Food and agri

Cooperatives remain a defining feature of Dutch agriculture, and a transaction involving one raises questions that do not arise with a BV: how members are admitted and removed, what the membership agreement requires on a transfer of activities, whether the cooperative's own approval is needed, and how member liability is structured. Where part of a cooperative's activities is being carved out or contributed to a joint venture, the member consultation and approval process usually sets the timetable rather than the documentation.

The constitutional detail matters more here than in a company transaction. A cooperative is governed by artt. 2:53 et seq. DCC. The liability of its members for a deficit on dissolution can be excluded or limited in the articles, which is then shown by the letters U.A. or B.A. at the end of its name. Decision-making sits with the general meeting of members or with a members' council where the articles provide for one. A cooperative of sufficient size can fall within the large-company regime, which brings a supervisory board with its own catalogue of approval rights. A counterparty negotiating with a cooperative is therefore negotiating with a body whose authority to commit is defined by its articles and by its member arrangements, and the approvals required are established at the outset rather than assumed to follow the signature of its board.

Family ownership raises a different set. The operating business, the land, the buildings and the production rights are often held by different entities or by individuals directly, sometimes for tax reasons that no longer apply. Due diligence can establish that assets used by the operating company are owned elsewhere. The perimeter question, what is actually being sold, is therefore settled at term sheet stage in this sector more often than in others.

Many sale processes in Dutch food and agri are not a sale of the whole business in one step: a buyer takes over part of the business, the seller retains the land and sells the operations, or the transfer is staged over several years. That choice shapes the structure of the transaction and is therefore made at an early stage.

Tax consequences often help determine the structure in this sector, so we design it with a tax advisor from the outset rather than adjusting it afterwards. Where a transfer is staged over several years, the shareholders' agreement, the leaver provisions and the exit mechanics have to work across that period, including when the shareholders do not agree.

Many businesses in the sector are not incorporated at all. A farm or horticultural business run as a maatschap or a vennootschap onder firma is a contractual arrangement between the participants rather than an entity holding its own assets, so a transfer runs through the partnership agreement, through the continuation and takeover provisions it contains and through the position of each participant's contribution, and incorporating the business into a BV is frequently a step taken in advance of a sale rather than during it.

• Production and emission rights are transferable assets with their own registration and transfer rules, and their value can be a material part of the consideration. Those rules can mean that the rights arriving with the buyer differ from the rights the seller holds, so they are established before the price is fixed.
• Nitrogen and nature permitting remains the dominant regulatory constraint on expansion and on any change of activity. Permit status, the position of PAS-related notifications and any pending enforcement should be established early, because it determines whether the buyer can do what it is buying the business to do. Nitrogen rules and case law continue to shift, and arrangements that rely on acquiring emission space from another holding depend on the transferring holding actually ceasing the activity concerned.
• Agricultural land is frequently leased rather than owned, and Dutch agricultural tenancy law in artt. 7:311 e.v. DCC gives tenants strong protections that survive a transfer. An ordinary lease carries a statutory term, continuation rights for the tenant and a right of first refusal where the land is sold, whereas a liberalised lease for a short term falls outside much of the regime, and lease agreements are submitted to the grondkamer, which can adjust terms that do not meet the statutory requirements.
• Environmental and operating permits, including NVWA registrations and approvals for food businesses, attach to the activity or the operator: some pass with the activity subject to notification, others require a fresh application, so each is checked rather than assumed to transfer.
• Food safety obligations travel with the business. EU food law requires traceability along the chain and imposes withdrawal and recall duties, so recall history, private label supply terms and the allocation of recall and product liability costs between supplier and retailer are diligence items in processing and trading targets.
• Subsidy entitlements under the Common Agricultural Policy and national schemes carry conditions on ownership, use and continuation that a transfer can affect. We coordinate the subsidy-law assessment with specialist counsel where needed.

• Real estate transfer tax arises on land and buildings, and the real estate entity rules can bring share transfers within the charge. Land in commercial agricultural use benefits from an exemption that is conditional on that use continuing.
• Merger control at ACM or EU level is a live consideration in food and agricultural markets, and supply and purchasing arrangements between competitors need a competition assessment.
• Supply arrangements with larger buyers are constrained by the rules on unfair trading practices in the agricultural and food supply chain, laid down in the Dutch Unfair Trading Practices (Agricultural and Food Supply Chain) Act and enforced by the ACM, which limit payment terms, unilateral amendments, short-notice cancellation of perishable orders and the passing on of certain costs.
• Employees within a transferring undertaking pass to the buyer by operation of law under artt. 7:662 e.v. DCC, which matters in a sector with substantial seasonal and posted labour.
• Works council advice under the WOR applies in the usual way and is often the first external step in a family sale.
• Share transfers in a BV or an unlisted NV require a notarial deed (artt. 2:86 and 2:196 DCC); transfers of registered property (registergoederen) require a separate notarial deed and registration.