Dutch corporate law
Articles of Association
The functioning of your Dutch BV company is governed by the Articles of Association. They shall contain information about the purpose of your company, the kind of business you will develop, the rights and the powers of the shareholders, along with the duties and responsibilities of the directors. Special classes of shares can be issued, such as shares without voting- or profit rights. The company is represented by one or more directors, who may be given sole or joint signatory rights.
Annual general meeting
At least once per year an annual general meeting (AGM) must be held for shareholders and holders of voting rights, where the approval of annual accounts and allocation of the result must be resolved.
Under Dutch corporate law, it is not obliged to hold the AGM in the Netherlands, or for shareholders to attend in person. This may be however advisable from a tax perspective. Similarly it is not mandatory by Dutch law to have a Dutch registered address, nor do directors have to be registered Dutch residents/nationals, but from a tax perspective, these arrangements may also be advisable.
If no Dutch director is chosen, it is possible to appoint a Dutch proxy holder to take care of local formalities.
The articles of association will mention the nominal value of the shares. The nominal value may be in EUR, but also in any other currency.
The articles of association may provide for different classes of shares, i.e. priority shares, preference shares, alphabet shares.
Ordinary shares will normally have both voting rights and profit rights. The articles of association may contain:
- non-voting shares: shares without voting rights (these share are always entitled to a part of the profits);
- non-profit shares: shares which are not entitled to any profits (these shares will always have voting rights).
The issued capital should consist of at least 1 share. There is no minimum capital requirement. EUR 1 (or USD 1 etcetera) will be sufficient.
Dutch corporate governance and representation
The management board and each member of the management board is authorized to represent the BV, by law and otherwise. Alternatively, in the event there is more than one board member the articles of association may provide that:
in addition to the management board itself, only one or more specific members of the management board (members A and/or members B) may represent the BV solely or jointly with one or more other specific members of the management board (members A and/or members B);
a member of the management board may only act jointly with one or more members of the management board or other persons.
The authority to represent the BV can also be restricted by the articles of association. Certain acts of the management board may for example be made subject to prior approval of the general meeting of shareholders. Such restrictions, however, can not be invoked by or against third parties.
Joint ventures/shareholders agreements
It is common to form a shareholders’ agreement for BV companies if there is more than one shareholder of the B.V. (joint venture). Such agreements are intended to protect the rights of the shareholders and usually include sections outlining the fair and legitimate pricing of shares. It also allows shareholders to make decisions about what outside parties may become shareholders and provides safeguards for minority positions. Such agreements may be drafted as an addition to the Articles of Association, but cannot supersede the Civil law code provisions or the Articles of Association.
It is advisable to have the shareholders’ agreement checked by a Dutch lawyer and to have them compared with the Articles of Association in order to avoid double or contradictory provisions.
The shareholders of a BV are in general not personally liable for acts performed in the name of the B.V. under Dutch corporate law. Though beware, obligations assumed when a B.V. is still “under formation” are for the risk of the person(s) representing the B.V. under formation. After the formal establishment of the B.V. these obligations need to be authorised by the B.V., and the representatives are absolved of this liability.
Statutory directors can be held liable for acts of mismanagement if the B.V. distributes dividends without the B.V. being able to comply to its financial obligations in the following financial year.
Also, in case of bankruptcy, if the accounts have not been formally approved and published within the deadline, the burden of proof will switch. In practice this means a person can be held liable to all the debts of his/her company, unless he/she can provide proof of NO mismanagement, in comparison to when provision of proof of mismanagement has to be provided.