THE RIGHT TO SHARE IN THE PROFITS OF THE ARUBA COMPANY WITH LIMITED LIABILITY
It is not necessary to give all shares a right to share in the profits
On January 1, 2009 the new Aruba Ordinance on the company with limited liability (vennootschap met beperkte aansprakelijkheid; VBA) became effective. This legislation gives shareholders far more freedom to organize their company than in the past
It is not necessary to give all shares a right to share in the profits (Section 38 par. 5 Ordinance). If shares have a par value, it is obvious that the right to share in the profits is related to that value. If there are shares with different par values, the articles of association will have to contain a provision dealing with each right to share in the profits. Besides shareholders, others may also be entitled to the profits, for example holders of profit-sharing certificates.
The general main rule is that the General Meeting of Shareholders will decide on distribution or withholding of profit and making other distributions from the equity, and that every shareholder has a right to an equal amount. However, the articles of association may provide otherwise. A company may deal with these matters at its own discretion, as long as the requirement of one share of “full value” has been met (Section 21 par. 5 Ordinance). Instead of the Meeting of Shareholders, for example, the Board of Directors or the Supervisory Board can be appointed as the authorized body concerning a decision for “distribution or withholding”.
The Ordinance stipulates that the articles of association of the VBA can provide for distribution, completely or partially, by a body specifically appointed for that purpose, for example the Supervisory Board (Section 38 par. 2 Ordinance). Furthermore, there is no obligation to provide for distribution rules themselves in the articles of association. Sometimes this can be desirable: groups with twin-shares, joint-venture relationships and family companies can be considered, or cases in which not all shares need to be treated equally. The Ordinance does not contain any standard for the body that decides on the distribution.
Karel Frielink
Attorney (Lawyer) / Partner
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