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De BeerINTERNATIONALknowledge partnerof private companiesPayment for shares can also be in kind. Payments in kind are for instance contributions of property, contributions ofshares in other companies/subsidiairies and/or other non-cash items. These payments are restricted to items thatcan be objectively appraised. If these payments take place upon incorporation of the BV, the incorporators mustdescribe the contributed assets and an auditor must issue a statement to the effect that the value of the contributionis at least equal to the par value of the shares. The statement of the auditor is to be provided to the civil-law notaryinvolved prior to incorporation and may not be issued more than 5 months prior to the date of incorporation.SharesA BV may only issue registered shares. Besides ordinary shares, a BV may also issue priority shares, to which certain(usually voting) rights are allocated in the articles of association, and preference shares, which entitle the shareholderto fixed dividends that have preference over any dividends on ordinary shares. Within a given type of share, thearticles of association may also create different classes of shares (e.g. A, B and C shares) to which certain specific rightsare allocated (e.g. upon liquidation).Dutch law does not allow for the existence of non-voting shares. All shareholders must at least have one vote. However,by using a foundation, the voting power attached to shares can be separated from the beneficial interest.The articles of association of a BV must stipulate limitations on the transferability of the shares. Dutch law providesfor 2 possible restrictions, which require the transferor either to:• offer his shares to the other shareholders, the right of first refusal, or;• obtain approval for the transfer of shares from the corporate body, as specified in the articles of association.Shares in a BV are transferred by a deed of transfer executed before a civil-law notary.The board of directors of a BV must keep an up-to-date shareholders’ register, which lists the names and addresses ofall shareholders, the number of shares, the amount paid-up on each share and the particulars of any transfer, pledgeor usufruct of the shares.ManagementThe management of a BV consists of the board of directors and the general meeting of shareholders. A BV can, in addition,under certain circumstances have a supervisory board.General meeting of shareholdersAny power not conferred upon the (managing and supervisory) directors or any other corporate authority of a BV isvested in the general meeting of shareholders, such within the limits set by law and the articles of association.At least one shareholders’ meeting should be held each year. This annual general meeting must be held in theNetherlands at the place stated in the articles. However, the shareholder may give a proxy. If the articles allow so, theshareholders may take unanimous resolutions outside a shareholders’meeting, under the condition the resolution is in writing.Shareholders resolutions are usually adopted by a majority of votes, unless the articles of association provide otherwise.As a rule, the shareholders may not give specific instructions to the board of directors with respect to themanagement of the company, but only general directions.Supervisory boardThe supervisory board’s sole concern is the interest of the BV. Its primary responsibility is to supervise and advise theboard of directors. Pursuant to the Large Companies Regime (Structuurregeling), the supervisory board is only a mandatorybody for a Large BV; however this is optional for other BVs.8 Doing business in The Netherlands
De BeerINTERNATIONALknowledge partnerof private companiesBoard of directorsThe BV is managed by a (board of) managing directors, appointed by the shareholders. As well natural persons ascompanies may be appointed as managing directors.The members of the board of directors are appointed and removed by the shareholders (unless the BV is a Large BV).The articles of association generally state that each director is solely authorized to represent the company. However,the articles of association may provide that the directors are only jointly authorized. Such a provision in the articles ofassociation can be invoked against third parties.The articles of association may provide that certain acts of the board of directors require the prior approval of anothercorporate body such as the shareholders’ meeting or the supervisory board. Such a provision is only internally applicableand cannot be invoked against a third party, except where the party in question is aware of the provision and didnot act in good faith.A member of the board of directors of the company can be held liable by the BV, as well as by third parties. The entireboard of directors can be held liable to the BV for mismanagement. An individual member of the board of directorscan be held liable with respect to specific assigned duties. The shareholders can discharge the members of the boardof directors from their liability to the company by adopting an express resolution barring statutory restrictions.Besides the above-mentioned liability prior to incorporation and registration, liability towards third parties can occurin several situations. For example, in case of the bankruptcy of the BV, the members of the board of directors areseverally liable for the deficit if the bankruptcy was caused by negligence or improper management in the preceding 3years. An individual member of the board of directors can exonerate himself by proving that he is not responsible forthe negligence or improper management.Simplification and flexibilization of Dutch private company lawDutch private company law is currently subject to extensive discussion. A Bill to simplify Dutch private company lawwas submitted on 31 May 2007 and is currently pending in the Dutch Parliament. The Bill will abolish many of theformalities that are currently required to set up a BV; e.g. the requirement of a minimum capital of € 18,000. The newlegislation will make it easier for entrepreneurs to set up a BV in the future.Public limited liability company (NV)In general, everything mentioned above that applies to the BV also applies to the NV. This section will outline themost significant differences between the NV and the BV.Share capital and sharesThe minimum issued and paid-up share capital is € 45,000. Besides registered shares, a NV may also issue bearershares. Bearer shares must be fully paid up and are freely transferable. Registered shares have to be transferred byexecuting a deed of transfer before a civil-law notary, and in contrast to a BV, it is not a statutory requirement that thearticles of association of an NV provide for limitations with respect to the transferability of the registered shares. AnNV is authorized to issue share certificates (certifcaten).Other common forms of business entitiesPartnership (maatschap)Entrepreneurs in the liberal professions (such as doctors, lawyers and graphic designers) often set up partnerships(maatschap).9 Doing business in The Netherlands
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