Squeezing out a co-founder by cancelling and issuing shares? Null and void
Can shareholders with a large majority push out a co-founder by cancelling all existing shares and issuing new ones only to themselves? No, according to a judgment of the Amsterdam District Court of 7 October 2026. Both resolutions are null and void.
The facts
Three shareholders who together held 94.11 percent wanted to end their cooperation with the co-founder who held 5.89 percent of a Dutch private limited company (BV). After he had rejected buy-back offers of EUR 5.89 and later EUR 58.90, the general meeting resolved to cancel all existing shares without repayment and to issue new shares, which were allotted only to the other three.
Contrary to law and the articles
The court considers that both resolutions conflict with the law and the articles of association and are therefore null and void (Article 2:14 of the Dutch Civil Code). His pre-emptive right had not been limited or excluded (Article 2:206a), the articles only allow this cancellation with repayment, and a BV without any transferable share does not fit within Article 2:175. The argument that his shares had not yet "vested" fails: the deed of incorporation allotted them unconditionally. A counterclaim of up to EUR 275,000 based on "bad leaver" terms also fails, because the conditions discussed had never been agreed. The cancellation must be reversed within eight weeks, subject to a penalty.
What this means
Vesting and leaver arrangements only work if they are properly laid down, in the articles of association or in a signed agreement. Without that basis, the majority cannot simply create the outcome by shareholders' resolution.
Practical tips
Lay down vesting, good and bad leaver arrangements in the articles or a signed shareholders' agreement at the start.
Check pre-emptive rights and the articles before cancelling or issuing shares.
Is a co-founder leaving? Agree on a transfer with a valuation mechanism rather than resorting to share manoeuvres.
Setting up or restructuring a company with co-founders? See our specialisations or get in touch with us.
This blog provides general information and is not legal advice. For advice on a specific situation, please contact us.
