THE CURACAO MEMBER-MANAGED COMPANY
The right form for small businesses
Until March 1, 2004 only manager managed companies were known. According to the current Curacao Civil Code, the articles of a company may provide that such company be a member managed company, which is a company without a board of directors. The shareholders (members) are then in charge of the company, including its day-to-day affairs. A member managed company is suitable for smaller companies, e.g. family businesses, with only one or a few shareholders.
If such designation is absent in the articles of a company, the company will be a manager managed company. The designation of a limited liability company as either member managed or manager-managed is important because it defines who the agents are and therefore have the apparent authority to bind the company. In a member managed company, the members have the authority to bind the company. Members possess actual authority by implication unless the actual authority is restricted in the Curacao Civil Code, the articles of association or the shareholders’ agreement. The designation of a company as a member managed company requires the express consent of all shareholders entitled to vote.
In a shareholders’ agreement, the shareholders (members) and the company may further lay down the manner in which they will manage the company, the allotment of duties in respect thereof, levels of remuneration and the manner in which decisions will be taken. Such an agreement requires the consent of all shareholders and the company. Each member has equal rights in the management and conduct of the company’s business unless otherwise provided in a shareholders’ agreement.
A member’s duty of care for the company in conducting the company’s business is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct, or knowingly violating the law, a standard actually used in most corporations. Liability shall be joint and several for all members, although a member shall not be liable if he can prove that the improper performance of duties is not attributable to him and that he has not been negligent in taking steps to prevent the consequences thereof.
Recognizing the informality of a member managed limited liability company, the Curacao Civil Code provides for the right of each member to inspect and, at his own expense, copy, any administrative records kept. This right is not dependent on a member’s purpose or motive.
Karel Frielink
Attorney (Lawyer) / Partner
(9 November 2011)
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