THE ULTIMATE CORPORATE ADVENTURE (V)
The meeting of shareholders decides on the distribution or withholding of profits
Under Netherlands Antilles law, it is not necessary to give all shares a right to share in the profits. 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 of an NV or BV 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. The Explanatory Memorandum to the Act explicitly states that 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. “Full value” means that one share with full voting rights that participates in the profit must be placed with the founder or a third party, or two shares, one of which has full voting rights and one that shares in the profit, as the case may be.
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 Corporate Act 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, for example the Supervisory Board. 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 Corporate Act does not contain any standard for the body that decides on the distribution.
Karel Frielink
Attorney (Lawyer) / Partner
