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Corporate I Fate managing director in the clutches of international law.

Few would have predicted that issues surrounding international law would be critical for the question whether the dismissal of a managing director was effective, or not. The Chinese parent company of a Dutch company (a BV) was dissolved prior to the dismissal of the managing director of that BV. The laws of the Netherlands do not lead to an automatic transfer of the BV-shares (including voting rights) to third parties such as directors or shareholders of that BV. Chinese law however, does entail such automatic transfer of shares (including voting rights). Notwithstanding the fact that the most relevant legislation indicates that the shares could not have been transferred automatically, one of the Dutch Courts of Appeal ruled that there was no reason to limit the applicability of the Chinese legislation directing in the opposite direction. Hence, the Court of Appeal ruled that the dismissal of the managing director as resolved in the BV’s “shareholders”-meeting (by the director of the dissolved Chinese parent company) was effective nonetheless. The managing director of the BV has not lodged an appeal in cassation with the Dutch Supreme Court, which means that this judgment is binding between the parties, but not decisive in similar cases.