Within a company different conflicts can arise. These can include conflicts between the shareholders, at an administrative level or between the members of the supervisory board.

 

Sometimes these conflicts lead to a situation in which it becomes impossible to make decisions and to ensure sound management. Fortunately, the law provides a solution for correcting misconduct within the company, the so-called investigation proceedings: an investigation into the course of events and the policy of the company.

 

Historical perspective

In 1928, the right of investigation was codified in the Dutch Commercial Code. In that period, the Netherlands consisted of the territory of the Netherlands and that of the overseas colonial parts of the Kingdom: the Dutch East Indies, Suriname and the former Netherlands Antilles. On October 1954, when the  Charter for the Kingdom of the Netherlands came into force, the Dutch colonial era came to an end. On 25 November 1975, Suriname became independent. However, the Surinam right of investigation, with Dutch roots, remained effective. Up to this day, the Surinam right of investigation is laid down unchanged in Articles 132 through 140 of the Surinam Commercial Code.

 

The Surinam right of investigation in brief

The Surinam investigation proceedings consists of several steps and starts with filing an application to the subdistrict court. Authorized to file an application for an investigation is/are one or more shareholders individually or jointly holding at least twenty percent of the shares. The articles of incorporation may stipulate a lower percentage. In this connection, it should be noted that, pursuant to the law, the Surinam right of investigation only applies to companies that allow bearer shares. For companies that do not allow bearer shares, the articles of incorporation may nevertheless grant the right of investigation. The law is unclear about whether the bearer shares should actually have been issued, or whether it is sufficient that the articles of incorporation offer the possibility of issuing bearer shares. Based on the right of investigation, as it entered into force in 1928, the latter option seems the most obvious. Namely, that it is sufficient that the articles of incorporation allow the issue of bearer shares. Finally, it is important that the person(s) filing the application, before turning to the subdistrict court, has/have asked the board, the supervisory board (if applicable) and the general meeting of shareholders for an inquiry in vain.

 

If an application is accepted for processing, it will be handled with ‘the greatest speed’. If there are legitimate reasons to doubt a correct policy and a proper course of events, and the applicant has provided sufficient security for the costs relating to the investigation, the application will be rejected. When granting an application, the subdistrict court will appoint one or more persons, who are not a managing director or a supervisory director of the company concerned, to conduct an investigation into the policy and course of events of the company. If the company refuses to cooperate, the subdistrict court will order the company to cooperate in the investigation. This happens at the request of the persons having the right of investigation, after having questioned or duly summoned the board of the company. Such an order could lead to the public authorities granting their assistance and makes it possible to enter a house (if necessary).

 

In principle, the costs of the investigation proceedings are payable by the applicants. However, after having taken cognizance of the report, the court may decide that these costs will be fully or partially refunded by the company, by one or more of its supervisory directors or managing directors or by one or more persons employed by the company.

 

Contrary to, for example, the Dutch regulations, the Surinam right of investigation does not offer the subdistrict court the possibility to grant injunctive relief. Thus, for example, the subdistrict court cannot dismiss or suspend managing directors or supervisory directors or deprive them of their right to vote. The legal wording (only) underlines the original character of the right of investigation; conducting an investigation to determine whether there is mismanagement, as described based on Dutch concepts. If the investigation shows that there is mismanagement, this also is a good step towards possible liability proceedings against those who are responsible for this mismanagement.

 

The Surinam right of investigation compared to the right of investigation within the Kingdom of the Netherlands

Throughout the years, the right of investigation has been modernized several times in the Kingdom of the Netherlands, with the exception of Aruba. The Surinam right of investigation defines the purpose of the investigation proceedings as ‘the conduct of an investigation into the policy and course of events of the company, either in its entirety, or with respect to any part thereof or a specific period’. In essence, the purpose of Surinam right of investigation does not differ from the purpose of the law applicable within the Kingdom of the Netherlands. This does not mean that, over the years, significant substantive differences have developed between the modernized regulations of Curaçao, St. Maarten and the Netherlands on the one hand and the Surinam right of investigation on the other. For example, the regulations in the first three countries stipulate that the court may grant (often radical) injunctive relief, such as suspension, temporary appointment of new managing directors and the temporary transfer of shares entrusted to the management of the company. This is also often used in practice. As indicated above, this possibility does not yet exist in the Surinam version of the investigation proceedings. The modernized regulations also do not contain the Surinam restriction that the right of investigation is only possible in companies that allow bearer shares.

 

The future of the Surinam right of investigation

A new Book 2 of the Surinam Civil Code is being developed in Suriname. Insofar as the right of investigation is concerned, the legislative text is almost identical to the modernized investigation regulations of Curaçao and St. Maarten. These regulations are closely connected with the Dutch right of investigation. It is still unclear when the new right of investigation, as described in the draft text of Book 2 of the Surinam Civil Code, will be implemented. So for now, everything remains as it was. Or, as they would say in Suriname: Foe now, ala sani o tang na srefi.

 

 

By Brian Zending, attorney at law at VanEps Kunneman VanDoorne