PROVISIONS IN THE ARTICLES OF ASSOCIATION TO PREVENT EXCESSIVE DIVIDEND DRAWS
Much room for withholding and distribution rules
With respect to the ‘risk’ of (excessive) dividend draws, it is not necessary to give all shares a right to share in the profits. If a company has shares with different par values, the articles of association will have to contain a provision dealing with each right to share in the profits.
Further, as a general rule the law stipulates that the general meeting of shareholders will decide on distribution or withholding of profit as well as making other distributions from the equity capital, and that every shareholder has a right to an equal amount. However, the articles of association may provide otherwise. A company may basically deal with these matters at its own discretion.
For example, instead of the meeting of shareholders, the board of directors can be appointed as the authorized body with regard to any decision for distribution or withholding. Netherlands Antilles law stipulates that the articles of association of the NV or BV can provide for distribution, completely or partially, by a body specifically appointed for that purpose. So, Netherlands Antilles law leaves much room for distribution (and, therefore, also for withholding) rules, including for the body that decides on these matters.
Karel Frielink / Ursus van Bemmelen
Curacao-based Attorneys (Lawyers)
