Is the acquisition of Centric the end of the long-running soap opera surrounding Sanderink?

It looks like the long-running soap opera surrounding IT service provider Centric is coming to an end. After earlier approval by the Authority Consumer and Market (ACM), the Enterprise Chamber gives the green light for the takeover of the company by a consortium of Dutch IT entrepreneurs. According to the Enterprise Chamber, a careful sales process was followed. The interests of founder and sole shareholder Gerard Sanderink were also taken into account.

This means that Sanderink is obliged to cooperate in the transfer of his company’s shares. Centric plays an important role in Dutch society. Centric’s customers are numerous. Companies such as chip machine manufacturer ASML, but also the government and government agencies. Centric provides as much as 70% of Dutch municipalities with software.

In recent years, however, there has been much turmoil surrounding Centric and founder Sanderink. In this article, I outline a timeline of key events and discuss the role of the Enterprise Chamber in this soap opera.

Unrest surrounding Centric and founder Sanderink

Back to the beginning. About 25 years ago, Sanderink founded Centric. Single-handedly he grows several companies into sizeable international enterprises. These are glory years for the entrepreneur from Twente.

Around 2019, however, the first cracks appear. A lot of negative publicity arises around Sanderink. Mainly because of his relationship with the controversial Rian van Rijbroek and many lawsuits, including against his ex. In early 2021, Sanderink realizes that it is better for Centric if he distances himself. Sanderink steps down from the board. However, his influence remains considerable. Centric seizes money that Sanderink had to pay to his ex. Afterwards it turns out that this was done at Sanderink’s request. He also posts all kinds of accusations about his ex on the Centric website.

As a result of the turmoil surrounding Sanderink, several top executives, employees, customers and important financial partners quit the company during those years. Even politicians got involved in the situation. Member of Parliament Omtzigt, for example, asked parliamentary questions about the situation.

In October 2022, Sanderink reappoints himself as a non-executive director with a casting vote. The climax is reached. Because of Centric’s public interest, the Public Prosecutor’s Office (OM) exercises its right of inquiry under Article 345(2) of Book 2 of the Civil Code. It asks the Enterprise Chamber to intervene immediately for “reasons of public interest.

The right of inquiry used by the prosecution: exceptional

It is unique that the prosecution has used its right of inquiry. The last time was over 20 years ago. The OM is not allowed to intervene lightly. The law states that only certain entities have the authority to file a request for an inquiry. The OM – specifically the attorney general – is authorized to make such a request only for reasons of public interest.

Usually an interested party of a legal entity makes a request for an inquiry. For example, a shareholder, trade union or the company itself. The Works Council has no right of inquiry, unless it has been agreed with the entrepreneur or is included in the legal entity’s articles of association. Also, the Enterprise Chamber cannot initiate an inquiry procedure on its own initiative.

The right of inquiry provides an opportunity to investigate the course of events and policies within a company. The inquiry procedure is conducted by the Enterprise Chamber of the Amsterdam Court of Appeal. If the Enterprise Chamber determines that there is mismanagement, it can take immediate action. Examples of measures are the suspension or dismissal of directors or supervisory directors, the temporary transfer of shares for the purpose of management and the dissolution of the legal entity.

Sanderink loses control of Centric as director and shareholder

The Enterprise Chamber comes to a harsh conclusion in 2022: Sanderink can no longer stay on at Centric, due to his irrational behavior. The Enterprise Chamber appoints a temporary board and control of Sanderink’s shares is transferred to a temporary administrator. However, not all of his shares are transferred. Sanderink retains control of one share. This gives him no influence over Centric’s policy, but he retains the right to be present at the shareholders’ meeting. In principle, this makes it possible to delay decision-making. It soon becomes clear that the directors, Works Council, customers and employees agree that Sanderink should never return to the company.

Several months later, the temporary management requested the Enterprise Chamber to transfer Sanderink’s last share to the temporary manager. Sanderink’s presence at the general meetings would hinder a healthy relationship between the company and its customers. Also, the temporary board would be reticent in connection with the public conflicts of Sanderink and his ex. The Enterprise Chamber grants the request. Sanderink comes to full separation from his company.

Nevertheless, Sanderink is trying to maintain control of his company. He is filing a request with the Enterprise Chamber to see Centric’s financial records. He hopes this will allow him to sell the company. However, the request is denied. The court weighs in that Sanderink has previously sent emails and letters containing company-sensitive information to the Lower House. Meanwhile, Sanderink continues to receive negative publicity. For example, he accused the temporary board of ties to the Russian mafia, was suspended as a director at two other large companies: Strukton and Oranjewoud, he has now lost more than 30 lawsuits and had more than 20 lawyers.

Approval for Acquisition to consortium of Dutch IT entrepreneurs: also exceptional

Now that the Enterprise Chamber has approved the acquisition of Centric, Sanderink is definitely losing his company. It is unusual and drastic to sell the company against the will of an interested party. This is also emphasized by the Enterprise Chamber. The sale must therefore be necessary in the interests of the company.

According to the Enterprise Chamber, the sale of Centric was done fairly and carefully. This at least seems to put an end (for now) to the long soap opera.

Conclusion

The right of inquiry under Article 345(2) of Book 2 of the Civil Code is a powerful remedy that allows the Enterprise Chamber to take all kinds of action. It becomes a trickier story if the entities that can invoke the remedy do not do so. The power to initiate an investigation is missing from the Works Council, nor can the Enterprise Chamber initiate an investigation on its own initiative.

As a safety net, the prosecution – specifically the attorney general – can act. However, this can only be done if there are reasons of public interest. The question is whether there is such a public interest in the case of a smaller company. Perhaps this case puts the right of inquiry and the article in a different light. Who knows, then, maybe things will change in the future….

The Enterprise Chamber also appears to consider itself competent to force a transfer of a company. This infringement of Sanderink’s right to property could take place, according to the Enterprise Chamber, because there is a sound legal basis for it, it is in the public interest and there is a “fair balance” between the requirements of the public interest and the protection of Sanderink’s fundamental property right. In Sanderink’s case, not the shares Sanderink held in the Holding were sold, but the Holding sold the shares in its participations. In this way, the company run by Centric was sold. The inability to force shareholders to transfer their shares to the other shareholder(s) or a third party has been cited by many as a fact and also the major shortcoming of the right of inquiry. The question is whether with this ruling the Enterprise Chamber has also opened the door for a transfer of the shares placed under management by the Enterprise Chamber.

Questions?

The actions of Enterprise Chamber can have far-reaching consequences. Do you have questions about the Enterprise Chamber? Or do you have other questions as a result of this article? Please feel free to contact one of our attorneys by mail, phone or fill out the contact form for a free initial consultation. We will be happy to think along with you.