13.2 Three types of inquiry proceedings

I make a distinction between three types of inquiry proceedings: the curative inquiry, the inquisitorial inquiry, and the antagonistic inquiry. The curative inquiry is aimed at putting the house in order at the legal entity’s enterprise. This type of inquiry primarily takes place at small companies where an impasse has been reached. Impasses also occur at larger companies, for example where the company runs into financial difficulties and there is an urgent need to raise extra risk-bearing capital, but the company and the shareholders cannot reach agreement on how that should be done. A curative inquiry may also take place if confidence has been lost between the corporate bodies of the legal entity, such as between the shareholders on the one hand and the management board and supervisory board on the other. The same applies if minority shareholders or depositary receipt holders use the inquiry as an instrument to prevent potential abuse of power by the majority of shareholders. A curative inquiry can also offer a solution to a breakdown of trust between the employees or their representatives and the legal entity. A petitioner will seek recourse to inquiry proceedings if he expects that this can break through the impasse or restore relations, either because the investigators make recommendations to that end which are accepted by all parties, or because the Enterprise Chamber orders certain measures.

An inquisitorial inquiry focuses on disclosing the state of affairs at the legal entity and determining who is responsible for potential mismanagement. In most cases, an inquisitorial inquiry will relate to a legal entity that has gone bankrupt. It may also involve a legal entity that has survived a crisis and has risen again like a phoenix from the ashes.

With an antagonistic inquiry, the inquiry proceedings are used as a means to battle with different (but frequently not all) stakeholders involved in a company. It focuses on the individual interests of the parties who are directly involved, which are usually legitimate in themselves, and not necessarily on the company’s interests. Inquiries of this kind occur primarily in connection with hostile takeovers or as a means to enforce performance of agreements. Antagonistic inquiries only occasionally lead to an actual investigation, because in many cases, the dispute is settled before the investigation stage.

Naturally, the three types of inquiry outlined here are archetypes. The distinction between them is not sharp. To a degree, every inquiry is inquisitorial, in the sense that the legal entity and its officers are required to cooperate with the investigation. Every inquiry is also antagonistic to a degree, as it follows from the nature of the case that two or more parties will be involved. Furthermore, the type of inquiry can also change. The point is that almost every inquiry primarily has the characteristics of one of the three archetypes. Consequently, where I refer to a ‘curative’, ‘inquisitorial’ or ‘antagonistic’ inquiry, this means an inquiry that primarily has one of these three characteristics. The distinction between the three types is gradual, which means that any consequences that can be associated with this distinction should not be regarded as absolute. There is no black-and-white distinction, but there are various shades of grey.