LIABILITY OF THE SILENT PARTNER
The Supreme Court can give its opinion
I will first describe Dutch law in this respect. A limited partnership (commanditaire vennootschap: ‘CV’) is a contractual, legal relationship between two or more persons or legal entities to carry on a business under a joint name, whereby the aim is to gain proprietary benefits on the basis of their contributions. The CV (with multiple managing partners) is therefore a special form of the general partnership (vennootschap onder firma: ‘VOF’). This special status consists of the business operations also being carried on at the expense of one or more silent partners (limited partners), …
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SUPREME COURT U-TURN
The bankruptcy of a general partnership (‘VOF’) does not automatically mean the bankruptcy of its partners
For many decades the rule had to be adhered to that the bankruptcy of a general partnership (vennootschap onder firma: ‘VOF’) also meant the bankruptcy of the individual partners (Supreme Court 14 April 1927, NJ 1927, page 725).
However, in a ruling of 6 February 2015 the Supreme Court made a U-turn and held that there is no (or no longer) any justification for this connection (ECLI:NL:HR:2015:251). The Supreme Court has justified its new position as follows:
3.4.1 A VOF has no corporate personality. …
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QUASI DIRECTOR OR JUST THE BOSS?
This depends on the facts
If a legal entity (an NV or BV comes to mind) becomes bankrupt, any director (according to its Articles) becomes jointly and severally liable for the deficit of the bankrupt’s estate if it is apparent that there has been improper management and it is plausible that this was a major cause of the bankruptcy.
The Act provides that a person who (during the relevant period) determined or co-determined the policy of the legal entity as if he was a director is considered equivalent to a director. This is also called a quasi director. For instance, …
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LIABILITY OF A NEW PARTNER
Supreme Court creates clarity
The National Ordinance on Partnerships (Landsverordening personenvennootschappen) of Curacao (1 January 2012) and St. Maarten (1 April 2014) mentions two main variants of the partnership: the public partnership and the silent partnership. The public partnership is a partnership (i) for carrying on a profession or business or performing professional or business acts, which (ii) partnership acts externally in a way which is clearly recognizable by third parties (iii) under a name it uses as such (Section 7:801 subsection 1 of the Civil Code).
The partners of a public partnership are jointly and severally liable for the …
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REVOCATION OF A RESOLUTION TO DISSOLVE A LEGAL ENTITY
The Supreme Court formulated stringent conditions
On 9 December 2014 the Dutch Supreme Court pronounced a ruling (ECLI:NL:HR:2014:3677; JOR 2015/33) which is also relevant to the law of the Caribbean (Is)lands of the Kingdom. On the basis of that ruling the following requirements are imposed on the revocation of a resolution to dissolve a legal entity:
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A CORPORATION AND ITS ALTER EGO
Piercing or lifting the corporate veil
As a general rule under Curaçao law, shareholders of corporate entities with limited liability do not risk more than their capital contribution. Such shareholders cannot be held liable for their corporations’ debts or obligations. These corporations are recognized as legal entities separate from their shareholders and managing directors. However, in exceptional cases, the veil of limited liability is pierced and a corporation’s debts or obligations are attributed to the shareholder, which may be a parent corporation.
The distancing of shareholder from corporation allows for individuals to engage in business while limiting their personal liability …
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GOVERNMENT-OWNED COMPANIES
Opposing views on political influence
Few people would argue that the rules issued by the state (government) must also be correctly and strictly observed by that same state. It cannot be well conceived that, for example, the police and Public Prosecutor’s Office (as instruments of the state) should be allowed to violate the law with impunity.
Though there may be very different opinions about the nature and the role of the state (particularly from a philosophical and jurisprudential viewpoint), here we address the question of how we should consider government-owned companies, and in particular, what level of influence the government …
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THE INCORPORATION OF A CURACAO LIMITED LIABILITY COMPANY
Incorporating an NV or BV is not a hassle
The act on corporate law (Book 2 Curaçao Civil Code) governs the NV (‘public limited liability company’) and BV (‘private limited liability company’). These companies can be used for group finance or holding activities, (international) joint-ventures, funds, structured finance, as a Curaçao Trust and for “plain-vanilla” (local) activities.
A notarial deed is required for the formation of an NV or BV and for any amendment to articles of association (a.k.a. articles of incorporation). Formation can however, be very quick (within one or two days if necessary) and does not require many …
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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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ORDER OF THE COMMON APPEAL COURT OF CURACAO CONCERNING THE RIGHT TO INSTITUTE AN INQUIRY
The Appeal Court has taken several fundamental decisions
On 5 March 2013 the Common Court of Justice of Aruba, Curacao, Sint Maarten and of Bonaire, Sint Eustatius and Saba (case: Ghis 55769 – HAR 28/12) issued an order in connection with inquiry proceedings. This order contains three major considerations.
The right of legal entities (including public limited companies [NV] and private companies with limited liability [BV]) to institute an inquiry was introduced in Curacao on 1 January 2012. Almost immediately after this introduction an application for instituting inquiry proceedings was submitted to the Appeal Court. The facts …
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BESCHIKKING INZAKE ENQUETERECHT GEMEENSCHAPPELIJK HOF CURACAO
Het Hof neemt enkele principiële beslissingen
Op 5 maart 2013 heeft het Gemeenschappelijk Hof van Justitie van Aruba, Curaçao, Sint Maarten en van Bonaire, Sint Eustatius en Saba (zaak: Ghis 55769 – HAR 28/12) een beschikking in het kader van een enquêteprocedure gegeven. Drie belangrijke overwegingen worden hier genoemd.
Het enquêterecht voor rechtspersonen (waaronder naamloze en besloten vennootschappen) is in Curaçao op 1 januari 2012 ingevoerd. Vrijwel direct na de invoering is een enquêteverzoek bij het Hof ingediend. De feiten die aan dat verzoek ten grondslag zijn gelegd hebben betrekking op de jaren voorafgaande aan de invoering van het enquêterecht. …
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LECTURE ON GOOD CORPORATE GOVERNANCE
Looking back on the future: the further development of corporate governance in Curaçao
A seminar on Checks and Balances in Corporate Governance on Curacao, was held on Thursday February 21st, 2013. More than 125 interested managing directors, supervisory directors, lawyers, accountants and other participants were in attendance.
The seminar was organized by the Board of financial supervision (College financieel toezicht – Cft), the Foundation Bureau for Supervision and Standardization Government Entities (Stichting Bureau Toezicht en Normering Overheidsentiteiten – SBTNO) and the Dutch Caribbean Accountants Association (DCAA). I had the honor to speak on the present and future of the Corporate …
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