COVENANTS NOT TO COMPETE IN THE DUTCH CARIBBEAN

Such covenants are null and void

A non-competition clause, a.k.a. a covenant not to compete, is a stipulation between the employer and the employee whereby the latter is restricted in his right to work in a given way upon termination of the latter’s contract of employment. Typically, a non-competition clause will prohibit an employee from seeking employment, or being directly or indirectly involved in the same type of industry or business conducted by another employer. According to the laws of the Netherlands Antilles, any non-competition clause related to an employment contract is null and void and thus not enforceable. This …
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04
Oct 2008
CATEGORY

Legal

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DUTCH CARIBBEAN PRIVATE INTERNATIONAL LAW

The legal effects doctrine: an exception to the lex loci delicti rule

Under Dutch Caribbean rules of private international law, a claim arising from an unlawful act is governed, in the absence of a choice of jurisdiction by the parties, by the law of the country were the unlawful act was committed (lex loci delicti). However, this rule may possibly not apply if the tortfeasor and the injured party are both residing in a country other than that where the unlawful act was committed and if the legal effects occur entirely in the other country. This is the so-called legal …
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23
Aug 2008
CATEGORY

Legal

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INADEQUATE CAPITALIZATION IN THE DUTCH CARIBBEAN

Liability for thin-capitalization?

In terms of ‘piercing the corporate veil’, thin or inadequate capitalization usually means capitalization that is not in proportion to the nature of the risks the business of the corporation necessarily entails; in other words it is based on likely economic needs rather than legal requirements.

Shareholders of a company in the Netherlands Antilles are under an obligation to pay to the company what is due with respect to the shares, i.e. the shareholder’s capital contribution, and such contribution may not be withdrawn without due process. This is the only financial obligation of a shareholder towards the …
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16
Aug 2008
CATEGORY

Corporate

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PRE-EMPTION RIGHTS IN THE DUTCH CARIBBEAN

Prevent a shareholder from dilution

According to article 2:106 of the Netherlands Antilles Civil Code shareholders have a pre-emption right on the issue of new shares, being the right to be offered any new issue in each class, pro rata to the number of shares of such class held by them. The pre-emption right is intended to protect the interests of shareholders and to prevent their stake from being diluted.

According to the Civil Code there are three ways to limit the pre-emption rights of the shareholders:

  • A limitation may provided for in the articles of the company (art. 2:106(1) …
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  • 09
    Aug 2008
    CATEGORY

    Corporate

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    SECURITY RIGHTS AND DUTCH CARIBBEAN INTERNATIONAL PRIVATE LAW

    Foreign security rights may be valid and enforceable

    According to Netherlands Antilles law, the question as to whether or not a security right may be created in a certain receivable must be determined according to the law governing that receivable. Netherlands Antilles international private law determines that the law that governs the receivable is the law that governs the underlying contract of the receivable.

    However, if the minimum requirements of a Netherlands Antilles security right have been met, a foreign law governed security right may be valid and enforceable, as if it were a Netherlands Antilles security right.

    It is not decisive whether or …
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    22
    Jul 2008
    CATEGORY

    Legal

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    CORPORATE PENSION FUNDS IN THE DUTCH CARIBBEAN

    Only legal entities may serve as a fund

    According to the Netherlands Antilles National Ordinance on Corporate Pension Funds only legal entities may serve as a corporate pension fund. The foundation (‘stichting’) is the legal form most used for these purposes.

    The main reason for using a foundation instead of a legal entity of which the equity is divided in shares is that there are no shareholders interest which could conflict with the interest of the participants in the pension fund.

    Furthermore, Netherlands Antilles corporate law includes some specific provisions for foundations that are used as a pension fund. Participants …
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    15
    Jul 2008
    CATEGORY

    Legal

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    DUTCH CARIBBEAN COMPANIES AND LIABILITY ISSUES

    Shareholders are not personally liable

    Shareholders of an NV or BV are not personally liable for the liabilities of the company, except where this would be contrary to the law. With the exception of actions based on tort or when a shareholder may be held liable because he is considered a policy maker (see below), in general, the shareholders only obligation is to pay to the company the consideration for the share issue, i.e. a payment on the shares.

    The members of the board of directors are personally and severally liable towards the company for any loss caused by the …
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    08
    Jul 2008
    CATEGORY

    Corporate

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    DIRECTORS OF A DUTCH CARIBBEAN COMPANY

    May a director resign when he chooses to do so?

    A Netherlands Antilles company (NV or BV) must have either a local director or a local representative. A company is not required to have more than one director, unless the articles of association provide otherwise. The Netherlands Antilles Corporate Code does not oblige the shareholders to appoint new board members once all board members have resigned.

    Pursuant to Article 2:12(1) Netherlands Antilles Civil Code, the articles of association of the company must provide for the manner in which provisions are made for the interim management and administration of the company …
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    05
    Jul 2008
    CATEGORY

    Corporate

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    MANAGING A COMPANY WHICH BELONGS TO A FOREIGN OWNER

    A contractual arrangement may limit the board’s powers

    Shareholders of a Dutch Caribbean NV or BV may choose between the English/American one-board system and the traditional continental European two-tier system. In a two-tier system there is a management board (parallel to the inside directors on a one-tier board) and a separate supervisory board (parallel to the outside directors on a one-tier board). Although every company (NV or BV) has a management board, not every company has a supervisory board.

    Article 2:14 of the Netherlands Antilles Corporate Code (a.k.a. Book 2 Civil Code) provides that each member of the board of …
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    28
    Jun 2008
    CATEGORY

    Corporate

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    STATUTORY MERGERS UNDER THE LAWS OF THE DUTCH CARIBBEAN

    Mergers mostly within a group of companies

    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 are used mostly within a group of companies.

    Essential for a statutory merger is that the title of all assets and liabilities of one legal entity transfer in their entirety to another legal entity. An actual transfer …
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    21
    Jun 2008
    CATEGORY

    Corporate

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    CREDIT DEFAULT SWAPS AND INSURANCE ISSUES UNDER DUTCH CARIBBEAN LAW

    Are credit default swaps insurance products?

    The National Ordinance on the supervision of the Insurance Business (“NOSI”) does not contain a definition of ‘insurance agreement’. Under Netherlands Antilles law the definition contained in article 315 of the Netherlands Antilles Commercial Code is usually used, which informally translated reads as follows:

    “Insurance is an agreement whereby an insurer commits itself to the insured, against receipt of a premium, to compensate the latter for a loss, damage or loss of expected advantage which the insured could suffer as a result of an uncertain event.“

    Will insurance issues under Netherlands Antilles …
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    17
    Jun 2008
    CATEGORY

    Finance

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    HARRY POTTER AND THE BATTLE OVER COPYRIGHT LAWS

    Can the author come up with a legal spell to prevent the publishing of a HP encyclopedia?

    J.K. Rowling is the renowned author of the famous fantasy books about the life of wizardry student Harry Potter. Since the release of the first book in 1997, the series have gained huge popularity worldwide. The books have spawned a series of Potter movies, Potter video games and themed merchandise. The commercial success of the Potter brand has made Rowling one of the highest-earning authors in history. Like with many popular and commercially successful products, there are …
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    10
    Jun 2008
    CATEGORY

    Legal

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