Legal Aspects of Dutch BVs and NVs
Contributed by Gerli Wren & Co.
13 May, 2013
Contributed by Gerli Wren & Co. [www.gerlico.com ]
A Dutch limited liability company (BV) or a public incorporated before a Dutch civil law notary.
The notarial deed of incorporation must be executed incorporators are provided with translated articles.
Prior to incorporation, the Dutch notary will examine incorporator(s), the managing director(s), and the ultimate maker. Limited liability company §V) must be : in the Dutch language, but usually the and verify the personal data of the beneficial owner(s), and the Policy
The capitalization requirements for BV and NV companies are somewhat different.
As of October 1,2012, a BV has a minimum capital requirement of only 0.01. If upon or after incorporation a higher capital is desired, additional capital 'can be contributed without any maximum. The capital can be divided into a number of shares, each of which have a par value expressed in euro or a foreign currency. Shares without a par value are not permitted.
An NV must have an authorized capital. At least 20 per cent of this authorized capital must be issued and paid-in. Dutch law requires a minimum issued and paid-in capital of 45,000 for NVs' Dutch corporate law does not require a minimum debt-equity ratio.
Managing or supervisory directors of Dutch companies are not required to hold any shares, nor is there any requirement stating that shares should be held by residents of the Netherlands.
A BV may only issue registered shares. Its articles of association may stipulate limitations on their transferability, but this is not obliged. Usually we notice that BVs are set up with freely transferable shares.
NVs may also issue bearer shares, which are freely transferable. Registered shares issued by an NV may or may not be freely transferred, subject to any restrictions that may be contained in the company' s articles of association.
BVs and NVs can have different classes of shares. A BV can issue shares without voting rights or shares without a right to participate in the profits, whereas an NV does not offer this possibility.
The articles of association of a BV can stipulate that, upon request by the seller, the purchase price to be paid for the shares will be determined by one or more independent experts. This will be the case when the seller and the buyer are unable to reach an agreement on the value of the shares to be transferred. It is, however, possible to include a statutory price for the shares in the articles of association instead of aforementioned provision. The transfer of registered shares in BVs and NVs requires a notarial deed of transfer which must be executed before a Dutch civil law notary.
4. Shareholders' register
The managing directors of a Dutch BV (and an NV, if it has issued registered shares) must keep a shareholders' register at the registered office of the company. The register contains the numbers of all registered shares, the names and addresses of all shareholders as well as the particulars of any transfer, pledge, attachment, or usufruct of the shares.
Each shareholder, pledgor, and usufructuary of shares has the right to inspect the shareholders' register and receive an excerpt of the registered particulars of his shares. Any amendment of or adjustment to the shareholders' register requires the signature of one of the managing directors.
5. Issuance of new shares
The issuance of registered shares requires a notarial deed executed before a Dutch civil law notary. The particulars of the shares issued are registered in the company's shareholders register.
The amount of the issued and paid-in share capital is also registered with the trade register of the Chamber of Commerce.
Bearer shares must be paid in full at issuance. If such shares are paid in kind, an auditor's appraisal is required, confirming that the value of such contribution in kind is at least equal to the par value of the issued shares. A contribution in kind to a BV does not require an auditor's appraisal.
Upon the issuance of additional shares, the existing shareholders can have pre-emptive rights, subject to exemptions under the law. However, pre-emptive rights may be limited or cancelled by the general meeting of shareholders. In case of a BV, the articles of association may contain provisions to limit or even cancel pre-emptive rights.
6. Legal reserve
No fixed proportion of the annual profits needs to be transferred to a legal reserve as in some European countries. A legal reserve may, however, be required to record surpluses on revaluation of certain assets.
Dutch BVs and NVs are managed by a board of managing directors, consisting of one or more managing directors (bestuurders). The board members are appointed and dismissed by the shareholders. The articles of association can stipulate that specific shares have voting rights concerning the appointment and dismissal of specific managing directors. However, any holder of shares with voting rights must be able to, directly or indirectly, appoint at least one managing director.
From a Dutch corporate law perspective, none of the managing directors of a Dutch BV needs to be a resident of the Netherlands. However, for Dutch tax purposes, it is advisable that at least half of the appointed directors are resident of the Netherlands.
The articles of association generally state that every managing director is authorized to fully represent and bind the company.
Alternatively, the articles of association may provide that two or more managing directors, acting jointly (or a managing director acting jointly with a proxy-holder), should perform all acts on behalf of the company. A provision to this effect can be invoked against third parties.
The BV's articles of association may provide that a number of specified acts of the board of managing directors require prior approval of the shareholders and/or the board of supervisory directors. Such restrictions, although internally applicable, cannot be invoked against third parties, unless they are aware of this provision and have not acted in good faith.
8. Supervisory directors
Dutch BVs and NVs may, optionally, appoint supervisory directors (commissarissen). Their role is to advise and supervise the managing directors. Supervisory directors are appointed and dismissed by the general meeting of shareholders. No person may concurrently serve as a managing director and a supervisory director.
The shareholders of BVs and NVs are authorized to make a decision about the distribution of dividends. The board of managing directors, however, has the right to approve (or disapprove) the decision of the shareholders. This decision must be based on a test: profits may only be distributed if the company expects to be able to meet its financial obligations in the next twelve months after distribution of the dividends.
10. Public filing in the Netherlands
Registration in the trade register of the Dutch Chamber of Commerce is mandatory and Dutch BVs are required to prepare annual accounts in conformity with Dutch civil law. A summarized version of the annual accounts needs to be filed with the Dutch Chamber of Commerce on an annual basis.
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