SEPARATION BETWEEN LEGAL AND BENEFICIAL OWNERSHIP OF SHARES IN THE DUTCH CARIBBEAN

The beneficial owner of shares is not a shareholder

On March 1, 2004 the act on corporate law (Book 2 Netherlands Antilles Civil Code) became effective. The Act governs NVs (‘public limited liability company’) and BVs (‘private limited liability company’). The main object of the legislator was to provide flexibility and maximum freedom for organization and presentation. Accordingly, the Act contains few mandatory provisions, such as provisions relating to the interests of creditors and minority shareholders.

Concepts like registered, subscribed and contributed capital do not appear in the Act. As a result  no minimum capital is required unless such a requirement …
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09
Jan 2010
CATEGORY

Corporate

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THE SELLING OF SHARES BY A DUTCH CARIBBEAN COMPANY

Answers to foreign counsel queries

A Netherlands Antilles company (NV or BV) may have assets, both local and foreign. Not seldom such a company wants to sell all or a portion of its assets. If foreign assets or a foreign buyer is involved, foreign counsel always asks questions about the laws of the Netherlands Antilles. Several of those questions will be dealt with here. Let’s assume that a Netherlands Antilles company wants to sell its shares in a Dutch BV.

The Netherlands Antilles NV or BV may sell some or all of its shares in the Dutch BV. It is customary …
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02
Jan 2010
CATEGORY

Corporate

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A COMPARISON OF THE DUTCH BV AND THE DUTCH ANTILLEAN BV

There are similarities and differences

There are certain similarities between the Dutch and the Antillean BV, in fact they are fundamentally the same type of entity. The main object of the Antillean legislator was, however, flexibility and maximum freedom of organization and presentation. Accordingly, the Antillean Act contains few mandatory provisions, such as provisions relating to the interests of creditors and minority shareholders.

An Antillean BV may be established in a form that resembles what a foreign shareholder encounters in his own legal system: the BV can, for example, be organized like a Dutch BV or NV, a Delaware corporation, …
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19
Dec 2009
CATEGORY

Corporate

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THE INCORPORATION OF A NETHERLANDS CARIBBEAN LIMITED LIABILITY COMPANY

Incorporating an NV or BV is not a hassle

The act on corporate law (Book 2 Netherlands Antilles 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 and “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 doesn’t require many other formalities. The founders of …
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12
Dec 2009
CATEGORY

Corporate

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THE CUSTODY OF SECURITIES IN THE NETHERLANDS CARIBBEAN

Separate legal entity

Generally, securities that must be held by a Netherlands Antilles bank on behalf of its clients will be held by a custodian. In most cases the custodian is either a foundation (‘stichting’) or a wholly owned subsidiary (NV or BV) of the bank.

The scope of the activities of the custodian will be limited to holding shares, bonds, notes, certificates and other securities. The insolvency risk of the custodian is therefore minimized. Alternatively, these securities can also be held in the name of the custodian by independent custody companies abroad, including brokers, agents and sub-custodians. In both …
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05
Dec 2009
CATEGORY

Finance

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THE ARTICLES OF ASSOCIATION OF A DUTCH CARIBBEAN LEGAL ENTITY (III)

Case law the principle of good faith

A legal entity and all involved in its organization have a legal duty to behave towards each in accordance with the principles of reasonableness and fairness, i.e. (objective) good faith. A provision or requirement contained in a legal entity’s articles of association or by-laws, may be set aside by the Courts if, in any given circumstances, it is in breach of the principles of reasonableness and fairness. Good faith may, in a certain cases, extinguish rules prevailing between the parties or exclude their application.

I will discuss two Dutch court cases below. It …
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14
Nov 2009
CATEGORY

Corporate

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THE ARTICLES OF ASSOCIATION OF A DUTCH CARIBBEAN LEGAL ENTITY (II)

Limitations on the applicability of provisions

As a general matter of Netherlands Antilles law, the interpretation of terms contained in legal documents, such as the articles of association and the by-laws, however only to a certain extent, inter alia subject to the intention of the parties, and the enforcement thereof, is subject to the overriding principle of “fairness and reasonableness” (in Dutch: “redelijkheid en billijkheid”) meaning that under certain circumstances a term of the articles of association or by-laws may not be applicable in so far as this term would in such circumstances be contrary to this principle.

According to …
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07
Nov 2009
CATEGORY

Corporate

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THE ARTICLES OF ASSOCIATION OF A DUTCH CARIBBEAN LEGAL ENTITY (I)

Ranging from basic to extremely complex

Under the laws of the Netherlands Antilles, public and private limited liability companies (NVs or BVs), foundations, co-operatives, mutual insurance societies and associations are considered legal entities.

The articles of incorporation (a.k.a. articles of association) provide the regulatory framework by which these legal entities in the Netherlands Antilles are governed and by which they must abide. Additionally regulations (‘reglementen’) are sometimes also used as a sort of ‘by-laws’.

The articles of association are more or less comparable with the constitution of a country. Regulations can for instance be adopted by a managing board, a …
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31
Oct 2009
CATEGORY

Corporate

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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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12
Sep 2009
CATEGORY

Corporate

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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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05
Sep 2009
CATEGORY

Corporate

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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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22
Aug 2009
CATEGORY

Corporate

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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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09
Jun 2009
CATEGORY

Corporate

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