THE RIGHT TO SHARE IN THE PROFITS OF THE ARUBA COMPANY WITH LIMITED LIABILITY
It is not necessary to give all shares a right to share in the profits
On January 1, 2009 the new Aruba Ordinance on the company with limited liability (vennootschap met beperkte aansprakelijkheid; VBA) became effective. This legislation gives shareholders far more freedom to organize their company than in the past
It is not necessary to give all shares a right to share in the profits (Section 38 par. 5 Ordinance). 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 …
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GROUP RESTRUCTURING AND REFINANCING
Plan and act prudently: better to be safe than sorry
Especially in these times of global economic and financial turmoil, a group (or part thereof) might want to consider restructuring and refinancing its operations or may be already in the process of doing so. When considering or carrying out such plans, careful thought must be given to potential (legal) risks involved. For instance, in many jurisdictions specific statutory provisions exist regarding fraudulent preference actions, i.e. actions that prejudice (specific) creditors. Such provisions often also apply in full with respect to (individual companies belonging to) a group of companies, and should …
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THE STRUCTURE OF A DUTCH CARIBBEAN FUND
It is easy and inexpensive to set up a SPV (Special Purpose Vehicle)
From a legal point of view, establishing a fund in Curaçao is very attractive under the corporate law in force since March 1, 2004, whereby a private limited liability company (besloten vennootschap) can be established very quickly and flexibly. Virtually everything is possible with this new legal entity. There is no minimum issued share capital requirement. Incorporation may be done within a day does not require any prior governmental approval. It is possible to split voting rights and dividend rights. There is no statutory requirement to have …
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THE SHAREHOLDERS REGISTER OF A DUTCH CARIBBEAN LIMITED LIABILITY COMPANY
Shareholders may inspect the register
Every shareholder of a Netherlands Antilles NV or BV may inspect the register of the company regarding the shares held by them. The articles of association of a particular company may confer the right for inspection on others. In most cases a shareholder may however only inspect the register of the company in so far as the shares held by him are concerned.
Shareholders, who alone or jointly with other shareholders, may cast at least ten percent of the votes with regards to a specific matter, may request in writing that the management or supervisory …
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STATUTORY MERGERS IN THE DUTCH CARIBBEAN
A notarial deed is required
A statutory merger involves at least two legal entities. The law uses the terms acquiring and disappearing legal entity. The law specifies that only legal entities having the same legal form may merge, specifying that a BV (closed limited liability company) and a NV (public limited liability company) are considered to be the same. Statutory mergers usually take place within a group of companies.
Essential for a statutory merger is that all assets and liabilities of one legal entity transfer as a whole to another legal entity. An actual transfer does not therefore take place.
PIERCING THE CORPORATE VEIL IN THE DUTCH CARIBBEAN
Ignoring the legal personality of a company
A shareholder is not personally liable for acts performed in the name of the company and is not liable to contribute to losses of the company in excess of the amount which he must pay to the company as contribution for his shares. There is therefore a legal separation between the assets and liabilities of the company and those of the shareholder.
Piercing the corporate veil in its purest form means making a shareholder responsible for the actions of the company. In essence this means ignoring the separate legal identity of the company. …
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THE MANAGEMENT BOARD OF A DUTCH CARIBBEAN CORPORATION
The concept of corporate officers is unknown
The management board has the function of managing the corporation, i.e., making policy and conducting the day-to-day management of the corporation. The management board is responsible for the management of the BV and is authorized to represent it, except where restricted by the articles of incorporation.
The management board is the corporation’s centre of gravity. The management board of a Netherlands Antilles corporation combines the functions of executive directors and senior officers in a U.S. corporation, unless the articles provide for a single-tier board. There is no position equivalent to that of chief …
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THREE QUESTIONS ON DUTCH CARRIBBEAN BANKRUPTCY LAWS
FAQ
Question 1
In which cases and by whom may bankruptcy proceedings be initiated in accordance with Netherlands Antilles bankruptcy law?
Filing for bankruptcy may be done either by the debtor itself or by one or more of its creditors. If the debtor is a company, the managing directors do not have the authority to petition for bankruptcy of the company without authorization thereto from the general meeting, unless otherwise stipulated in the articles of association.
The pre-requisites for making a bankruptcy order on application, regardless of whether the application is made by the debtor or by any of the …
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DUTCH CARIBBEAN CORPORATE LAW IN PRESSING CIRCUMSTANCES
Rules of law, articles and contract may be set aside
According to Section 2:7(2) of the Netherlands Antilles Civil Code, any rule imposed, for instance, on board members or shareholders of a limited liability company, will not be deemed to apply, to the extent, in the given circumstances, that these would be unacceptable in terms of reasonableness and fairness.
Generally speaking, the management board of a company is not entitled to sell the company’s business or a substantial part thereof, without the approval of the shareholders’ meeting.
However, in the event an immediate and urgent decision is absolutely necessary for the …
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CAN A FOREIGN COMPANY BUY SHARES IN A DUTCH CARIBBEAN COMPANY?
Generally speaking: yes
Under Netherlands Antilles law, no specific requirements exist regarding the purchase of shares in a Netherlands Antilles offshore company by a foreign company. The Netherlands Antilles do not have any anti-trust regulations.
In the Netherlands Antilles there are no statutory requirements preventing the sale of one or all the shares issued and outstanding or any requirements in the form of governmental license or registration. Certain restrictions apply however, if the target company is a bank or insurance company.
According to Netherlands Antillean corporate law shares are transferable, in principle. However, there is one exception. The articles of …
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DRAG-ALONG RIGHTS UNDER THE LAWS OF THE DUTCH CARIBBEAN
Drag-along rights may be validly created
A drag-along right is a right that enables a majority shareholder to force a minority shareholder to join in the sale of his shares in a company (NV or BV). The majority shareholder doing the dragging must give the minority shareholder the same price, terms, and conditions that apply to him. The question with regards to Dutch Caribbean law is whether the articles of association of an NV or BV may contain drag-along provisions.
Article 2:257(1) of the Netherlands Antilles Civil Code reads as follows: “The articles may provide that, in cases to be …
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WHAT IF A LENDER BECOMES A SHAREHOLDER OF THE BORROWER IN THE DUTCH CARIBBEAN?
The obligation to repay still ranks pari passu
If a lender takes over the shares in a borrower, the ranking of the borrower’s obligation to repay the loan does not change. Such obligations will continue to rank pari passu with the other creditors.
Let me give you an example. In the event of dissolution of the borrower, assuming the borrower is a company, all creditors must be satisfied as far as possible. A shareholder is, however, not considered to be a creditor of the company.
Under Article 2:30(1) of the Netherlands Antilles Civil Code, the liquidator must realize the assets …
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