their securities to the claimants providing there are well-founded legal reasons.

**I. Facts of the case:**

– Lucas De Smet and Sophie Van Den Berghe, both veterinaries, married on 6 July 1996. On 16 October 1998, they founded the company BV De Groene Weide to run their jointly owned veterinary practice.

– Their divorce became final on 26 October 2020.

On 4 September 2020, prior to the decree absolute, De Smet summoned Van Den Berghe with the aim to have her excluded as a company shareholder. Both parties agreed to appoint the company auditor Tom Verhoeven to value the shares. Whilst awaiting the auditor’s report, the case was placed on the cause list.

– On 24 December 2020, De Smet submitted a petition in accordance with Art. 19 of the Judicial Code. He stated that Van Den Berghe severely disrupted the running of the business and petitioned the court for protective measures. On 10 February 2021, it was decided to appoint a mediator, Jan Peeters. This mediation, however, did not result in any agreement, and on 21 May 2021 Peeters reported that no progress had been made.

**II. Legal framework and proceedings:**

– The initial summons was served on 4 September 2020 and recorded on 8 September 2020. The ruling of 14 June 2021 determined that the case would be heard at the public hearing of 27 July 2021. The assessment by the court of the dispute took into account the final conclusions of both of the parties and the documentary evidence they had submitted.

– The court adopts the Act of 15 June 1935 for the use of languages in legal cases.

**III. Claims of the parties:**

**Lucas De Smet:**
– De Smet requests that the ruling be declared as opposable to BV De Groene Weide and that the ruling be declared as provisionally enforceable, in order to ensure that the measures may instantly be enforced.

– He also requests that Van Den Berghe be ordered to transfer her shares against payment of EUR 210,500 within the week of the court ruling being served, subject to the expert report of the company auditor Jan Jansen.

– He requests that Van Den Berghe be ordered to pay the legal costs.

**Sophie Van Den Berghe:**
– She disputes the validity of the claim and petitions the court to declare De Smet’s claim as unfounded.

– If the court does decide upon a transfer, she requests that the share value be determined and updated by Verhoeven up to the time of the court verdict.

– She claims litigation costs of EUR 1,440.

**IV. Assessment by the court:**

**Claim to exclude Sophie Van Den Berghe:**
– De Smet argues that Van Den Berghe is guilty of acting against the interests of the company. He accuses her of illegally transferring company funds to her private account, paying private expenses (e.g. home equipment and legal costs) from company funds, and referring customers to other veterinaries.

– In addition, he states that Van Den Berghe neglected her professional obligations by not sharing clinical information about patients and even leaving a sedated animal at the practice without any other veterinary being present. The latter is a serious breach of the code of ethics.

– In addition, he accuses her of disrupting the working atmosphere by turning staff against each other and by making threatening and humiliating comments, which has led to an investigation by Mensura following a complaint from members of staff.

– The court rules that De Smet sufficiently substantiates his accusations with documentary evidence and witness statements from the staff. Van Den Berghe, however, has not submitted any concrete evidence to oppose the accusations.

**Legal grounds for exclusion:**
– The court refers to Art. 2:63 of Company Law [WVV] which permits the exclusion of a shareholder if there are well-founded reasons that jeopardise the fundamental interests or the continued existence of the company.

– The court considers that the relationship between De Smet and Van Den Berghe is not only severely and profoundly strained, but that it also jeopardises the continued existence of the company. The court concludes that the conduct of Van Den Berghe as a shareholder has a negative impact upon the operation and the reputation of the practice and that her exclusion is in the company’s interests.

**Share valuation:**
– The court bases the share valuation on the reports compiled by the company auditor Verhoeven. He calculated both the net substantial value (EUR 392,046) as well as the profitability value (EUR 842,000) of the shares. The court applies a correction to the profitability value, in view of the departure of two of the three veterinaries from the practice.

– Due to the fact that Van Den Berghe objects to a non-competition clause and that the court notes that her departure and competition will have an impact upon the business, the profitability value is being corrected by 25% to EUR 631,500. The final value of Van Den Berghe’s shares is determined at the average of the corrected profitability value and the substantial value, i.e. EUR 255,886.50.

**Request to submit documentary evidence:**
– De Smet requests that Van Den Berghe submit the report of another company auditor, Jan Jansen. The court rules that this report is not relevant, because it was not drawn up on behalf of both of the parties. The court finds that it can determine the share valuation based on the current documentary evidence and Verhoeven’s expert report.

 

**Order to pay costs:**
– The court orders Van Den Berghe to pay the legal fees, given that it has ruled largely in De Smet’s favour. This includes the costs of the summons (EUR 282.40) and the litigation costs (EUR 1,560).

**V. Court ruling:**

– The court rules the claim of Mr Lucas De Smet to exclude Mrs Sophie Van Den Berghe to be well-founded and orders that she transfer her shares in BV De Groene Weide to him against payment of EUR 255,886.50 within 8 working days from the court verdict being served.

– The court rules that this decision acts as legal title for the formalities linked to the share transfer.

– Mrs Van Den Berghe is ordered to pay the legal fees, and the court declares the verdict opposable to BV De Groene Weide and provisionally enforceable.

– Finally, the court orders Van Den Berghe to pay the cause list duties of EUR 165, as charged by the Finance Federal Public Service.

This ruling emphasises the extent of disruption in the collaboration and the negative impact upon the continued existence of the practice caused by the conduct of Mrs Van Den Berghe. The court emphasises that the exclusion is necessary to protect the business operation and to enable the company to continue to operate without any further hindrance.

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