Shareholder exit: how to avoid costly legal disputes
Blog
27 May 2025
Two options in shareholder disputes: articles of association or court?
The CCA allows entrepreneurs to define in their articles of association how shareholders can exit or be excluded without involving the courts. This mechanism offers a more efficient alternative to the legal dispute resolution procedure, which typically requires court intervention and is often lengthy.
Why opt for a statutory arrangement?
- Speed and efficiency: A procedure based on the articles of association is generally much faster than a court case, which may take years.
- Cost savings: No expensive legal fees or court costs with an out-of-court solution.
- Discretion: Conflicts remain internal and are not aired in a public courtroom.
- Predictability: Conditions and procedures are agreed upon in advance.
- Tailored solutions: The arrangement can be fully adapted to the specific needs of the company and its shareholders.
- Control over valuation: The company can define how shares are to be valued and how the price is determined, offering financial certainty.
Exit by articles of association: flexibility as an asset
Exit at the expense of the company’s assets is a unilateral, out-of-court termination of the corporate relationship by the shareholder. This is possible in a BV, provided it is explicitly foreseen in the articles of association.
There is considerable freedom to determine the terms of exit in the articles. While the law provides certain default principles, these can be tailored. Exit can even occur without justification, unlike exclusion, which requires a lawful or or another reason stated in the articles.
This allows entrepreneurs to leave the company relatively easily without needing a court procedure or showing valid cause—useful in cases of dysfunctional collaboration without severe conflicts.
Exclusion by articles of association: procedure and safeguards
Exclusion at the expense of the company’s assets is a unilateral, out-of-court termination of the corporate relationship by the company through a resolution of the general meeting. A shareholder may be excluded “for a lawful reason or another reason stated in the articles.”
Lawful reasons may include:
- Serious breaches of obligations toward the company
- Actions that harm the company’s interests
- Irreconcilable disagreements obstructing operations
- Conduct endangering the company’s continuity
The articles can also include additional grounds for exclusion, such as violent or criminal behavior. Neutral criteria may also apply, such as failing to meet agreed quality or membership standards.
Other shareholders must ensure the targeted shareholder’s right to defend themselves is respected. A shareholder whose exclusion is on the agenda of the general meeting must be heard.
For companies, this offers a powerful tool to remove problematic shareholders without the cost and uncertainty of court proceedings. Exclusion criteria that are clearly specified in the articles of association also allow for a preventive approach.
The separation share: key difference and financial advantage
When a shareholder exits, their shares are repurchased by the company in exchange for a separation share, after which the shares are cancelled. The law provides a default valuation method, but the articles may define an alternative.
A key difference from the judicial court procedure is how shares are valued. In court, the price is generally based on the going concern value. Under the system defined in the articles of association, this is not mandatory. The CCA valuation method results in a significantly lower separation share and may even be contractually excluded. The payment term can also be set in the articles.
This creates a substantial financial advantage for the company and remaining shareholders. A clearly defined valuation method in the articles helps prevent the company from being financially drained upon a shareholder’s departure—especially important in smaller companies.
Which exit procedure applies? Articles vs. court
Exit and exclusion under the company’s assets coexist with the legal dispute resolution and do not override its mandatory character. Both systems exist alongside one another.
Doctrine and case law are divided on the hierarchy between these systems. Some argue the judicial procedure prevails due to its mandatory nature. Others believe the arrangement in the articles of association takes precedence, citing the subsidiary nature of the dispute resolution and the binding force of contracts. We continue to monitor this closely.
Certainty in shareholder disputes starts with your articles
Want to avoid legal uncertainty in case of shareholder conflict? Then a clear arrangement in the articles of association on exit and exclusion is essential. Including this in your articles of association today helps prevent costly procedures tomorrow.
At De Groote – De Man, our corporate law attorneys are ready to review your articles and adjust them where necessary. This way, you build clarity, stability, and peace within your company.
Contact us for tailored advice, with no obligation.
Special thanks to our experts Jolien Van Lancker and Floor De Beus for their insights and practical experience.
Read more about Jolien Van Lancker.
Read more about Floor De Beus.
