EUROPEAN COURT OF JUSTICE: NO GENERAL PRINCIPLE RE PROTECTION OF MINORITY SHAREHOLDERS
Case C-101/08 – Audiolux SA and Others v Groupe Bruxelles Lambert SA (GBL) and Others, and Bertelsmann AG and Others
According to the European Court of Justice, in its decision of 15 October 2009, community law does not include any general principle of law under which minority shareholders are protected by an obligation on the dominant shareholder, when acquiring or exercising control of a company, to offer to buy their shares under the same conditions as those agreed when a shareholding conferring or strengthening the control of the dominant shareholder was acquired (click here for the full …
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LECTURE ON GOOD CORPORATE GOVERNANCE
BZSE law office on Sint Maarten celebrates merger
On October 2, 2009 BZSE law firm (BergmanZwanikkenSnowEssed) celebrated the merger of Bergman and ZwanikkenSnowEssed law offices and the official opening of their new offices in Belair (St. Maarten) with a lecture on good corporate governance. I was the keynote speaker and delivered my presentation in the Dutch language (click here for the presentation or click here for The Daily Herald’s coverage of the event).
I argued that government-companies should be left out of the political sphere as much as possible, so they can …
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THE MANAGEMENT OF A DUTCH ANTILLES FOUNDATION
Management must act in the best interests of the foundation
The members of the management board of a Netherlands Antilles foundation have collective powers and responsibilities. The management board shall be in charge of the management of the foundation.
Although not explicitly provided for in Book 2 of the Netherlands Antilles Civil Code, it is considered a general rule of corporate law that the management board must act in the best interests of the foundation in the performance of its duties, even when acting upon instructions from others (e.g. a supervisory or advisory body).
The minimum standard of care is …
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CROSS-BORDER CONVERSIONS AND MERGERS IN THE DUTCH ANTILLES
No outbound mergers allowed
According to the laws of the Netherlands Antilles, a limited liability company (NV or BV) may convert to a foreign legal entity provided that under the laws governing such a foreign legal entity the consequence of such conversion shall be the continued existence of the company as a legal entity – in its new legal form. The Netherlands Antilles Corporate Code also allows a foreign legal entity to convert to a Netherlands Antilles legal entity.
The Netherlands Antilles corporate Code does not permit a merger of a Netherlands Antilles company, as the disappearing company, into a …
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BEARER SHARES IN A NETHERLANDS CARIBBEAN COMPANY
Registered shares must be issued first
On 1 March 2004, the new Netherlands Antilles act on corporate law (Book 2 Civil Code) became effective. Since that date it is no longer 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 …
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THE REPAYMENT OF SHARE PREMIUM IN THE NETHERLANDS CARIBBEAN
Net equity may not be or become negative
From the legal point of view in Netherlands Antilles, share premium (’agio’) forms part of the company’s free 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 of the company.
In addition to this …
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THE ANNUAL ACCOUNTS OF LARGE DUTCH CARIBBEAN COMPANIES
Stricter rules for large companies
Under Netherlands Antilles law the annual accounts of limited liability companies which do not qualify as so called large companies, need to be prepared in accordance with generally accepted standards and shall provide sufficient insight as to enable a sound judgment to be formed regarding the assets and the results and, to the extent the nature of the annual accounts so permit, regarding the solvency and liquidity of the company (article 2:116 (4) Netherlands Antilles Civil Code). This is comparable to the principles of good business practice (goed koopmansgebruik).
For large companies the legislator chose …
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CONVERSION OF A DUTCH CARIBBEAN LIMITED LIABILITY COMPANY
An NV may be converted into a BV and vice versa
The Netherlands Antilles Civil Code provides for an NV to be converted into a BV and vice versa. Conversion does not terminate the existence of the legal entity.
Conversion requires a resolution. A resolution to convert and to amend the articles has to be adopted, if only to satisfy similar requirements as for a resolution to amend the articles. The conversion shall become effective by execution of a notarial deed of conversion, and said deed must contain the new articles of association.
A conversion balance sheet must be attached to …
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TRANSACTIONAL POWER OF THE MANAGING BOARD OF A DUTCH CARIBBEAN CORPORATION (II)
Only corporations may plead absence of representative authority
Under the Netherlands Antilles Corporate Code, i.e. Book 2 of the Civil Code, transactions with third parties that violate either the law or any limitations on the transactional powers of the board of directors of a corporation, are not enforceable against the corporation if the limitations are properly disclosed at the trade register. According to Article 2:10(3) Netherlands Antilles Civil Code only corporations may plead the absence of representative authority.
A counterparty wishing to withdraw from a legal act on that ground, may only rely on the fourth paragraph of Article 2:10 …
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TRANSACTIONAL POWER OF THE MANAGING BOARD OF A DUTCH CARIBBEAN CORPORATION (I)
Limitations must be disclosed to have effect
Netherlands Antilles law provides that, subject to restrictions laid down by the Netherlands Antilles Corporate Code or a corporation’s articles of association, the board of directors of a corporation shall be competent to represent the corporation, e.g. a limited liability company (‘naamloze of besloten vennootschap’; NV or BV). In the event of several managing directors, any managing director shall be competent, insofar as not otherwise provided for by the articles of association.
Under Netherlands Antilles law, information required to be disclosed pursuant to the Civil Code, for instance (i) the identities of the …
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MANAGEMENT AND SUPERVISION OF THE ARUBA COMPANY WITH LIMITED LIABILITY
A local representative is required
On January 1, 2009 the new Aruba Ordinance on companies with limited liability (vennootschap met beperkte aansprakelijkheid; VBA) became effective.
The Board of Directors is responsible for the management of the VBA and is authorized to represent it, with the exception of any restrictions in the articles of association. The Board may consist of natural persons and/or legal entities. A VBA must have as local representative, an Aruban corporation (NV or AVV). The bylaws and business license explicitly provide for the representation of companies, unless the VBA either has one or more directors with their …
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CAPITAL STRUCTURE OF THE ARUBA COMPANY WITH LIMITED LIABILITY
Full value share is required
On January 1, 2009 the new Aruba Ordinance on companies with limited liability (vennootschap met beperkte aansprakelijkheid; VBA) became effective.
Concepts like registered, subscribed and contributed capital do not appear in the Ordinance. No minimum capital is therefore required, unless such a requirement is included in the articles of association. There may be voting shares, non-voting shares and shares with restricted voting rights. Shares may have a par value. If shares have a par value, this may differ per category of shares. The par value may also be expressed in one or more foreign currencies.