Conflicts between the BV’s management and shareholders require clear agreements and a timely legal approach.
A conflict between management and shareholders occurs more often than many entrepreneurs think. Although management and shareholders have, in principle, the same objective – the company’s success – tensions regularly arise in practice. These conflicts can lead to standstill, distrust and even legal proceedings. In this article you will read where conflicts between management and shareholders arise and which solutions are possible.
The role of management and shareholders
Conflicts between a BV’s management and shareholders: your rights
Within a BV, management and shareholders each have their own role. The management board is responsible for day-to-day policy and implementation, while shareholders exercise control through the general meeting of shareholders.
A conflict between management and shareholders often arises when expectations no longer align or when powers start to overlap.
Common causes of conflicts
1. Differences of opinion about the company’s direction
A classic cause of a conflict between management and shareholders is a difference of opinion about strategy, investments or growth. Shareholders sometimes want faster returns, while management opts for long-term stability.
2. Lack of transparency
When shareholders feel they are insufficiently informed, distrust quickly arises. This can escalate into a serious management–shareholders conflict.
3. Conflicts of interest
Conflicts also arise when directors allow personal interests to influence decision-making. This undermines trust and can lead to legal action.
4. Distribution of profit and dividends
Discussions about dividend distributions are a common source of tension. Shareholders want distributions, while management wishes to retain profits.
5. Power dynamics within the BV
With multiple shareholders or a minority stake, a conflict between management and shareholders can arise over control and influence.
Consequences of an escalating conflict
When a conflict between management and shareholders escalates, it can have major consequences for the company:
- decision-making comes to a halt;
- investments are postponed;
- employees notice the tensions;
- external parties lose confidence;
- the continuity of the company is put at risk.
What do the articles and agreements say?
In a conflict between management and shareholders, it is essential to consult the articles of association and any shareholders’ agreement. These often contain provisions on powers, information and dispute resolution.
Practical solutions for conflicts
Consultation and mediation
At an early stage, consultation or mediation can prevent escalation. This requires a willingness to put business interests first.
Amending agreements
Sometimes a conflict can be resolved by amending agreements or recording them more clearly.
Legal steps
When consultation offers no solution, legal steps may be necessary, for example to challenge decisions or enforce rights.
International shareholders
In international companies, a conflict between management and shareholders can be particularly complex. Foreign shareholders are confronted with Dutch law and different governance structures.
General information on governance and shareholders’ rights can be found at the Chamber of Commerce.
What can Arslan Advocaten do for you?
Arslan Advocaten assists directors and shareholders with conflicts within the BV. We analyse the situation, advise on solutions and guide negotiations or proceedings where necessary.
Read more about our expertise in business law, our experience with shareholder disputes and international commercial disputes.
Costs and litigation funding in conflicts between management and shareholders
In disputes between management and shareholders, we generally do not work on the basis of free legal aid. Such matters require a careful legal and strategic approach.
However, this does not mean that you must bear these costs yourself. In many business disputes, it is possible to use litigation funding.
We work with an independent litigation funder who – after a substantive assessment of your case – may decide to pay all litigation costs. This includes, among other things:
- attorneys’ fees;
- the court fees;
- any expert costs;
- litigation costs on appeal.
If litigation funding is granted, you as the client do not have to pay these costs yourself. The litigation funder bears the financial risk of the proceedings.
The funder receives a fee only in the event of a positive outcome. For you, this means that litigation may be possible without having to incur costs upfront or during the proceedings.
About the author
This article was written by Onur Arslan, attorney and founder of Arslan Advocaten. He specializes in business disputes, including conflicts between management and shareholders.
Would you like to discuss how your conflict within the BV can be resolved?
👉 View Onur Arslan’s profile and get in touch directly.
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Frequently asked questions
What are the most common causes of conflicts between management and shareholders in a BV?
Common causes include differences of opinion about direction, lack of transparency, conflicts of interest, discussions about dividend distributions and power dynamics within the BV.
How can conflicts between management and shareholders be prevented or resolved?
Early consultation, mediation and amending agreements or articles can help prevent or resolve conflicts before they escalate.
What is the importance of the articles of association and the shareholders’ agreement in conflicts?
The articles and shareholders’ agreement contain provisions on powers, information and dispute resolution, offering guidance in resolving conflict situations.
What are the consequences if a conflict between management and shareholders escalates?
Escalation can lead to a standstill in decision-making, delayed investments, loss of confidence among employees and external parties, and potential risk to the company’s continuity.
Management–shareholders conflict is an important legal subject that you, as a party involved, should be well informed about. In this article we explain what your rights and options are.
