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Recent Dutch court judgement on drag-along provisions: a case of organic food retailer

Similarly to other jurisdictions, Dutch shareholders agreements typically include exit mechanism provisions, including the so-called ‘drag-along’ and ‘along-along’ rights. In a nutshell, a drag-along right enables a majority shareholder to force a minority shareholder to join in the sale of a company. The majority owner doing the ‘dragging’ must give the minority shareholder the same price, terms, and conditions as any other seller.  By the same token, tag along rights, being the inverse of  drag along rights, can be exercised when a majority shareholder sells their shares, thus enabling a minority shareholder to participate in the sale at the same time for the same price for the shares.

One of the most recent Dutch cases relating to an exercise of the so-called ‘drag-along right’ concerns a niche organic food retailer, Marqt, whose shops could be seen on highstreets in all major Dutch cities.

As the time of financial hurdles, the founders and minority shareholders of Marqt opposed the exercise of the ‘drag-along right’ by the majority shareholders citing they needed more time for finalize the sale they were working on at their end.

Having considered all the circumstances in the case, the Dutch court ultimately ruled that exercise of the ‘drag-along right’ by the majority shareholders justified full compliance with the relevant shareholders agreements.

A full text of the judgement (in Dutch only) is available here.

Are you a founder or investor and interested to learn more how to best structure a shareholders agreement to protect your best interests? STRIK TAX|LEGAL is a boutique, multilingual consulting firm that advises on matters of Dutch corporate and tax law and is happy to assist its clients in navigating legal and tax landscape in the Netherlands.

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