SHAREHOLDERS’ LIABILITY AND RESPONSIBILITIES UNDER THE LAWS OF ARUBA
A shareholder must behave reasonably
Shareholders’ liability is of a different nature than directors’ liability. Unlike managing directors and supervisory directors, shareholders of a limited liability company (‘NV’) do not have a contractual or functional relationship with the company and, except for the obligation to pay up their shares, they do not have any duties towards the company. As long as they act in accordance with the principle of good faith, they need not necessarily act in the best interests of the company.
Article 130 Commercial Code of Aruba provides that all persons, supervisory directors and shareholders included, not being members of the board of managing directors of the company, who, pursuant to any provision in the articles of incorporation or pursuant to a resolution by the general meeting or otherwise, for a certain time or under certain circumstances perform acts of management, shall be considered as managing directors in that respect, with regard to their rights, obligations and liabilities vis-à-vis the company and third parties.
The law requires that each shareholder behaves reasonably and equitably in all situations towards all parties connected with the company. This does not imply that shareholders must uphold the company’s interests, or that they have any obligation toward other shareholders. These good faith requirements may, however, e.g. form the grounds for an action to have a resolution of a corporate body voided by court order. The laws of Aruba do not provide for derivative suits whereby a shareholder (plaintiff) sues in a representative capacity on the basis of a cause of action belonging to the company, nor for class actions.
In principle, a majority shareholder can overrule the minority shareholder(s). There is however the limit of having to act in good faith. Although it is not possible to give an exact description of which actions would be acting in good faith and which would not, it could be stated that the guideline for the majority shareholder is that the resolutions, the adoption of which he forces, are adopted for sound (corporate) reasons thereby taking into account the interests of the minority shareholders when weighing the facts leading to his decision.
Unlike Dutch law, Aruban law does not provide for rules for expulsion (a shareholder being forced to sell his shares) and opt-out (a shareholder being forced to acquire shares from other shareholders) resulting from intolerable behavior.
There is no provision in Aruban law empowering the Court to order the company dissolved if an investigation into the affairs of the company shows mismanagement or intolerable behaviour by the shareholders in the event the Court deems dissolution the most appropriate solution.
Karel Frielink
Attorney (lawyer) / Partner
