Empirie en recht

For what it’s worth: shareholder guarantees and expert share valuation

The pricing of shares is the final stage of various corporate procedures and regulations. Often, one or more experts are involved in determining the price. The involvement of an expert is also visible in voluntary transfers under a blocking regulation, which applies when shares cannot freely be transferred. This restriction commonly applies to private companies, such as family businesses and start-ups. The legal starting point according to Article 2:195 paragraphs 1 and 4 of the Dutch Civil Code is that a shareholder, upon offering his shares, has the option to receive a price for his shares equivalent to the value of his shares, as determined by one or more independent experts. The legislator sees the intervention of one or more experts in the price determination as a safeguard for the involved shareholders, especially for the offering (minority) shareholder(s), in ensuring a fair price will be determined. This post now further examines this guarantee more in-depth.

Party appreciation of statutory regulations

Parties are in principle free to give their own interpretation to the statutory offer regulation. They can largely take matters into their own hands when it comes to price determination in voluntary transfers, including the role of the expert(s). Consequently, a question arises regarding how this freedom is dealt with in practice. This inquiry can be addressed through research on articles of association. The pricing and role of the expert are regularly given shape in the articles of association, simply put being the constitutional rules of the company. Our research aims to provide an indication of the role of experts in determining share prices in the context of voluntary transfers based on a relatively limited statutory investigation, which involved researching the articles of association of approximately 500 companies. Our research answers the following questions about the appointment of valuation experts:

  1. Do the articles of association determine that one or more experts must be appointed in the price determination?; And if so:
  2. Who appoints the expert(s) on the basis of the articles of association?;
  3. How many experts must be appointed on the basis of the articles of association?; and
  4. Who bears the costs for the expert(s)’ work on the basis of the articles of association?


The article presents four conclusions. The first conclusion is that all the examined articles of association with a blocking arrangement (involving offering, approval, or a combination of both) contain a provision for the appointment of one or more experts to determine the price (if parties themselves do not reach an agreement on the price). Parties attach great importance to the involvement of an expert or experts, as this ensures the establishment of a fair price (with the help of an independent expert), thereby breaking any potential deadlocks.

The second conclusion is that if parties cannot reach an agreement on the price and the expert(s), they usually prefer the court or the Royal Dutch Notarial Association (KNB) to appoint the expert(s). Other institutions such as the Dutch Institute of Register Valuators (NIRV), the Netherlands Institute of Chartered Accountants (NBA) and the Netherlands Arbitration Institute (NAI) are far less commonly mentioned in the articles of association. The emphasis on the court is noteworthy in the context of a benevolent decision, that is – the court is not always obligated to appoint experts, even though articles of association prescribe so. The emphasis on the KNB is surprising as it is not specialized in share valuations, unlike the NIRV. In addition, it is notable that in some articles of association, the Chamber of Commerce (KvK) is still incorrectly designated as the appointing authority for the expert. This is an undesirable situation as it leads to unnecessary ambiguity regarding the appointment of the expert.

The third conclusion is that most of the examined articles of association (about 2 out of 3) include a statutory provision specifying the appointment of three experts to determine the price if the parties do not agree on the price. Often, this provision also states that three experts will only be appointed if the parties fail to agree on the number of experts. A smaller part of the examined articles of association (about 1 out of 3) contains a provision for the appointment of one expert. In these statutory provisions, there is often no emphasis on party consultation regarding the number of experts. Furthermore, some articles of association require the appointment of two experts or do not prescribe an exact number of experts. The strong preference for three experts, in case of a lack of agreement on the number of experts, can be attributed to a more balanced valuation. The idea seems to be that three experts will provide a better and more broadly supported valuation than one expert. The appointment of three experts may also incentivize parties to negotiate and reach a price agreement themselves (i.e. without an expert report) due to the higher costs involved compared to appointing only one expert. Based on the research results, a recommendation is made to include a provision specifying the number of experts to be appointed.

Finally, it appears that most of the articles of association examined (about 4 out of 5) contain a provision regarding the costs of the expert. This is to ensure clarity in advance about who bears the costs of the expert, which can help prevent or limit conflicts related to costs. However, a small part of the articles of association examined (about 1 out of 5) lack such a provision, suggesting that the party requesting the expert opinion is likely to bear the costs. The article concludes that parties’ preference for the involvement of experts in determining the price of shares is reflected in the articles of associations examined.

This blog is an English summary of a Dutch article by Han Gulyás and Manuel Lokin, ‘De prijsvaststelling van aandelen bij vrijwillige overdracht: een statutaire verkenning naar de rol van de deskundige (deel I)’. The article is part of a broader research project about safeguards for shareholders in the valuation of shares in corporate procedures and regulations. The research project has, in addition to UCALL, been financed by law firm Finch Dispute Resolution and the Empirical Research Institute (ERI) of the UU.