IMPACT OF THE LIABILITY TO THE DIRECTOR OF THE DIRECTOR (II)
2nd degree director as director of a foreign corporate director
It appears from the 2011 ruling referred to by the Supreme Court that Section 2:11 of the Dutch Civil Code is applicable to the joint and several liability of a director of a Dutch legal entity being a director of another Dutch legal entity. The Supreme Court confirmed this doctrine again in clear wording in its decision of 21 June 2013.
The conclusion is as follows:
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IMPACT OF THE LIABILITY TO THE DIRECTOR OF THE DIRECTOR (I)
Liability of the 2nd degree director
Under Section 2:17 subsection 1 of the Curaçao Civil Code, the liability of a legal entity as a director of another legal entity (the direct or 1st degree director) also rests jointly and severally on each person who at the time this liability arose for the legal entity was its director (the indirect or 2nd degree director). It applies to this indirect director as it applies to the direct director that he will not be liable if he can prove that he cannot be blamed for the improper performance of duties, also considering his …
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DIRECTORS’ LIABILITY IN CURACAO
Quasi-director may be held liable too
The members of the board of managing directors are personally and severally liable towards the limited liability company (NV or BV) for any loss caused by the improper performance of duties. Each member of the board who proves that he cannot be blamed for such improper performance and that the activities concerned fall outside the scope of activities addressed to him, and that he has not been negligent in taking steps to avert the related consequences, is not liable (Section 2:14 subsection 4 Curaçao Civil Code; “CCC”). Therefore, a division of tasks among such …
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A CURACAO COMPANY WITH NEGATIVE EQUITY AND FINANCIAL SUPPORT
Restrictions for providing financial support to a party acquiring shares in its capital?
A company cannot purchase its own shares if it has a negative equity capital or when this equity capital becomes negative by purchasing them, whereby the nominal capital applies as the lower limit (Section 2:114 subsection 2 of the Curaçao Civil Code in conjunction with Section 2:118 subsections 5 to 7 of the Curaçao Civil Code).
The question is, however, whether a Curaçao NV (public limited company) or BV (private limited liability company) with negative equity is allowed to provide financial support to a third party acquiring …
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THE INDEPENDENT SUPERVISORY BOARD IN CURACAO
Should be mandatory for government-owned entities
Under the laws of Curaçao, the main task of a board of supervisory directors is to supervise the board of managing directors of a limited liability company (NV or BV).
The Corporate Code provides for two different kinds of boards of supervisory directors, a “regular” board of supervisory directors and the so-called “independent” board of supervisory directors (Section 2:139 Curaçao Civil Code). Within this context the word independent means that the supervisory directors are independent of the shareholders, interest groups (“belangengroepen”) and to a certain extent from the shareholders’ meeting.
An independent board of …
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THE REPAYMENT OF SHARE PREMIUM IN CURACAO
Net equity may not be or become negative
From the legal point of view in Curaçao, share premium (’agio’) forms part of the company’s free reserves (Curaçao law does not provide for statutory reserves), and does not qualify as share capital. If share premium is to be repaid, the company’s financial condition should at the time allow for it, i.e. the net equity of the company may not be or become negative as a result of such repayment.
If the company has shares with a nominal value, the repayment may not result in the nominal capital exceeding the net equity …
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BEARER SHARES IN A CURACAO COMPANY
Registered shares must be issued first
According to the Curaçao act on corporate law (Book 2 Curaçao Civil Code) it is not possible to (directly) issue bearer shares.
A company with only bearer shares has no shareholders’ register. Only a public limited liability company (NV) may issue bearer shares, provided that registered shares be issued first and that they have been fully paid up. These may subsequently be converted into bearer shares. The issuance (of registered shares) requires a ‘deed of issuance’, which must be signed by both the company and the subscriber. Without such a deed the subscriber does …
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ENQUETEPROCEDURE OVERHEIDSVENNOOTSCHAPPEN CURACAO
Behandeling bij het Gemeenschappelijk Hof van Justitie
Op 5 juni 2013 heeft bij het Gemeenschappelijk Hof van Justitie van Aruba, Curaçao en Sint Maarten en van Bonaire, Sint Eustatius en Saba de behandeling plaatsgevonden van het verzoek van het Openbaar Ministerie om een enquête op grond van het Burgerlijk Wetboek van Curacao te gelasten naar het beleid en de gang van zaken bij de overheids NV’s Aqualectra, Curoil/Curgas en Refinería di Kòrsou (RdK). Klik hier voor de beschikking van het Hof van 15 juli 2013 en klik hier voor de Extra van 16 juli 2013.
Fundashon …
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CROSS BORDER CONVERSION AND MERGER (part 10)
Legal entities under supervision
So far we have only looked at legal entities not under the supervision of the Central Bank of Curacao and St. Maarten (CBCS). Just a few words about institutions that are under supervision.
The following applies to banks with a registered seat in Curacao for instance. These entities have a license from the CBCS pursuant to the Ordinance on the Supervision of Bank and Credit Institutions 1994 (Landsverordening toezicht bank- en kredietwezen 1994: ‘Ltbk’). The prior consent of the Central Bank is required for each amendment to the articles of association (Article 23 paragraph 1 Ltbk). …
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CROSS BORDER CONVERSION AND MERGER (part 9)
The cross-border merger
We now look at the cross-border legal merger. Before 1 January 2012 the possibility already existed in Curacao that in connection with a merger, a foreign legal entity as the disappearing legal entity could merge with a comparable legal form of Book 2 of the Civil Code on the condition that the law governing that foreign legal entity was not incompatible with the merger and the manner in which it was brought about (Section 2:323a of the Civil Code). This inbound merger possibility still exists.
Since 1 January 2012 it is also possible that a legal entity …
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CROSS BORDER CONVERSION AND MERGER (part 8)
Changes in Curacao as of 1 January 2012
The most important amendment in the Curacao provision with regard to the conversion of an NV or BV into a foreign legal entity (outbound) is that the requirement of the personal notice of liability by managing directors and shareholders has been removed as from 1 January 2012 onwards, except for the case mentioned below. This provision has been replaced by the possibility for creditors or contractual counterparties of the company wishing to convert into a foreign legal entity to lodge an objection on the grounds that they will be prejudiced in their …
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CROSS BORDER CONVERSION AND MERGER (part 7)
The conversion of or into a foundation
If a foreign legal entity wants to be converted into a Curacao foundation (inbound) the Court in Curacao must grant consent (Section 2:303 subsection 2 of the Civil Code). I was unable to find any explanation of this in the Explanatory Memorandums of Book 2 of the Civil Code of 2003 and 2010.
That authorization by the court is required for the conversion of a foundation into another – whether or not foreign – legal form, can certainly be explained (Section 2:306 subsection 2 in conjunction with Section 2:300 subsection 4 of the …
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