Proxy voting and applicable law

By Karel Frielink
Curacao law follows the incorporation theory
Proxy voting allows shareholders to vote when they cannot attend (or do not wat to attend) a shareholder meeting. What law applies to such a proxy to vote?
The 1978 Convention on the Law applicable to Agency (Verdrag betreffende het toepasselijke recht op vertegenwoordiging 1978) does not apply to Curacao. The question of the law applicable to a power of attorney with respect to the voting rights on shares must be answered on the basis of Curacao’s private international law on legal entities.
Curacao law follows the incorporation theory (incorporatieleer), which means that a legal entity in several respects, for instance whether it is validly incorporated, who is authorized to represent the entity etc., is governed by the laws of the state in which it has its statutory seat (this in contrast with the ‘siège réel‘-theory, under which the place where the legal entity’s judicial and economic activities are centered is decisive). Therefore, a company with its statutory seat in Curacao is governed by the laws of Curacao.
The Dutch Supreme Court (20 April 1990, NJ 1991, 560; Natco Trust/mr Thesseling q.q.) ruled that the question whether a power of attorney of a shareholder in an NV to exercise shareholder rights, including voting rights, can be made irrevocable, is so closely linked to the validity of resolutions that it is governed by the law governing the structure and organization of the company and its organs, i.e. the law under which the company is incorporated. In this context, it does not matter where the proxy holder is domiciled or where he carries out his business activities. A choice of law does not affect this rule either. This case was decided according to the laws of the (former) Netherlands Antilles. As far as the laws of Curacao are concerned, it should be assumed that the ruling of the Supreme Court is still applicable.
If a dispute about a proxy to vote on shares in a Curacao company is brought before a court in Curacao, it will therefore apply the laws of Curacao.
Karel Frielink
(9 March 2020)

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