To link to this article, copy this persistent link:
(Oct 17, 2012)
The private limited company (besloten vennootschap met beperkte aansprakelijkheid, or B.V.), which is similar to the American limited liability company, "is the most frequently used legal entity in the
B.V.s are governed chiefly under Title 5 of Book II of the Civil Code. (Burgerlijk Wetboek Boek 2, OVERHEID.NL.) Thenew Act amends the relevant provisions of Title 5 as well as other parts of Book II. A law on legislative alignment and implementation of the Act, which also took effect on October 1, was similarly issued on June 18 (Implementation Act for Simplification and Flexibilization of Private Company Law (Invoeringswet vereenvoudiging en flexibilisering bv-recht). (Text of Implementation Act [in Dutch], 300 STAATSBLAD (July 5, 2012).)
Under the Flex Act, the B.V. incorporation procedure has been greatly simplified (with Articles of Association, for those who wish to adopt standard rules, able to "fit on one A4-sheet of paper") and impediments have been removed, businessmen have been given more freedom to shape the company at will, and the cost of incorporation has been significantly reduced. In regard to the latter, the minimum capital requirement of €18,000 (about US$23,206) has been abolished. The capital can now also be denominated in a foreign currency. (Incorporating a Private Limited Company Becomes Easier, Government of the
Other significant changes in the law on B.V.s include:
- removal of the share transfer restriction clause: the articles of association need no longer include provisions restricting share transferability, but if they do not, the statutory provision providing the other shareholders with the right of first refusal applies;
- permissibility of issuance of non-voting shares with dividend rights as well as of voting shares without dividend rights;
- reduction to eight days' notice for convening a shareholders' meeting;
- right of the general meeting of shareholders to appoint, suspend, and dismiss managing and supervisory directors and to give the managing board specific instructions;
- permissibility of including in the articles of association arrangements between shareholders;
- revision of the level up to which distributions may be made from shareholder equity, making it possible to distribute paid-up capital and called-up capital, which no longer form part of mandatory shareholder equity (leaving the limitation on a distribution that it can only occur if a company's equity exceeds its lawful reserves or pursuant to the articles of association), with the requirement that the managing board approve distributions; and
- entitlement of a B.V. to repurchase its own shares "as long as one share with voting right and dividend entitlement remains outstanding," and to reduce its share capital without a lengthy procedure. (Kersten et al., supra.)
According to one assessment of the impact of the changed B.V. law, "[w]ith the ease and flexibility created by the Flex-BV Act, the Netherlands will re-establish itself as the frontrunner in continental Europe when it comes down to the practicalities of setting up companies." (Manon Cremers et al., Flexibilization of Dutch BV Law as per 1 October 2012, LEXOLOGY (June 12, 2012).)
|Author:||Wendy Zeldin More by this author|
|Topic:||Corporations More on this topic|
|Jurisdiction:||Netherlands More about this jurisdiction|
Search Legal News
Find legal news by topic, country, keyword, date, or author.
Global Legal Monitor RSS
Get the Global Legal Monitor delivered to your inbox. Sign up for RSS service.
The Global Legal Monitor is an online publication from the Law Library of Congress covering legal news and developments worldwide. It is updated frequently and draws on information from the Global Legal Information Network, official national legal publications, and reliable press sources. You can find previous news by searching the GLM.
Last updated: 10/17/2012