Legal Aspects of Doing Business in the Netherlands

www.loyensloeff.com
Legal aspects of doing business in
the Netherlands
Editor Tom Claassens
LegalaspectsofdoingbusinessintheNetherlands
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14-04-EN-LA

1loyens & loeff Legal aspects of doing business in the Netherlands
LEGAL ASPECTS OF DOING BUSINESS
IN THE NETHERLANDS
2014 Edition

2 loyens & loeff Legal aspects of doing business in the Netherlands
© Loyens & Loeff N.V. 2014
All rights reserved. No part of this publication may be reproduced, stored in a retrieval
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Loyens & Loeff N.V.
Insofar as it is permitted, pursuant to Section 16b of the Dutch Copyright Act 1912
(Auteurswet 1912) in conjunction with the Decree of 20 June 1974, Dutch Bulletin of Acts
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This publication does not constitute tax or legal advice and the contents thereof may
not be relied upon. Each person should seek advice based on his or her particular
circumstances. Although this publication was composed with the greatest possible
diligence, Loyens & Loeff N.V., the contributing firms and any individuals involved cannot
accept liability or responsibility for the results of any actions taken on the basis of this
publication without their cooperation, including any errors or omissions. The contributions
to this book contain personal views of the authors and therefore do not reflect the opinion
of Loyens & Loeff N.V.

Preface
If you have a copy of this publication, there is a chance you have visited the Netherlands.
And if you arrived by plane, the sky was clear (if you were lucky) and you looked out of
the plane window, you will have seen the landscape for which the Netherlands is famous:
flat with neatly organized plots of land, interlinked with small canals, dikes, roads and
railroads. And what strikes most: everything is manmade and in straight lines (except for
the occasional river). Neat and straight.
Unfortunately, Dutch law is not always so neat and straight (it is manmade, true). The aim
of Tom Claassens, who edited this publication, and his team of contributors was to create
some clarity and order to the Dutch legal landscape so that it all seems to make sense
again.
We wrote this book for investors and their advisors, in order to provide them with a basic
understanding of the main areas of Dutch business law. It also gives sufficient background
to facilitate communications with Dutch legal counsel (especially if Loyens & Loeff is that
legal counsel).
I would like to thank Tom for editing this publication, which he has done for more
than ten years now. Thanks also to the contributors: Marc Custers (competition law),
Lilia Gontcharova (tax law), Irene Groenland (corporate law), Pjotr Heemskerk (general
contract law), Sabine Kerkhof (employment law), Kim Koops (corporate law), Erik Koster
(litigation), Albertine Mazzola (environmental law), Ewout Stumphius (corporate law),
Irene Tax (corporate law), Wendy Terporten (income tax law), Wies Verstraaten (income
tax law), Vincent Vroom (insolvency law) and Harmen Zeven (tax law).
Enjoy the read!
Willem Jarigsma
Managing Partner Loyens & Loeff NV

Contents
1 The legal framework for a business 12
1.1 Introduction 12
1.2 Main Differences between an NV and a BV 12
1.3 Establishing an NV or a BV 13
1.3.1 Incorporators 13
1.3.2 Incorporation procedure 13
1.3.3 Shareholders’ Register 14
1.3.4 Registration 14
1.3.5 Pre-incorporation transactions 14
1.4 Articles of Association 15
1.4.1 General 15
1.4.2 Name; name search 15
1.4.3 Official domicile and registered address 16
1.4.4 Corporate objects 16
1.4.5 Share capital 16
1.5 Shares 17
1.5.1 Types of shares 17
1.5.2 Shareholder obligations and requirements 18
1.5.3 Payment for shares 18
1.5.4 Transfer of shares 19
1.6 Corporate Bodies 20
1.6.1 General 20
1.6.2 Management Board 20
1.6.3 One-Tier Board 22
1.6.4 Supervisory Board 22
1.6.5 Limitations on the holding of supervisory positions in and the board
composition of large companies 23
1.6.6 General Meeting of Shareholders 23
1.7 Large Company Regime 25
1.7.1 General 25
1.8 Annual Accounts 27
1.8.1 General 27
1.8.2 Annual accounts – contents 27
1.9 Liquidation 28
1.9.1 General 28
1.9.2 The standard procedure 28

1.9.3 ‘Accelerated’ liquidation and ‘turbo’ liquidation 30
1.10 Dutch Partnership Law 31
1.10.1 General characteristics 31
1.10.2 Legal requirements 31
1.10.3 Formation and management of a Dutch Partnership 32
1.10.4 Capital, assets and annual accounts of a Dutch Partnership 33
2 Miscellaneous corporate issues 35
2.1 Introduction 35
2.2 Director’s Liability 35
2.2.1 General 35
2.2.2 Internal liability, i.e., Managing Director(s) vis-à-vis the company 35
2.2.3 Liability in bankruptcy 36
2.2.4 Misleading annual accounts, annual report and interim accounts 37
2.2.5 Liability for tax debts, social security premiums and pension fund
contributions 37
2.2.6 Tort 37
2.2.7 Registration with Trade Register and payment on shares 38
2.2.8 Liability in case of legal entity as Managing Director 38
2.3 Liability of a shareholder for the Debts of a company 38
2.3.1 General 38
2.3.2 Main rule and exceptions 38
2.4 Ultra Vires 39
2.4.1 General 39
2.4.2 Ultra vires in the event of issuance of security 40
2.5 403 Statement 41
2.6 Conflict resolution 41
2.6.1 Inquiry proceedings 41
2.6.2 Squeeze out 42
2.6.3 Force-out 43
2.6.4 Buy-out 43
3 Joint ventures 44
3.1 Introduction 44
3.2 Reasons to use Dutch entities in general 44
3.2.1 Tax structuring 44
3.2.2 Neutral forum 45
3.2.3 Conflict resolution 45
3.2.4 Flexible corporate law 45
3.2.5 Limited liability; no piercing the corporate veil 45

3.2.6 Bilateral Investment Protection 45
3.2.7 No access restrictions 46
3.3 Flexibility introduced by recent legislation 46
3.4 Shareholders agreement and Articles of Association 47
3.4.1 Choice of law 48
3.4.2 Remedies 48
3.4.3 Correlation between shareholders agreement and Articles of Association 48
3.4.4 Alignment is preferred 49
3.5 Some practicalities 50
3.6 Governance of the joint venture BV 50
3.6.1 General introduction 50
3.6.2 Basic governance structures 50
3.6.3 Large Company Regime 52
3.6.4 Representative authority 52
3.6.5 Tax substance 53
3.6.6 Conflict of interest 53
3.7 Minority Protection in a BV 53
3.7.1 Introduction 53
3.7.2 General shareholders rights 53
3.7.3 Some specific minority rights 54
3.7.4 Majority versus minority 54
3.8 The Cooperative 55
3.8.1 Legal characteristics 55
3.8.2 Governance 56
3.8.3 Distributions 56
3.8.4 Usage of the Cooperative in a joint venture context 57
3.9 Foundation 57
3.9.1 Legal characteristics 57
3.9.2 Depositary receipts 58
3.9.3 Governance 58
3.9.4 Distributions 59
3.9.5 Usage of the Foundation in a joint venture context 59
4 Main regulatory and antitrust issues 61
4.1 Introduction 61
4.2 Main Regulatory Issues 61
4.2.1 Foreign investments regulations 61
4.2.2 Reporting obligations 61
4.2.3 Customer due diligence 62
4.2.4 Act on Financial Supervision 63

4.2.5 Other rules and regulations 64
4.3 National Antitrust Issues 64
4.3.1 General 64
4.3.2 Agreements affecting competition 65
4.3.3 Economic dominance 66
4.3.4 Merger control 66
4.3.5 Enforcement 67
5 Tax aspects 69
5.1 Introduction 69
5.2 Personal income Tax 69
5.2.1 General 69
5.2.2 Resident taxpayer 70
5.2.2.1 Box 1: Taxable income from work and home 70
5.2.2.2 Box 2: Taxable income from a substantial shareholding 71
5.2.2.3 Box 3: Taxable income from savings and investments 72
5.2.3 Non-resident taxpayers 72
5.2.3.1 Box 1: Taxable income from work and home 72
5.2.3.2 Box 2: Taxable income from a substantial shareholding 73
5.2.3.3 Box 3: Taxable income from savings and investments 73
5.2.3.4 Non-resident taxation and double tax treaty application 73
5.3 Wage Withholding Tax 74
5.3.1 General 74
5.3.2 The ‘30% ruling’ (expatriate regime) 74
5.4 Corporate Income Tax 75
5.4.1 General 75
5.4.2 Corporate income taxation of resident entities 75
5.4.2.1 Subject to tax 75
5.4.2.2 Taxable profits 75
5.4.2.3 Innovation box 77
5.4.2.4 Participation exemption 77
5.4.2.5 Exemption of foreign business results 78
5.4.2.6 Functional currency 78
5.4.2.7 Fiscal unity 79
5.4.2.8 Mergers 79
5.4.2.9 Losses 79
5.4.2.10 Advance certainty from tax authorities 79
5.4.2.11 Incentive regulations 80
5.4.3 Corporate income taxation of non-resident entities 80
5.5 Withholding Tax 81

5.5.1 Dividends 81
5.5.2 Interest and royalties 82
5.6 Value Added Tax 82
5.6.1 General 82
5.6.2 Taxable persons 82
5.6.3 Tax base 83
5.6.4 Exemptions 83
5.6.5 Tax rates 83
5.6.6 The acquisition of goods and services 83
5.6.7 Import of goods 84
5.7 Import Duties 84
5.7.1 General 84
5.7.2 Key elements in determining whether imported goods are dutiable 84
5.7.3 Introduction of the Authorised Economic Operator 86
5.8 Transfer Tax 86
5.9 International Aspects of Taxation in the Netherlands 88
5.9.1 Avoidance of double taxation 88
5.9.2 The Dutch tax treaty network 89
6 Employment law 90
6.1 Introduction 90
6.2 Employment Agreement 90
6.2.1 The existence of an employment agreement 90
6.2.2 Duration and working time 92
6.2.3 Probationary periods 92
6.2.4 Non-competition clause 93
6.3 Wages, Vacation and other Benefits 93
6.3.1 Wages and vacation allowance 93
6.3.2 Vacation 94
6.3.3 Employee incentive plans 94
6.3.4 Sick pay 95
6.3.5 Miscellaneous compensation 96
6.4 Residence permit and work permit 96
6.5 Collective Bargaining Agreements 98
6.6 Termination 99
6.6.1 Termination of an individual employment agreement 99
6.6.2 Reorganizations 103
6.6.3 Employer taxes 104
6.7 Co-Determination; Works Council 104
6.8 Dealing with Discrimination 107

6.8.1 Equal treatment in general 107
6.8.2 Discrimination on the basis of sex 107
6.8.3 Sexual harassment 108
6.8.4 Age discrimination 109
6.8.5 Employment of disabled persons 109
6.9 Miscellaneous 110
6.9.1 Strikes and plant occupations 110
6.9.2 Court system 110
6.9.3 Evidential burden 111
7 Commercial agency, distributorship and franchise 113
7.1 Introduction 113
7.2 Commercial Agency 113
7.2.1 Definition 113
7.2.2 General 113
7.2.3 Termination 114
7.2.4 Antitrust law 115
7.3 Distributorship 115
7.3.2 General 115
7.3.3 Termination 116
7.4 Franchise 118
7.4.2 General 118
8 Intellectual property rights 120
8.2 Patents 120
8.2.2 Patentability 120
8.2.3 Duration 121
8.2.4 Assignment; license 121
8.2.5 Employee rules 121
8.2.6 European Patent Convention 122
8.2.7 Patent Cooperation Treaty 122
8.2.8 EC Treaty 122
8.3 Trademarks 122

8.3.2 Protection 123
8.3.3 Invalidation and termination 123
8.3.4 Duration 124
8.3.6 Collective trademarks 125
8.3.7 Community trademarks 125
8.4 Copyright 125
8.4.1 Neither registration nor other formal requirements 125
8.4.3 Duration 126
8.4.6 Miscellaneous 126
8.5 Protection for Models and Designs 127
8.5.3 Invalidation and termination 128
8.5.4 Duration 128
8.5.7 Copyright 129
8.5.8 Community designs 129
8.6 Enforcement of Intellectual Property Rights 129
9 Spatial planning and the environment 131
9.1.1 Legislative framework 131
9.1.2 European Union Law 132
9.1.3 Policy trends 132
9.1.4 PRTR report 132
9.1.5 REACH 133
9.1.6 Specific environmental aspects 133
9.2 Environmental Permit and Zoning Plans 133
9.2.1 Zoning Plans 133
9.2.2 Environmental Permit procedure 133
9.2.3 Wastewater discharge permit 137
9.2.4 Transferability of Environmental Permits 137
9.2.5 Environmental lmpact Statement (EIS) 138
9.2.6 Birds and Habitat Directive, Natura 2000 areas 138
9.2.7 Other protection areas 138

9.3 Soil and Groundwater Pollution 139
9.3.1 General 139
9.3.2 Seriousness and urgency 139
9.3.3 Remediation costs 139
9.4 Asbestos 140
10 Insolvency 141
10.2 Types of Insolvency Proceedings 141
10.3 Initiating a Bankruptcy Action 142
10.3.2 Bankruptcy trustee 142
10.4 Procedure in Bankruptcy 142
10.5 Creditors’ Rights 143
10.5.2 Secured creditors 143
10.5.3 Preferred creditors 144
10.5.4 Unsecured creditors 144
10.5.5 Estate creditors 145
10.6 Termination of the Bankruptcy and Distribution of the Proceeds 145
10.6.2 Cancellation 145
10.6.3 Liquidation 145
10.6.4 Closing 146
10.6.5 Composition 146
10.7 Suspension of Payments (Legal Moratorium) 147
10.8 Fraudulent Conveyance (Actio Pauliana) 148
10.8.1 Fraudulent conveyance in or prior to bankruptcy 148
10.8.2 Fraudulent conveyance outside of bankruptcy 149
10.8.3 The insolvency regulation 150

1 The legal framework for a business
1.1 Introduction
One subject to consider when establishing a business in the Netherlands is the legal
framework. It is possible (for example, for cost reasons) to perform the contemplated
business activities through a branch office of an existing legal entity. Most foreign
investors, however, prefer to establish a separate legal entity or to enter into a partnership.
Although there are various other legal forms available under Dutch Law, by far the most
commonly used are:
i. the public limited liability company (naamloze vennootschap or ‘NV’), and
ii. the private limited liability company (besloten vennootschap met beperkte
aansprakelijkheid or ‘BV’).
In view of the fact that an NV and a BV are used in the vast majority of cases, this chapter
mainly focuses on these two types of legal entities.
Chapter 1.9 below contains a short description of the main features of partnership law.
1.2 Main Differences between an NV and a BV
An NV is primarily designed as a public company shares of which can be listed on a stock
exchange it is the required company form for banking or insurance businesses, but it is
not restricted to such use. A BV by contrast is privately owned (i.e. with a closed circle
of shareholders) and is frequently used for financing, tax structuring purposes and for
setting up joint ventures and group holdings. An NV is subject to European harmonization
rules on public companies and therefore less flexible with regard to the possibility of
tailoring its corporate structure and Articles of Association to its shareholders’ needs than
a BV. In an NV specific rules apply with regard to the proper functioning of the general
meeting as a corporate body in general and, more specifically, the exercise of the voting
rights by its shareholders. Furthermore, an NV is subject to capital protection rules, such
as the requirement of minimum capital and formalities on the payment of shares, share
buybacks, financial assistance and the distribution of dividends and reserves.
A BV is designed to be a more flexible instrument with very limited rules on capital
protection and with the possibility to incorporate detailed shareholders’ arrangements
in the Articles of Association. In a BV it is, for example, explicitly allowed to include

shareholders’ obligations other than just the payment on shares in the Articles of
Association (statuten). This flexibility is one of the reasons why a BV is a very suitable
type of entity for structuring joint ventures. A BV, being primarily the instrument for a closed
circle of shareholders, can only issue registered shares; bearer shares are not allowed.
The corporate tax treatment of a company does not differ solely on the basis of whether
the company is an NV or a BV.
1.3 Establishing an NV or a BV
1.3.1 Incorporators
The founders of an NV or a BV, who may be one or more individuals or legal entities, may
be of any nationality and may be domiciled anywhere. The founders may be represented
at incorporation by means of written powers of attorney and they may or may not be the
first shareholders of the company. In this chapter the first shareholders are referred to as
the ‘incorporators’, this in order to distinguish them from shareholders in general.
1.3.2 Incorporation procedure
A company is incorporated by means of the execution of a notarial Deed of Incorporation
(akte van oprichting) by a civil law notary (notaris). This Deed of Incorporation contains
the Articles of Association. Once incorporated, the Articles of Association may only be
amended by a notarial Deed of Amendment.
The incorporation of an NV requires a bank statement providing evidence of the payment
of the minimum paid-in capital (if in cash) or a description of the contribution drawn up
and signed by the incorporators and an auditor’s certificate attesting to such payment (if in
kind) (see paragraph 1.5.3). The minimum capital of an NV amounts to € 45,000.
For a BV, there is no requirement of a minimum paid-in capital. The incorporation of a BV
also requires a description of the contribution drawn up by the incorporators if the payment
on shares is made in kind (see paragraph 1.5.3), but a bank statement and an auditor’s
certificate are not required.
The Deed of Incorporation, which must be in the Dutch language and which must be
executed by a Dutch civil law notary, establishes the company as a separate legal entity.
The Deed of Incorporation can be executed as soon as the civil law notary has all the
required documents at his disposal. A prior clearance or approval from any governmental
authority is not required.

1.3.3 Shareholders’ Register
If the company’s shares are in registered form, which is always the case for a BV and
may be the case for an NV, the company must maintain a Shareholders’ Register
(aandeelhoudersregister).
Upon the incorporation of the company, the civil law notary will prepare the Shareholders’
Register. The Shareholders’ Register must be kept by the Management Board (bestuur)
at the office of the company and must list the name and address of each shareholder,
the type and number of shares held by each of them, the denomination and date of issue
of the shares, the amount paid in on each share, and pledges and other encumbrances.
In a BV, the Shareholders’ Register must also mention the name and address of each
holder of a depository receipt of shares (certificaathouder) which carries the right to attend
shareholders’ meetings. Any change in the above-mentioned data must be updated in
the register. Each entry and change made must be countersigned by or on behalf of the
Management Board.
1.3.4 Registration
Within eight days after incorporation, the company must be registered in the Trade
Register of the Chamber of Commerce (Handelsregister) in the district of the company’s
office address (i.e., its principal place of business). In addition certified copies of the Deed
of Incorporation and, for an NV, the bank statement or accountant’s certificate(s), must be
deposited. Each of the Managing Directors (bestuurders) is jointly and severally liable, in
addition to the company, for all legal actions undertaken on behalf of the company during
the period from incorporation until due registration in the Trade Register of the Chamber of
Commerce. Accordingly, it is advisable to arrange for registration as soon as possible after
the incorporation has been completed.
A company is required to register details of all its Managing Directors, Supervisory
Directors (commissarissen), and proxy holders (gevolmachtigden), if any. Details of
proxyholders must include the scope of their powers. If all issued and outstanding shares
in the company are held by one individual or legal entity, certain data regarding this sole
shareholder must also be registered. An estimate of the costs to be borne by the company
in connection with the incorporation (capital tax, fees for civil law notary and advisors,
etc.). Separate registration requirements apply to branches.
1.3.5 Pre-incorporation transactions
Prior to incorporation, a Dutch company may enter into contractual commitments,
provided that it is in the process of being incorporated and is referred to as a company in
incorporation (in oprichting or i.o.). During this stage, the company’s name and status is
indicated thus: ‘[name] NV i.o.’ or ‘[name] BV i.o.’

Under Dutch law, a person who represents himself as authorized to bind the company
may execute agreements on behalf of the company i.o. Third parties may rely on such
person’s authorization; this means that if he performs legal acts in the name of the
company i.o., unless the contrary is expressly stipulated in such authorization, he will be
jointly and severally liable for such acts until these have been ratified by the company.
Such ratification may be included in the Deed of Incorporation or by resolution of the
Management Board after incorporation (or may be implied by conduct).
Even in the case of ratified acts, the persons who acted on behalf of the company i.o. will
remain jointly and severally liable for a third party’s loss if they knew, or must reasonably
have known, that the company would not perform its obligations. If the company is
involuntarily liquidated within one year of its incorporation, such knowledge will be
presumed. This non-release is also without prejudice to the liability of the Managing
Directors of the company for ratifying transactions which the company could not perform.
1.4 Articles of Association
1.4.1 General
The Articles of Association contain the provisions pursuant to which the company will
be governed after incorporation. The main issues to be considered when preparing the
Articles of Association are the following.
1.4.2 Name; name search
The proposed name or trade name of the company must be sufficiently distinguishable
from existing trade names, whether or not registered, and must not give raise to confusion
among the public.
To ensure that the proposed name does not infringe upon, or conflict with, existing
names, a name search must be undertaken at the Trade Register of the Chamber of
Commerce. Three name alternatives may be submitted to the Trade Register of the
Chamber of Commerce at one time against payment of a nominal fee. At the same
time, an investigation as to potential infringement of trademarks registered with the
Benelux Trademark Office (see paragraph 7.3) may also be commenced upon request.
If requested, the trade name can also be registered as a trademark with the Benelux
Trademark Office.
Requirements for the name of the company are that it must have some distinctive
character and must not be too general. The characters ‘NV’ or ‘BV’, as the case may be,
must be included in the name, either at the beginning or at the end of the name.

1.4.3 Official domicile and registered address
The official domicile is the city in the Netherlands identified as such in the Articles of
Association. In addition to the official seat, the company must have an office address to be
registered with the Trade Register of the Chamber of Commerce. This office address can
be anywhere in or outside the Netherlands. For tax or other reasons it may be preferable
that the company’s office address is in the Netherlands. If such office is not (yet) available,
the company may be domiciled with a ‘trust company’, specialized in providing services in
the field of management and administration of companies.
1.4.4 Corporate objects
The objects clause in the Articles of Association provides a general description of the
company’s proposed business activities. Its activities will be limited to those stated in the
objects clause.
1.4.5 Share capital
The nominal value of the shares in an NV must be defined in euros. The nominal value of
a BV may be defined in other currencies as well.
Dutch company law distinguishes between three types of capital, namely: (i) the
authorized capital (maatschappelijk kapitaal), which sets the limit beyond which no shares
may be issued other than by amending the Articles of Association; (ii) the issued capital
(geplaatst kapitaal), which is the issued amount of the authorized capital and reflects
the aggregate nominal value of the issued shares; and (iii) the paid-in capital (gestort
kapitaal), which is the amount of the issued capital for which payment has been received
by the company. It is mandatory for an NV to define the authorized capital in the Articles of
Association, not for a BV.
The ratio between authorized and issued capital in an NV cannot exceed 5 to 1. There is
no mandatory ratio between authorized capital (if defined at all) and issued capital for a
BV. There are no legal limits on the debt/equity ratio.
Payment on the shares may be made in cash or in kind. In principle, each issued share
must be fully paid upon its issuance. The company and its shareholders may, however,
agree that the nominal value of an issued registered share may be paid in a later stage
to be decided by the Management Board. For a BV, this deferral may relate to the full
nominal value. For an NV such deferral of payment is only allowed up to 75% of the
nominal value.
The aggregate nominal value of the issued and paid-in capital in an NV must amount to
(at least) € 45,000 for an NV. No minimum share capital requirements apply to a BV. The

Deed of Incorporation must nonetheless specify the capital of a BV, but this may be as
small as the nominal value of the share (which should be more than zero (0)).
Managing Directors of an NV are jointly and severally liable for juridical acts performed
on behalf of the company until the moment the minimal payment obligation has been
complied with. This liability risk does not apply to Managing Directors of a BV.
1.5 Shares
1.5.1 Types of shares
The shares in the capital of a BV may only be issued in registered form, whereas
the shares in the capital of an NV may be in registered or bearer form. In the case of
registered shares, the shareholdings must be registered and kept up to date in the
Shareholders’ Register of the company.
Different types and classes of shares may be provided for in the Articles of Association:
(i) ordinary shares, which normally provide equal rights to each shareholder (although the
ordinary shares may be sub-divided into different classes with different corporate rights,
such as special reserves, voting rights and separate redemption rights); (ii) preference
shares, which have preference over other types of shares with respect to distribution
of dividends and distributions upon liquidation of the company (preference shares may
be cumulative or non-cumulative with regard to distribution rights); and (iii) priority
shares, which may confer a specific authority on the holders, such as the authority to
make binding recommendations with respect to appointment of Supervisory Directors or
Managing Directors.
It is not allowed for an NV to issue shares without any voting rights. However, a similar
result may be obtained by way of issuing shares to a Trust Foundation (stichting
administratiekantoor), which, in its turn, issues depositary receipts representing the
economic rights accruing to such shares. It is furthermore not allowed for an NV to issue
shares that do not share in the profits.
A BV is entitled to issue shares either without any voting rights or without any financial
rights. However, it is not possible to create shares in a BV that lack both voting and
financial rights. Any provision in the Articles of Association that limits the voting or financial
rights on shares, may only be made in respect of all shares of a particular class or type
with the consent of all shareholders or in respect of shares in relation to which the Articles
of Association, prior to the issuance, already, provided that they lack voting rights. There
must always be at least one share with voting rights held by someone other than the BV
and not for the account of the BV or any of its subsidiaries.

1.5.2 Shareholder obligations and requirements
For an NV, no obligation other than to pay up the nominal amount of a share may be
imposed upon a shareholder against his will, even by an amendment of the Articles of
Association.
For a BV, this is different. The Articles of Association may, with respect to all shares or
shares of a particular class or type, impose obligations of a contractual nature towards the
company or third parties or between shareholders. The Articles of Association may also
provide for so-called “qualitative requirements” to be met by the shareholders. The Articles
of Association of a BV may also provide for circumstances in which the shareholders
are required to offer and transfer their shares. Shareholders in a BV can, however, not
be bound without their consent to these requirements and obligations. These issues are
highly relevant in joint venture situations (see Chapter 3 below).
1.5.3 Payment for shares
Shares in a company may be subscribed for by payment in cash or in kind, in accordance
with the following provisions:
In cash
If payment for the shares to be issued upon incorporation in an NV is made in cash,
the funds must be paid into a bank account in the company’s name at a bank in the
Netherlands or the EU, provided that such bank is subject to governmental control.
An NV cannot be incorporated until a bank statement with respect to the payment on the
shares has been issued to the civil law notary executing the Deed of Incorporation. The
bank statement must state that a specified amount (the amount which, at incorporation,
is to be paid in on the issued share capital): (i) will be at the disposal of the company
immediately upon its incorporation; or (ii) has been paid, on a date preceding the date of
incorporation by not more than five months prior to incorporation, into a separate account
of the company which, after incorporation of the company, will be at the company’s
exclusive disposal, provided that the company expressly accepts these payments in the
Deed of Incorporation. If the statement referred to in (ii) above is used, it is possible to
withdraw (part of the) funds deposited in the name of and on behalf of the company prior
to its incorporation. For a BV, these rules do not apply.
In kind
If, upon incorporation of an NV or a BV, payment on the issued shares will be made in
kind, a description of the contribution must be drawn up and signed by the incorporators.
The description must include a statement from all incorporators as to the value of the
contribution in kind and the valuation methods used and may not predate the date of

incorporation by more than five months for an NV or six months for a BV. For a BV, the
description must be made available for inspection by the shareholders at the offices of the
company. For an NV, the description must be attached to the Deed of Incorporation.
For an NV there is a second requirement: a certificate of an auditor is required confirming
that the value of the contribution in kind, as set forth in the description, is at least equal to
the amount to be paid on the issued shares. The auditor’s certificate must be attached to
the Deed of Incorporation. Such certificate of an auditor is not required for a BV.
Share capital in excess of the aggregate nominal value may be provided by means of
payment of share premium (agio) on the issued shares.
1.5.4 Transfer of shares
Shares in an NV are freely transferable. The Articles of Association may, however,
provide for restrictions on transfer with respect to shares in the capital of an NV. Transfer
restriction clauses in the Articles of Association are usually in the form of either a right of
first refusal for the other shareholders, or a right of approval. In the event of a right of first
refusal, the shares must first be offered to the other shareholders. In the event of a right
of approval, the General Meeting of Shareholders, the Management Board, or another
corporate body must grant its prior approval to the potential transfer of the shares. The
Articles of Association can also provide for a combination of the two transfer restrictions.
In a BV shares are not freely transferable, since the other shareholders in principle enjoy
a right of first refusal. The Articles of Association may, however, provide otherwise and
they may for example, determine that no transfer restrictions apply or impose different
restrictions (such as a right of approval). In a BV, the Articles of Association may also
restrict the transferability of shares for a certain limited period of time (a lock up period).
However, such lock up provisions may not be imposed on a shareholder against his will.
The transfer of registered shares in the capital of an NV (provided that the shares of
such NV are not listed on an official stock market) and in the capital of a BV, requires the
execution of a notarial deed of transfer between the transferor and the transferee. Unless
the company itself is party to the notarial deed of transfer, the rights pertaining to such
shares can only be exercised after the company has acknowledged the transfer of the
shares or the notarial deed of transfer has been formally served to the company by a court
bailiff (deurwaarder).
Different requirements apply to transferring registered shares in the capital of an NV that
are listed on an official stock market and for transferring bearer shares in the capital of an
NV.

1.6 Corporate Bodies
1.6.1 General
Dutch corporate law provides that a Dutch company must have at least two corporate
bodies, i.e., (i) the Management Board (bestuur) consisting of Managing Directors
(bestuurders), and (ii) the General Meeting of Shareholders (algemene vergadering
van aandeelhouders). Dutch companies may also have a Supervisory Board (raad van
commissarissen), but for most Dutch companies this is not required.
1.6.2 Management Board
The Management Board is the executive body of the company and is charged with the
day-to-day management of the company.
The Managing Directors are appointed and dismissed by the General Meeting of
Shareholders (except for the first members of the Management Board, who are appointed
by the incorporators and identified in the Deed of Incorporation). In a BV, the authority to
appoint and dismiss a Managing Director may also be granted to the meeting of holders of
a specific class of shares, provided that each shareholder with voting rights has the right
to participate in the decision making process for (the appointment and dismissal of) at
least one Managing Director.
It is possible to grant corporate bodies other than the General Meeting of Shareholders
or third parties the right to make a binding nomination for the appointment of one or
more members. The General Meeting of Shareholders, may, however, at all times, by a
resolution passed with at least two-thirds majority of the votes cast for shares representing
over half of the issued capital of the company overrule such nomination.
The Management Board may consist of only one Managing Director, which may be
a natural person or a legal entity. There are no requirements as to the nationality or
residence of Managing Directors (but note that for tax purposes, this may be a highly
relevant issue – see Section 5.9). A trust company can be charged with the management
of the company.
All other duties of Managing Directors that have not been validly assigned to one or
more specific Managing Directors will belong to the duties (task) of each of the Managing
Directors. Each Managing Director is and remains, however, responsible for the general
conduct of affairs, regardless of any valid division of tasks.
In the performance of their duties, the Managing Directors must act in the best interest
of the company. Dutch corporate law recognizes the principle of collective responsibility:

each Managing Director (which includes both executive and non-executive members
in a one-tier board, see for the one-tier board paragraph 1.6.3 below) is collectively
responsible for all the duties of the board and can be held liable for mismanagement if
those duties are not performed properly. In such case an individual Managing Director can
only exculpate himself if he did not act in a seriously negligent manner, also taking into
account the tasks assigned to the other Managing Directors, and if he was not negligent in
acting to prevent the consequences (see paragraph 2.2 below).
Dutch corporate law provides that the Management Board is authorized to represent and
bind the company towards third parties and that each Managing Director is also authorized
to represent the company. If the Management Board consists of two or more members,
instead of each Managing Director being authorized to represent the company, the Articles
of Association may provide for a system of joint representation by, for example, two
Managing Directors, or by providing that only one specific Managing Director (for example
the President Director), is individually entitled to represent the company. Such provisions
have binding effect vis-à-vis third parties only after publication at the Trade Register of the
Chamber of Commerce.
Restrictions in the Articles of Association that state, for example, that certain specific
decisions of the Management Board are subject to prior approval of another corporate
body, will, in general, only have internal effect and have no binding effect vis-à-vis third
parties. Specific resolutions subject to the prior approval of the General Meeting or
the Supervisory Board may be defined in the Articles of Association, or the Articles of
Association may provide that the relevant corporate body is allowed to define those by
separate resolution.
An internal restriction with regard to the authority of the Managing Directors to represent
the company may also be effected by providing that the Management Board is obliged
to comply with instructions given by the General Meeting of Shareholders or another
corporate body. The fiduciary duties of the Management Board, however, imply that
instructions given to the Management Board that are contrary to the interests of the
company can be disregarded by the Management Board. In fact, the Management Board,
which must always act in the best interest of the company, will have to disregard such
instructions.
The Management Board may hold its meetings wherever it deems appropriate, unless the
Articles of Association provide otherwise. Fiscal considerations, however, may necessitate
that Managing Directors reside or that Management Board meetings be convened and
held in the Netherlands.

Decisions of the Management Board may either be adopted by resolutions passed
and recorded in the minutes of an actual meeting, or in the form of written resolutions.
Management Board rules often define further rules on the Management Board’s decision
making process and conflicts of interest.
1.6.3 One-Tier Board
As per January, 1 2013 Dutch law formally recognises the concept of a one-tier board,
which combines executive and supervisory duties within one management body. The
division of tasks between the executive and non-executive Managing Directors must be
laid down in the Articles of Association. Such a division of tasks can, however, not be
implemented without limitation. Executive Managing Directors are excluded from the
chairmanship of the board and from taking part in the decision-making process regarding
nominations for appointment of fellow Managing Directors and regarding their own
remuneration. Any allocation of duties between Managing Directors other than between
the board’s executive and non-executive members can also be made in a separate
(written) document if this is permitted under the Articles of Association.
1.6.4 Supervisory Board
Except in the event that the company has a one-tier board, the Articles of Association of
the company may create a Supervisory Board. For companies that must apply the Large
Company Regime (see paragraph 1.7 below), a Supervisory Board is mandatory.
The members of the Supervisory Board, the Supervisory Directors, are appointed and
dismissed by the General Meeting of Shareholders (with the exception of the initial
members, who are appointed by the incorporators in the Deed of Incorporation). The
Articles of Association may, however, provide that up to one third of the total number of
Supervisory Directors are appointed and dismissed by a third party. A shareholder or a
representative of a shareholder may be appointed as Supervisory Director. The Articles of
Association usually provide for the number of Supervisory Directors, which should consist
of at least one member. Legal entities cannot act as Supervisory Directors.
The principal tasks of the Supervisory Board are (i) to supervise the Management Board
and the company’s general course business and (ii) to advise the Management Board
in connection therewith. In doing so, the Supervisory Board must at all times act in
the interests of the company and its business. The Supervisory Board does not have
the authority to represent or bind the company vis-à-vis third parties. The Articles of
Association may provide that certain specific decisions of the Management Board are
subject to the prior approval of the Supervisory Board.

1.6.5 Limitations on the holding of supervisory positions in and the board composition
of large companies
For large NV’s or BV’s additional restrictions apply which intend to (i) promote gender
diversity and (ii) prevent a dilution of responsibilities of board members. An NV and BV
will be regarded as “large” for these purposes if at least two of the following conditions are
met:
i. The value of the assets of the company according to the balance sheet with
explanatory notes exceeds € 17,500,000;
ii. The net turnover of the company exceeds € 35,000,000; and
iii. The average number of employees of the company regularly employed in the
Netherlands is at least 250.
These conditions differ slightly from the conditions that apply in the context of the so-called
“Large Company Regime” (see paragraph 1.7 below) and one must avoid mixing up the
two sets of rules.
A person may not be appointed as a Managing Director in a large company if he has two
or more other supervisory positions with other large companies or foundations or if he
is a chairman of a Supervisory Board or a one-tier board of another large company or
foundation. Supervisory Directors are prohibited from holding more than five supervisory
positions. Chairmanship of a Supervisory Board or a one-tier board will count as two
supervisory positions. The appointment of a member of either the Management or
Supervisory Board will be void if the number of supervisory positions held by such
member exceeds the maximum number allowed. Limited exceptions apply in relation to
positions held prior to the implementation of the relevant legislation on 1 January 2013
and positions held in group companies and foreign companies.
Furthermore, the positions in a Management or Supervisory Board of large NV’s and
BV’s must be composed in such a way so that at least 30% of the positions are held by
women and at least 30% by men. Non-compliance with this rule must be explained by the
company in its annual report.
1.6.6 General Meeting of Shareholders
All corporate powers not granted by law or by the Articles of Association to any other
corporate body of the company are vested with the General Meeting of Shareholders. By
law, certain matters are solely within the authority of the General Meeting of Shareholders,
such as the appointment, suspension and removal of Managing Directors and Supervisory
Directors, amendments to the Articles of Association, the adoption of the annual accounts,
and the voluntary liquidation of the company. When exercising its powers, the General

Meeting of Shareholders may elect to focus primarily on the interests of the shareholders,
but always within the boundaries of the principles of reasonables and fairness vis-à-vis the
other stakeholders.
In principle, every General Meeting of Shareholders for an NV must take place at the
location of that company’s official seat or any other location specified in the Articles of
Association. For a BV such other location as mentioned in the Articles of Association may
be a place outside the Netherlands. For an NV this specified other location must be in the
Netherlands. Meetings may, however, always be held elsewhere if the entire share capital
issued and outstanding at such time is present or represented. The same is true for a BV,
provided that all persons who are entitled to attend the meeting have given consent to the
alternative place of the meeting and the Managing Directors and Supervisory Directors
were given an opportunity to render their advice prior to the adoption of the resolution(s).
If certain criteria are met it is possible to adopt resolutions in writing without holding a
General Meeting of Shareholders. These criteria differ for an NV and a BV but both require
the consent of all shareholders as no physical meeting is held.
For an NV it is required to hold at least one physical meeting each year. This Annual
Meeting of shareholders must take place within six months prior the end of the company’s
financial year. For a BV, this general Annual Meeting of shareholders may be replaced by
a written resolution without holding a physical meeting.
Every shareholder may at all times appoint by way of a written power of attorney a proxy
to vote at a General Meeting of Shareholders on his behalf.
Resolutions of the General Meeting of Shareholders are, in general, adopted by a simple
majority of valid votes cast, unless the law or the Articles of Association provide otherwise.
Shareholders meetings are convened by the Management Board, the Supervisory Board
or the persons so authorized in the Articles of Association. Shareholders and holders of a
right to attend shareholders meetings representing 1% of the issued shares for a BV and
10% of the issued shares for an NV are entitled to demand the Management Board to
convene a General Meeting of Shareholders. The convocation notice period for a General
Meeting of Shareholders is at least 15 days for an NV and 8 days for a BV.

1.7 Large Company Regime
1.7.1 General
Specific rules of governance apply to companies that are subject to the Large Company
Regime (structuurregime). A Dutch company qualifies for the Large Company Regime if:
i. according to the balance sheet with explanatory notes the sum of the issued capital of
the company and reserves amounts to at least € 16 million;
ii. the company or one or more subsidiaries has, pursuant to a statutory obligation,
established a Works Council; and
iii. the company and its dependent companies together normally employ at least one
hundred employees in the Netherlands.
In short, a company must apply the Large Company Regime if it has met the criteria for
three consecutive years and can stop applying the same if it has during a consecutive
three year period thereafter no longer met (one or more of) the criteria. Dutch law requires
that a large company conforms its Articles of Association to the rules applicable to large
companies.
In the event the company meets the requirements as referred to above, it must establish a
Supervisory Board. A profile regarding the size and composition of the Supervisory Board
is required.
As a main rule, under the Large Company Regime the Supervisory Directors are
appointed by the General Meeting of Shareholders, on the basis of a binding nomination
drawn up by the Supervisory Board. Both the General Meeting of Shareholders and the
Works Council have the right to recommend persons to the Supervisory Board for the
nomination. With respect to one third of the number of members of the Supervisory Board,
the recommendation of the Works Council must be followed by the Supervisory Board.
If the General Meeting of Shareholders does not agree with the nomination of one or
more persons it may reject the nomination where after the Supervisory Board must draw
up a new nomination (with the same recommendation rights for the General Meeting of
Shareholders and the Works Council as for the nomination earlier made).
If the Supervisory Board, Works Council and the General Meeting of Shareholders all
agree, the Articles of Association can prescribe a different appointment procedure.
Supervisory Directors under the Large Company Regime are appointed for a maximum
of four years. As a main rule, the Supervisory Directors in a large company may only be

dismissed at the request of the company by the Enterprise Chamber of the Amsterdam
Court of Appeal. The General Meeting of Shareholders may, however, if it has lost its
confidence in the Supervisory Board as a whole, decide to dismiss all Supervisory
Directors at the same time (after having given the Works Council the opportunity to give its
opinion).
In a company which applies the Large Company Regime – as compared with a regular
company – the Supervisory Board has the following additional powers:
a. Approval Management Board resolutions
Certain important Management Board resolutions are subject to the mandatory prior
approval of the Supervisory Board.
b. Appointment of the Management Board by the Supervisory Board
The Supervisory Board has the power to appoint the Managing Directors. This power
may not be limited by any binding list of candidates. The Supervisory Board must
notify the General Meeting of Shareholders of the intended appointment of a Managing
Director. The Supervisory Board may not remove a Management Director from his
position until the General Meeting of Shareholders has been consulted on the intended
dismissal.
The law creates the possibility for a partial exemption on the rules applicable to large
companies (wich is commonly referred to as the Mitigated Regime). In the event the
Mitigated Regime applies, the Manageging Directors are not appointed and removed by
the Supervisory Board but by the General Meeting of Shareholders.
The Mitigated Regime applies to a company of which at least one half of the issued capital
is held as a participation by:
i. a legal entity, the majority of the employees of which work outside The Netherlands or
by subsidiaries thereof;
ii. two or more legal entitys as referred to under (i) above who cooperate pursuant to a
mutual arrangement (joint-ventures); or
iii. one or more legal entitys as referred to under (i) and one or more companies to which
the rules applicable to large companies apply who cooperate pursuant to a mutual
arrangement (joint ventures).
Under specific circumstances subsidiary companies and companies who operate in
(international) groups may be exempted in full from the Large Company Regime.

1.8 Annual Accounts
1.8.1 General
The Management Board of a company must prepare annual accounts and each Managing
Director (and each Supervisory Director, if any) must duly sign the accounts prepared,
within five months after the end of each financial year, unless by reason of special
circumstances this period is extended by the General Meeting of Shareholders. Such
extension may not exceed six months. Within two months from the end of the period
set for their preparation, the Management Board must submit the annual accounts for
adoption to the General Meeting of Shareholders.
For a BV, if all shareholders are Managing Directors, their signing of the annual accounts
entails the adoption of the annual accounts (and discharge of the Managing Directors).
Once adopted, the Management Board must file the annual accounts with the Trade
Register of the Chamber of Commerce for publication within eight days. If the General
Meeting of Shareholders has not adopted the annual accounts of the company within 13
months after the end of the financial year, the Management Board must still file without
delay and with notification that these accounts have not (yet) been adopted.
The Managing Directors of a company in bankruptcy can be held liable in person for the
deficit of the bankrupt estate if it is established that the bankruptcy is due to ‘evidently
improper management’ during the last three years preceding the bankruptcy. Failure to file
the annual accounts in time in one or more of the three years preceding the bankruptcy
constitutes prima facie evidence of evidently improper management.
1.8.2 Annual accounts – contents
The annual accounts must consist of a balance sheet, a profit and loss account, and the
explanatory notes thereto, and must be drawn up in accordance with the Dutch Civil Code.
The company must appoint an auditor to audit the annual accounts and issue an auditor’s
report. If the company qualifies as a ‘small company’ it is exempted from the audit
obligation. A company qualifies as a small company if it meets at least two of the three
following criteria, on both the opening and closing balance sheet for two consecutive
financial years:
i. The value of the assets according to the balance sheet with explanatory notes
amounts to less than € 4,400,000;
ii. Net annual sales amount to less than € 8,800,000;
iii. The average number of employees in the financial year is less than 50.

In addition, a company forming part of a group of companies may draw up its annual
accounts in a much more limited form, provided that the terms and conditions of Section
2:403 Dutch Civil Code have been met. The most important of these terms and conditions
is the issuing of a written declaration by the parent company stating that it accepts joint
and several liability for debts of the company arising from (past, present and future) legal
acts (the ‘403 liability statement’ as discussed in paragraph 2.5 below).
If the aforementioned section on ‘small companies’ applies, (i) the content of the balance
sheet and the profit and loss account may be limited; (ii) the content of the explanatory
notes thereto may be limited; (iii) no auditor’s statement is required, and (iv) the annual
accounts do not have to be filed with the Trade Register of the Chamber of Commerce.
1.9 Liquidation
1.9.1 General
This paragraph provides an overview of the statutory provisions relating to the liquidation
procedure for a company. Although there can be various legal causes for the liquidation
of a company, here we will limit ourselves to discussing the liquidation on the basis of
a resolution to that effect passed by the General Meeting of Shareholders. Three types
of procedures are described: the standard procedure, the ‘turbo’ liquidation, and the
‘accelerated’ liquidation.
1.9.2 The standard procedure
The procedure of liquidation of a company has two stages: the dissolution of the company,
and the winding up of its assets and liabilities. The dissolution reduces the objects of the
company: it continues to exist only insofar as is required for the purpose of the liquidation
of its assets and liabilities and it may not transact any business other than is necessary for
liquidation. The winding-up consists of the settlement of the accounts (including paying the
company’s creditors), and the realization of the non-cash assets for the purpose of making
a final distribution of the liquidation proceeds to the shareholders and other potential
parties entitled thereto by virtue of the Articles of Association.
The liquidation procedure begins with a resolution of the General Meeting of Shareholders
to dissolve the company and to liquidate its assets, to appoint the liquidators, and to
appoint a custodian for the corporate books and records.
If the company has a Supervisory Board, this corporate body must approve the
shareholders’ resolution of the General Meeting of Shareholders to dissolve the company.

Except if the Articles of Association provide otherwise, or in case of a specific appointment
of another person or persons in the shareholders’ resolution to dissolve the company, the
Managing Directors in office at the time of the adoption of the shareholders’ resolution
will act as liquidators. If a specific appointment is made in the shareholders’ resolution,
the Trade Register of the Chamber of Commerce must be notified of the resignation of
the members of the Managing Directors who are not appointed as liquidators. Finally, the
provisions contained in the company’s Articles of Association regarding the appointment
of members of the Managing Director must be observed with respect to the appointment
of a liquidator who is not a member of the Management Board, unless the Articles of
Association provide otherwise.
The resolution to dissolve and liquidate must be registered with the Trade Register of
the Chamber of Commerce. From the moment of the dissolution, the Dutch words ‘in
liquidatie’ must be added to all publications, letters and announcements by the company.
The period of winding-up commences immediately upon the dissolution.
The liquidators have the same powers, obligations and liabilities as the former members
of the Managing Directors; they decide autonomously as to how the assets are liquidated,
although their authority may be subject to some of the same constraints (possible statutory
limitations or conditions, approval by other corporate bodies) as the Management Board
was subject to prior to the dissolution. If the assets of the company are not sufficient to
settle all debts, the liquidators must apply for bankruptcy on behalf of the company, unless
all creditors agree to the continuation of the liquidation outside of bankruptcy.
The liquidators must prepare a final account of the liquidation, as well as a ‘distribution
plan’ (plan van verdeling), providing for the distribution of the balance of the liquidated
company to the parties entitled thereto (shareholders and other parties which, according
to the Articles of Association, are entitled to a part of the balance). If there is only one
interested party (a sole shareholder) the plan of distribution is not necessary. The final
account and the plan of distribution must be deposited at the company’s office address, if
such office address still exists, and must be filed with the Trade Register of the Chamber
of Commerce at which the company is registered. The liquidators must publish a notice
in a nationally distributed daily newspaper, indicating the location where the final account
and the plan of distribution are available for public inspection. Upon publication of this
notice a two-month period commences during which any interested person may file
objection to the final account or the plan of distribution. Upon expiration of the two-month
period, distribution of the liquidation proceeds in accordance with the plan of distribution
may take place, unless objections have been filed.

Upon termination of the liquidation procedure, the company’s books and records must be
retained by the custodian for a period of seven years. The Trade Register of the Chamber
of Commerce must be notified of the termination of the liquidation procedure and of the
name and address of the custodian of the corporate books and records.
In the event it appears at a later stage date that an asset still remains to be liquidated, or
that a creditor or beneficiary has not been taken into account, the liquidation procedure
may be ‘reopened’ by court decision. In such case, the company ‘revives’, but only for the
purpose of re-liquidating the balance; to the extent that the beneficiaries have received a
distribution of liquidation proceeds that, as it appears in the reopened procedure, was too
high, the liquidator is authorized to reclaim the balance of the excess.
1.9.3 ‘Accelerated’ liquidation and ‘turbo’ liquidation
The standard liquidation procedure may be accelerated if – after the shareholders’
resolution to dissolve has been adopted, and the company has registered its liquidation
with the Trade Register of the Chamber of Commerce, and the (currently known) debts of
the company have been settled – the liquidator is willing to distribute the remaining assets
of the company among the beneficiaries by way of a ‘distribution in advance’. In the event
that such a distribution takes place during the period of two months referred to above in
paragraph 1.9.2, prior approval of the appropriate district court is required in order to make
such distribution. Such distribution in advance may be attractive from a fiscal point of view,
for instance, if the distribution still falls within the current book year.
Since the possibility exists that the assets distributed in advance may have to be (partly
or wholly) recovered to effect a redistribution (see below), an ‘accelerated liquidation’ is
only warranted if (i) the liquidator has reason to assume that there are no other creditors;
(ii) the beneficiaries of the final balance of the company are few in number; and (iii) the
beneficiaries ensure, for instance by way of a guarantee, that they will reimburse (part
of) the distribution in advance if it would appear that a creditor was passed over or would
contest the distribution.
Although in practice little or nothing remains to be liquidated, the liquidators still must
prepare a final account of the liquidation, as well as a distribution plan. Normally, this is a
mere formality, but the possibility still remains that an unknown creditor can be identified
as a result of the publication or that an objection may be filed during the two months’
period following the publication. In such case, as mentioned, the assets distributed in
advance may have to be (partly or wholly) recovered to effect a re-distribution. Should
recovery not be possible and should one or more creditors thus remain unsatisfied, the
liquidator(s) will be personally liable for the loss or losses thus incurred.

Notwithstanding the above, the company ceases to exist at the very moment of the
resolution of the General Meeting of Shareholders to dissolve the company, if it does not
have any assets or liabilities at such moment. In such case, there will be no winding-up
procedure and consequently, no liquidators have to be appointed. This is usually referred
to as ‘turbo’ liquidation. The Management Board must file the ending of the company with
the Trade Register of the Chamber of Commerce. The company’s books and records must
be kept with the custodian for a period of seven years.
1.10 Dutch Partnership Law
1.10.1 General characteristics
The two most common forms of a Dutch Partnership are the general partnership
(vennootschap onder firma or ‘v.o.f.’), i.e., a partnership between two or more general
partners, and the limited partnership (commanditaire vennootschap or ‘CV’), i.e., a
partnership between one or more managing partners and one or more limited partners.
A partnership created under Dutch law is created by means of a partnership agreement
for the purpose of durable cooperation between one or more partners (vennoten). The
general partners in a v.o.f. and the managing partner(s) (beherend vennoten) in a CV each
have unlimited liability, whereas the liability of the limited partners in a CV (commanditaire
or stille vennoten) is, in principle, limited to the amount of their capital contribution. A Dutch
Partnership is an agreement between its partners and does not constitute a separate legal
entity. However, a Dutch Partnership can sue and be sued and enter into contracts in its
own name.
Since the partnership is an agreement, statutory provisions of contract law, of both a
general and partnership-specific nature, apply to the v.o.f. and to the CV insofar as
these provisions are of a mandatory nature, or if the partnership agreement contains
no provisions regulating a certain matter. It is noted that the number of these statutory
provisions is limited.
1.10.2 Legal requirements
A partnership is established only if the following conditions are met:
i. The agreement must have been entered into with the intention to create and regulate a
durable cooperation (samenwerking) between the parties.
ii. The partners enter into the agreement in order to obtain common benefits by
establishing a business enterprise (bedrijf) for the common account of the partners and
under a common name. Although the law does not provide a definition of a ‘business
enterprise’, the prevailing view among legal commentators in the Netherlands is that a

‘business enterprise’ exists only in the case of a durable and public economic activity
with the purpose of making a profit. If the cooperation between the parties is not
durable, but rather is limited to a sole transaction or business project, the partnership
agreement will not constitute a partnership. In order to act in a public manner, a
partnership must conduct its economic activities in a manner that is clearly notable to
third parties. It must, therefore, conduct its activities under a common name.
iii. Each partner (including the managing partner or managing partners of a CV) is under
an obligation to make a contribution to the partnership. The contribution may be of a
nominal nature, and may also consist of services or expertise.
iv. A v.o.f. must have at least two general partners, whereas a CV must have at least one
managing partner and one limited partner. Without limited partners, a CV qualifies
between the managing partners as a general partnership.
v. In order to qualify as a Dutch Partnership, the partnership agreement has to be
governed by Dutch law.
1.10.3 Formation and management of a Dutch Partnership
A Dutch Partnership is formed by an agreement between two or more partners, each of
which may be an individual or a corporation, either for a limited or an unlimited period of
time. The partners are not required to be Dutch citizens, a corporation in or residents of
the Netherlands.
A partnership agreement must be entered into in writing. There are no additional formal
requirements (such as a notarial deed or government approval) with respect to the
formation of a Dutch Partnership. As far as the terms and conditions of the partnership
agreement are concerned, generally, the concept of “freedom of contract” applies, i.e.
the parties to a partnership agreement are, in principle, free to determine the content of
the agreement among themselves. It is noted that third parties are not expected to check
the existence of a written partnership agreement: the absence of it may not be invoked
against them.
The v.o.f. is, in principle, managed by all of its partners and may be represented by all
of its partners. The partnership agreement may contain specific divisions of tasks or
authorities, but these only have an internal effect. A CV is managed by its managing
partner(s). A managing partner is responsible for the day-to-day affairs of the CV. In
addition, the managing partner is authorized to represent and validly bind the CV to third
parties. If there are more managing partners, each managing partner has the power and
authority to individually represent and bind the C.V., unless the partnership agreement
provides otherwise.

Any limited partner in a CV may not represent (directly or by proxy) the CV or act or
appear to act on behalf of the CV. Also, his name may not appear in the partnership’s
name. If the limited partner represents the CV or otherwise acts on behalf of the CV or
his name appears in the partnership’s name, such limited partner becomes jointly and
severally liable for all debts and obligations of the CV as if he were a managing partner.
1.10.4 Capital, assets and annual accounts of a Dutch Partnership
Unlike the rules applicable to an NV, Dutch law does not prescribe any statutory minimum
capital for a partnership and no provisions under Dutch law require that a certain
minimum amount of capital be retained in the partnership. The interests in the capital of a
partnership may not be referred to as shares.
Since a Dutch Partnership is not a legal entity, it is not capable of having the legal
ownership of the partnership’s assets. Contribution of an asset to the partnership by the
partners at the time of formation or otherwise is considered to have a contractual basis
(verbintenisrechtelijke grondslag). The combined contributions of the partners form, in
principle, a community of property (goederenrechtelijke gemeenschap) between the
partners.
Assets may be contributed to the community of property of (a) full (i.e., legal and
beneficial) title to the assets (volledige eigendom); (b) the beneficial title to the
assets (economische eigendom); and (c) the right of use with respect to the assets
(gebruiksgenot). To avoid any uncertainty as to the form and legal consequences of
contribution, the partnership agreement must provide for detailed provisions with respect
to initial and future contributions of assets by the partners.
Dutch legal doctrine holds in general that movable assets (roerende zaken) acquired
by the general partners of a v.o.f. in their capacity as such or by the managing partner
acting on behalf of the CV during the lifetime of the CV automatically become part of the
partnership’s estate, i.e. the community of property that exists between all partners. The
(managing) partner acting in such capacity is assumed to act as an agent (middelijke
vertegenwoordiger) on behalf of the partnership and thus, movable assets acquired by
him will belong to the partnership’s estate unless otherwise provided in the partnership
agreement or stipulated in a particular transaction.
Real estate or immovable assets (onroerende zaken) that are acquired by the managing
partner during the lifetime of the partnership will only form part of the community
of property if the (managing) partner transfers the immovable assets to the limited
partnership in joint ownership and in compliance with applicable transfer formalities.

Nonetheless, the beneficial title to such immovable assets can be assumed to be acquired
on behalf of the partnership, on the same basis as movable assets.
Dutch law contains no special requirements as to the contents of the annual accounts
of a Dutch Partnership, unless all managing partners are corporations incorporated
under foreign law, in which case the partnership is subject to Dutch financial reporting
requirements.

2 Miscellaneous corporate issues
2.1 Introduction
This chapter contains a brief outline on various corporate issues, including director’s
liability, shareholders’ liability for the debts of a company, the ‘ultra vires’ issue, the ‘403
statement’. It furthermore describes various types of corporate litigation matters.
2.2 Director’s Liability
2.2.1 General
A distinction can be drawn between the internal and the external liability of Managing
Directors. The internal liability exists towards the company and arises from the contractual
relationship between the Managing Directors and the Supervisory Directors (if any) on the
one hand, and the company on the other hand. The external liability is a liability towards
third parties, such as creditors of the company or the tax authorities, but also shareholders
of the company.
2.2.2 Internal liability, i.e., Managing Director(s) vis-à-vis the company
As a general rule, a Managing Director is jointly and severally liable for improper
performance of duties only in case of serious culpability (ernstig verwijt). Improper
performance of duties can consist of acting (or failure to act) in violation of the law or
the Articles of Association, or acting in a clearly unreasonable way. Whether or not the
Management Board has performed his duties improperly or was seriously negligent, will
depend on the specific circumstances of the case.
In a BV, specific rules apply that define the responsibility of the Management Board
towards the company for distributions. Distributions may only be made by a BV to
shareholders or other persons entitled to such distributions with prior approval of the
Management Board. Prior to granting such approval, the Management Board should
perform a ‘solvency test’. If, based on the solvency test, the Management Board
concludes that, after the contemplated distribution, the company will no longer be able to
satisfy its payable debts, it is required to withhold its approval. A distribution without the
approval of the Management Board is null and void. If, after an approved distribution, a
BV cannot continue to pay is outstanding debts, the Management Board members can
be held liable vis-à-vis a BV for the amount of the distribution (with statutory interest), if
they knew or reasonably should have foreseen that the company would not be able to
continue paying its debts. Also shareholders of a BV can be obliged to repay the amount

received if they knew or should reasonably have been aware of the solvency risk of the
distribution. Similar rules apply with respect to resolutions to (i) reduce the share capital
of the company with a repayment in respect of the shares and (ii) purchase shares in the
capital of the company (a buy back) or the parent company.
The General Meeting of Shareholders (and in specific cases, the Supervisory Board) may
grant discharge to the Managing Directors. As a rule, discharge granted to a Managing
Director for management performed during a specific period, prevents the company from
holding him liable for his management in the relevant period. In principle, a discharge
can only release a Managing Director from liability for matters which are apparent from
the annual accounts or which are otherwise notified to shareholders. Discharge does
not release the Managing Director from liability for acts which the shareholders could
not reasonably have had knowledge about (such as undiscovered fraud). In principle,
discharge only applies to internal liability and not external liability.
2.2.3 Liability in bankruptcy
Each Managing Director is jointly and severally liable for the shortfall of the bankrupt
estate if the Management Board has evidently improperly performed its duties and the
improper management was a contributing factor to bankruptcy. An individual Managing
Director can exculpate himself, if he proves that he has not been negligent insofar as
the improper management is concerned and he has not acted negligently with regard to
taking measures to prevent the consequences thereof. Any situation where no reasonable
Managing Director would have acted in such manner under the same circumstances
would constitute improper management.
The relevant legislation attaches special importance to the obligation of maintaining a
proper administration and the obligation to prepare, adopt and publish annual accounts
(see paragraph 1.7 above). If one of these obligations is neglected, the act contains two
statutory presumptions, namely, an irrefutable presumption that the Managing Director has
improperly performed his duties, and a refutable presumption that the violation of these
obligations was an important contributing factor to the bankruptcy. In order to rebut this
refutable presumption, the Managing Director must give prima facie evidence that external
factors other than improper management importantly contributed to the bankruptcy. Unless
the trustee in bankruptcy can give prima facie evidence that the improper management
was also an important cause of bankruptcy, the management is exonerated.
The claim against the Managing Director(s) is instituted by the trustee in bankruptcy on
behalf of the collective creditors. Only improper management in the three-year period prior
to bankruptcy can serve as a basis for a claim. The court has the power to reduce the
amount for which the Managing Directors are liable on a collective or individual basis. The

‘policy maker’, i.e. the person who determined the policy of the corporation as if he were a
Managing Director, is liable to the same extent as the Managing Director.
2.2.4 Misleading annual accounts, annual report and interim accounts
If the annual accounts, the annual report or the interim accounts published by the
company contain a misleading presentation of the financial situation of the company,
the Managing Directors are jointly and severally liable towards third parties for damages
suffered as a result thereof. A Managing Director who proves that the misleading
presentation is not attributable to him is not liable.
2.2.5 Liability for tax debts, social security premiums and pension fund contributions
A Managing Director can be held jointly and severally liable for income tax and VAT, social
security premiums and pension fund contributions owed by the company. In the relevant
legislation importance is attached to the duty of a Managing Director to timely notify the
authorities of an inability on the part of the company to make a payment with respect
to these obligations. In the event this notification obligation is observed, the Managing
Director can only be held jointly and severally liable for the payment of taxes or premiums
if the non payment is caused by evidently improper management (which is very difficult to
prove).
2.2.6 Tort
A Managing Director can be liable in tort. In particular, actions that are prejudicial to
creditors, cause environmental pollution, or give a misleading presentation in a prospectus
may result in liability in tort attributed to such Managing Director.
Prejudice to creditors
Pursuant to case law, a Managing Director is liable if he entered into a contract on behalf
of the company while at the time of the conclusion of such contract he knew or had reason
to know that the company would not, or would not within a reasonable period of time, be
able to fulfil its obligations and would not have (sufficient) assets against which the creditor
could take recourse. The burden of proof rests, in principle, on the prejudiced creditor.
Environmental damage
A Managing Director can be liable with respect to third parties (including the government)
in the case of environmental damage (soil and water pollution) caused by the company.
Case law relating to environmental pollution tends to more easily attribute liability to
Managing Directors than tort law in general. Personal liability is attributed if it was
within the power of the Managing Director to prevent the environmental damage and he
neglected to take action.

Prospectus liability
A Managing Director can be liable with respect to third parties for a misleading
presentation of the financial position of the company in a prospectus. The relevant rules
shift the burden of proof with respect to the misleading presentation to the issuer of the
prospectus.
2.2.7 Registration with Trade Register and payment on shares
Each Managing Director is jointly and severally liable with the company with respect to
third parties for each legal act that is performed during his management period and by
which the company is bound in the period of time before the initial registration with the
Trade Register of the Chamber of Commerce has taken place.
Managing Directors of an NV are also liable for each legal act that is performed during
their management period and by which the company is bound in the period of time before
either (i) the statutorily required minimum capital of € 45.000 has been paid in (see again
paragraph 1.4.5 above); or (ii) a minimum of 1/4th of the nominal issued capital has been
paid in.
2.2.8 Liability in case of legal entity as Managing Director
To prevent Managing Directors from hiding behind a legal entity in case of liability,
Dutch law provides that, if a company is managed by a legal entity, each person who is
a Managing Director of this legal entity at the time that a certain liability arises is jointly
and severally liable for such liability in addition to the legal entity which manages such
company.
2.3 Liability of a shareholder for the Debts of a company
2.3.1 General
The following describes the most significant ways in which a shareholder can involuntarily
become liable for debts and obligations of a company. Voluntary assumptions of liability
for the debts of a company (e.g., by way of contracts, guarantees or otherwise) are not
discussed here.
2.3.2 Main rule and exceptions
A shareholder is, in principle, not personally liable for acts performed in the name of the
company and he is under no obligation to contribute to the losses of the company in
excess of the amount to be paid on his shares.
An exception applies in the event a shareholder received distributions from the company,
whilst he knew or reasonably should have known that the company could, as a

consequence of this distribution, not continue to pay its outstanding debts (see paragraph
2.2.2 above)
Relevant Dutch case law, has also recognized various other grounds which, under
exceptional circumstances, can result in liability of a shareholder for the company’s debts
and obligations. The main ones are (i) a tort (onrechtmatige daad) committed by the
shareholder and (ii) an alter ego situation (vereenzelviging) as regards the shareholder
and his company. Both can be categorized under the heading ‘lifting or piercing the
corporate veil’.
A shareholder may be held liable for the debts and obligations of a company if the
existence of such debts and obligations constitutes a tort on the part of the shareholder.
This would be the case, for example, if the shareholder creates a misleading appearance
of solvability of the company. Another example of how this liability in tort is construed is
a case in which the shareholder, either as a creditor of the company or in capacity as
shareholder, creates an unjust ‘edge’ for himself in comparison with the company’s other
creditors.
Furthermore, Dutch courts have held shareholders liable in tort for the company’s
actions if and when such court found that a shareholder and a company are insufficiently
independent. In such case of alter ego the court will not respect the corporate
separateness of the company and will, instead, hold that the shareholder and the
company are to be viewed as one and the same as far as debts and obligations vis-à-vis
third parties are concerned. In general, the Supreme Court is highly reluctant to draw this
conclusion and only does so under special circumstances. Needless to say, numerous
independent facts can be considered that together result in a situation in which a court
is likely to hold that a disregard for the corporate separateness is warranted on the
grounds of identification. In its determination, the court will examine many factors under a
‘balancing test’. This typically means that no specific weight will be given to any particular
‘piercing factor’, and the court will have broad discretion in deciding each case according
to its particular facts. It is therefore often difficult to predict the outcome of a challenge to
the corporate separateness of a shareholder and his company, particularly if the corporate
group operates in a highly integrated fashion.
2.4 Ultra Vires
2.4.1 General
Under relevant Dutch law, a legal transaction entered into by a company can be nullified
in the event that the transaction is beyond the scope of the company’s objects (ultra
vires) and the other party to the transaction knew or reasonably should have known this

without further investigation. Most authoritative writers take the view that the acts of a
company must be in its best interests, in the sense that such acts must be conducive to
the realization of the objects of the company as laid down in the relevant objects clause
its Articles of Association. Only the company itself or a trustee in bankruptcy is entitled to
invoke the nullification of the transaction.
2.4.2 Ultra vires in the event of issuance of security
The issuance of security by the company to a lender raises the question whether this
issuance might be voidable under the ultra vires concept. Especially in respect of the
financing of a group of companies (or one company out of a group of companies) whereby
a security interest is granted in order to secure the obligations of an affiliate, the ultra vires
doctrine is complex, with many grey, undecided, areas.
Downstream security (a parent granting a security interest in its assets in order to secure
the obligations of a subsidiary) does not in most cases cause a problem since the
granting of a security interest for the obligations of a subsidiary is usually considered to
be within the corporate objects of the (parent) company. Assuming that the entering into
the transaction in respect of which a security interest is granted is in the interest of such
subsidiary – which is normally the case – the granting of the security interest is in the
best interest of the (parent) company because the (continued) well-being of its subsidiary
ensures the well-being of the (parent) company.
As for upstream security (a subsidiary issuing security for the obligations of a parent
company) the Dutch courts have, in a limited number of cases, accepted the nullification of
the granting of such security interest on the basis of the ultra vires doctrine. This, however,
always occurred in fairly specific circumstances, for example, because the granting of
the security interest was not provided for in the corporate objects clause of the company.
The opinions in literature differ considerably as to the question of whether and, if so,
under what particular circumstances, the granting of an upstream security interest can be
nullified.
Furthermore, with respect to upstream security or lateral security interests, a distinction
can generally be drawn between group financing pursuant to which all subsidiaries are
borrowers under the credit facilities or are entitled to use the credit facility extended to the
parent or a group finance company (group financing) on the one hand, and the financing
of one particular borrower for the purpose of its own activities on the other. Although the
ultra vires test would be no different, group financing gives rise to less risk because in all
likelihood the interests of the companies involved in the financing would be more clearly
served, and therefore the issuance of security would be equally in the interest of the
companies.

2.5 403 Statement
A parent company may voluntarily assume joint and several liability for any liabilities
arising from legal acts performed by one or more of its direct or indirect subsidiaries
(with the exception of liability arising from tort) in the form of a ‘403 Statement’. This is a
statement issued by the parent company, pursuant to Section 2:403 Dutch Civil Code.
The main reason for issuing this kind of statement is that the annual accounts of the
subsidiaries are governed by less strict rules than would otherwise apply (provided that
certain other criteria are also met). Consequently, the creditors may rely on the information
and liability of the parent company. Based on the above, it follows that the annual
accounts of the parent company and the subsidiary must be presented on a consolidated
basis.
If one of the debtors, parent or subsidiary, has settled the claim, they are both discharged
from liability. The Dutch Supreme Court has confirmed that the creditors of a subsidiary
can simultaneously hold the parent company and its subsidiary liable pursuant to a
403 statement. Consequently, it is not a pre-requisite to first take recourse against the
subsidiary before taking action against the parent.
2.6 Conflict resolution
2.6.1 Inquiry proceedings
In the Netherlands a unique procedure exists for corporate conflicts which is called the
right of inquiry (recht van enquête). If the Enterprise Chamber of the Amsterdam Court of
Appeal finds that there are valid reasons to doubt the proper policy or correct course of
affairs of the company, it will order an inquiry and appoint one or more experts with a view
to conducting an investigation.
In an NV or BV with an issued capital of no more than € 22.5 million, the Enterprise
Chamber may order such inquiry at the request of shareholders representing at least
the lower of either 10% of the issued capital or a par value of € 225,000. In an NV or
BV with an issued capital that exceeds € 22.5 million, a similar request can be made by
shareholders representing at least the lower of either 1% of the issued capital, or, in the
event the company’s shares are issued on a publicly listed, a par value of € 20 million.
Also, a similar request can be made by the company itself and certain other parties, such
as the public procecutor’s office.
The performance of the duties of the Managing Directors and Supervisory Directors and
even the behavior of the shareholders may be subject to such inquiry. If, on the basis
of the report of the court appointed experts, the Enterprise Chamber concludes that

it is indeed a matter of mismanagement, it may, at the request of the initiators of the
proceedings, take one or more of the following measures:
i. suspension or annulment of a resolution of the Management Board, Supervisory
Board, General Meeting of Shareholders or any other body of the company;
ii. suspension or dismissal of one or more Management Board or Supervisory Directors;
iii. temporary appointment of one or more Managing Directors or Supervisory Directors;
iv. temporary deviation from certain provisions in the Articles of Association (as specified
by the Enterprise Chamber);
v. temporary transfer of the shares of the company to a trustee; and
vi. winding up the company.
The Enterprise Chamber also has the power to take provisional measures. Such
measures can, under certain circumstances even be ordered before the request for an
inquiry has been decided upon. There is no (exhaustive) list of such provisional measures
in the Dutch Civil Code or otherwise. In practice, this is a very important and frequently
used remedy. Generally, the purpose of the provisional measures is to force a break of
a deadlock or, alternatively, to maintain the status quo. For instance, if preferred shares
are issued to a befriended foundation as an anti-takeover measure, the suspension of the
voting rights on such preferred shares could be requested as a provisional measure. As a
provisional measure, the Enterpise Chamber can also appoint one or more Management
Board or Supervisory Board members with specific (extensive) powers. In practice, such a
temporary Managing Directors or Supervisory Directors may act as a mediator.
2.6.2 Squeeze out
Dutch law provides for two procedures which could be used to legally force minority
shareholders to transfer the shares they hold in the capital of an NV on the basis of their
limited shareholding. It is a simple procedure to determine the fair price that remaining
shareholders will receive.
The general squeeze-out procedure laid down in Section 2:92a Dutch Civil Code is
available for a shareholder who holds at least 95% of the shares and voting rights in a
company.
The squeeze-out procedure laid down in Section 2:359c Dutch Civil Code is available for
an offeror, who has acquired, through a public offer, at least 95% of the shares and voting
rights of the target. In addition, the same kind of procedure is available for remaining
shareholders to sell their shares to a majority shareholder who has acquired, through
a public offer, at least 95% of the shares and voting rights of the target. This procedure
is only available within three months after the end of the acceptance period. After such

period, the shareholder can still initiate squeeze-out proceedings on the basis of Section
2:92a Dutch Civil Code.
2.6.3 Force-out
Dutch law also recognises a different squeeze out procedure in the event of misbehaving
shareholders. One or more shareholders in a BV or in an NV who, by themselve or jointly,
hold at least one-third of the issued capital, can institute legal proceedings to force-out any
other shareholder, who prejudices or has prejudiced the interests of the company to such
an extent that the continuation by that shareholder of its holding can reasonably no longer
be tolerated.
The interests of the company cannot be considered prejudiced by shareholder only
because the relation between the shareholders is strained. What matters is that the
shareholder in its capacity as a shareholder has misbehaved. Misbehaviour may include
an unwillingness of a shareholder to reasonably consult with other shareholders,
unreasonably blocking the decision making process in the General Meeting of
Shareholders, or voting against each proposal made in the General Meeting of
Shareholders. The price to be paid for the received shares is determined by the court
(taking into account any contractual agreement or relevant provisions in the Articles of
Association), which usually appoints one or more experts to advise on such determination.
2.6.4 Buy-out
In a similar way, any shareholder may request the court to require the other shareholders
to purchase its shares if they are prejudicing the shareholder’s rights to such extent that
the shareholder can reasonably no longer be expected to remain a shareholder. Contrary
to the aforementioned procedure (force-out), actions and omissions outside the scope of
his shareholding (e.g. in its position as competitor of the company) may be relevant here.

3 Joint ventures
3.1 Introduction
Joint ventures are not expressly regulated in Dutch law. The term “joint venture” comprises
a variety of types of cooperation between two or more enterprises. A distinction is often
made between unincorporated joint ventures (such as a partnership) and incorporated
joint ventures (such as an NV or BV). For purposes of this Chapter 3, the focus is on
incorporated joint ventures which take the form of a BV. The usage of the Cooperative
(Cooperatie) and the Foundation (Stichting) for joint ventures is briefly discussed as well.
The latter two are not discussed in detail but some specific joint venture related comments
are set out in Sections 3.8 and 3.9 below. This Chapter is by no means exhaustive on
the topic of joint ventures, but merely aims to provide an introduction on a number of key
areas of relevance when setting up a joint venture in the Netherlands.
3.2 Reasons to use Dutch entities in general
Dutch entities are often used as a joint venture vehicle in an international context.
There are numerous examples where non-Dutch enterprises structure their joint
operations (whether in the Netherlands or elsewhere) through an entity established in the
Netherlands. Reasons for the usage of Dutch entities for joint venture (and for holding)
purposes in an international context include the following:
3.2.1 Tax structuring
Proper tax structuring reduces the overall global tax burden of internationally organized
groups. The extensive tax treaty network which the Netherlands traditionally maintains
with a series of other countries, its membership of the European Union, and the beneficial
Dutch tax regime for withholding tax, capital gains, income received from subsidiaries, and
certain other specific tax benefits, are all available to foreign investors and joint venture
partners. This makes the Netherlands a jurisdiction of choice for group structuring and for
international joint ventures alike.
In order to benefit from the Dutch tax regime applicable to all Dutch corporate entities, so-
called substance rules need to be observed. This implies, amongst others, that a specific
percentage of the Managing Directors have to be resident in the Netherlands (regardless
of their nationality). The proper implementation of the necessary requirements to qualify
for tax benefits is a critical element in dealing with, for example, the chosen governance
model of a joint venture (see also Section 5.9 below).

Legal Aspects of Doing Business in the Netherlands

Legal Aspects of Doing Business in the Netherlands

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