13.1 Introduction

Since 1971, corporate inquiry proceedings have gradually become the primary process for settling company law disputes. In these proceedings, the Enterprise Chamber of the Amsterdam Court of Appeal can establish, in a declaratory judgment, that a legal entity was mismanaged and who is responsible for this mismanagement. The Enterprise Chamber can also order certain measures and rule that present or former directors and employees who are responsible for the wrong policy or for an unsatisfactory conduct of business have to reimburse the party that paid the costs of the inquiry.

At the core of a corporate inquiry is the investigation. The Enterprise Chamber appoints investigators to investigate the legal entity’s policy and conduct of business and to issue a written report. The Enterprise Chamber can only establish mismanagement and order measures based on this report. Likewise, the Enterprise Chamber may only permit the company to recover costs if the report provides a basis for this.

Corporate inquiry proceedings were introduced in 1971 as a way to put the house in order if things were not going well in a legal entity and its business operations. The objectives of the corporate inquiry have been further expanded in case law. These objectives are – in the terms used by the Supreme Court – to restructure and restore sound relations by reorganisation measures within the legal entity’s business, to uncover the true state of affairs, to establish responsibility for any mismanagement found, and to protect a minority of shareholders and depositary receipt holders against real or potential abuse of power by the majority. In the first objective of inquiry proceedings defined by the Supreme Court – putting the house in order – the central issue is the legal entity’s interests. In the other objectives named by the Supreme Court, the legal entity’s interests move more into the background. These other objectives enable the petitioner to use inquiry proceedings as an instrument to realise aims that lie outside the right of inquiry. Case law of the Supreme Court has developed in such a way that a petitioner may serve his own proprietary interests through the inquiry as long as one or more of the objectives of the right of inquiry can be realised.

The fact that petitioners may use inquiry proceedings as an instrument to serve their own proprietary interests increases the need of the defendants – i.e. the legal entity and its current or former directors and employees – for legal protection. This need for legal protection arises in three different phases:

My research focuses on the investigation phase. Legal protection is something to cherish, but has the disadvantage of making the investigation more formal, longer to complete and, as a result, more costly. That may be desirable for some inquiry proceedings, but for others it is not if speed is called for or the financial means of the legal entity are limited. For this reason, it is important to make a distinction between the different types of inquiry proceedings.