NETHERLANDS ANTILLES MEMBER-MANAGED COMPANY
The right form for small businesses
On March 1, 2004 the new act on corporate law (Book 2 Civil Code; the ‘Act’) became effective. The Act shows a bold new approach to Netherlands Antilles corporate law as such. Until March 1, 2004 only manager-managed companies were known. According to the Act, the articles may provide that a company shall be a member-managed company, which is a company without a board of directors. The shareholders (members) are in charge of the company, including its day-to-day affairs. The member-managed company is for smaller companies, e.g. family businesses, with only one or a few shareholders.
Absent further designation in the articles, a company will be a manager-managed company. The designation of a limited liability company as either a member-managed or a manager-managed company is important because it defines who are agents and have the apparent authority to bind the company. In a member-managed company, the members have the agency authority to bind the company. Members possess actual authority by implication unless the actual authority is restricted in the Act, 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 which will apply in respect thereof and the 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 to the company in the conduct of the company’s business is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of 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 proves that the improper performance of the 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 Act provides for the right of each member to inspect and, at his own expense, copy any administrative records maintained. This right is not conditioned on a member’s purpose or motive.
Karel Frielink
Attorney (lawyer) / Partner
