The Cost Regulation in Inquiry Procedures: Practical Risks for Entrepreneurs

In the world of corporate law, inquiry procedures are an important tool for addressing mismanagement in companies. However, these procedures often bring to light a forgotten but crucial aspect: the costs. How are these costs distributed and what are the financial risks for shareholders, directors, and the company itself? In this blog post, we will discuss the cost arrangement in inquiry procedures, supported by recent rulings from the Enterprise Chamber.

Who Bears the Costs?

According to Article 2:350 paragraph 3 of the Dutch Civil Code (BW), the investigation costs are primarily the responsibility of the legal entity itself. This means that the company must bear the costs of the investigation and must also provide security. This may sound straightforward, but practice shows that these costs can quickly escalate, especially in complex cases.

Take, for instance, the case involving B.V. Huizenmij (ECLI:NL:GHAMS:2026:852) where the investigation budget was increased from €59,750 to €74,750. This was the third increase of the budget in a case where the reporting took more time than initially presented. The parties involved agreed to this increase, which ultimately led to an increase of no less than 75% compared to the original estimate. This illustrates how costs can spiral out of control during an inquiry procedure, something that entrepreneurs often do not realize.

Reimbursement from Directors

Another crucial aspect of cost recovery is Article 2:354 BW. This article states that directors can be held jointly liable for investigation costs in cases of mismanagement. This means that a lighter accusation may be sufficient: it is not necessary to establish serious wrongdoing, but merely a personal accusation for improper management. This is a significant step compared to the conditions of Article 2:9 BW, where serious wrongdoing is required for liability.

In the Marrobel case (ECLI:NL:GHAMS:2024:2969), the Enterprise Chamber condemned the involved directors to jointly pay €106,025 in investigation costs. This mismanagement was the result of a conflict of interest, poor administration, errors in published annual accounts, and unjustified payments to affiliated parties. This made it clear that directors are not only responsible for the daily operations but can also be held jointly liable for the costs of such an investigation.

Financial Risks and Underestimation

The practical risks of this cost arrangement are often underestimated by shareholders and directors. While many entrepreneurs may think that investigation costs have a limited impact, the actual costs in SME cases can vary between €15,000 and €50,000, and in more complex cases even exceed €1,000,000. This means that a seemingly small dispute or an internal issue can have very serious financial consequences.

Additionally, liability toward directors can entail significant personal financial risks. In situations where mismanagement is established, directors may face claims from the company in addition to the investigation costs, leading to further financial loss or even bankruptcy of their personal assets.

With the increased likelihood of legal proceedings and the inherent costs involved, it is important for companies to be aware of this financial reality. This is especially true for small and medium-sized enterprises, where every euro counts.

Conclusion

The cost arrangement in inquiry procedures is not just a legal facet; it has a concrete financial impact on companies and their directors. It is essential for entrepreneurs to be well-informed about these risks and their potential liability, so as not to be caught off guard.

Ensure that the financial aspects are not overlooked in such procedures, and consider seeking legal advice before proceeding to an inquiry procedure.

Rulings

1. Huizenmij - ECLI:NL:GHAMS:2026:852
2. Marrobel - ECLI:NL:GHAMS:2024:2969