Corporate in brief highlights recent developments in Dutch and European corporate regulation
Consultation on cross-border conversion of companies
The government has launched a public consultation about a draft bill on cross-border conversions of companies. The draft bill relates to the conversion of:
- a Dutch NV/BV into a company under the law of another member state of the EEA (comprising the EU countries, Liechtenstein, Norway and Iceland)
- a company from an EEA member state into a Dutch NV/BV
Conversion of a Dutch NV/BV into an NV/BV under the law of Bonaire, Sint Eustatius or Saba, and vice versa, is also covered by this draft bill. Once the new conversion rules have been in force for a while, the government will look at extending them to other countries outside the EEA, and to Aruba, Curaçao and St Maarten.
The draft bill is based on existing rules on cross-border relocations of a European Company (SE) and also partly inspired by rules on cross-border mergers.
The case law of the European Court of Justice shows that member states must allow the cross-border conversion of companies within Europe. The draft bill aims to create legal certainty and to offer safeguards to the creditors, minority shareholders and employees of a company that want to convert into a company under the law of another state.
Spain has introduced legislation similar to what is now proposed in the Netherlands. Luxembourg law only allows relocation of a company’s seat to another country, but does not enable foreign companies to convert into a Luxembourg company.
The consultation period ends on 18 April 2014.
Consultation on management and supervision of (all) legal entities
The government is consulting the public about a draft bill to improve the quality of management and supervision of Dutch legal entities. The current Act on Management and Supervision has been in force since 1 January 2013, but it does not apply to all legal entities.
The draft bill offers uniform rules for all legal entities to improve the quality of their management and supervision. This will not lead to any substantive changes for NVs and BVs. But for members of management and supervisory bodies of associations and foundations, the following changes are introduced:
- they must carry out their duties based on the interests of the legal entity and its organisation
- if they have a conflict of interest, they must refrain from taking part in deliberations and decision-making
- they are liable for damages resulting from improper performance of duties, and also jointly and severally liable for a financial shortfall in bankruptcy if this was caused by this improper performance
The draft bill includes an additional change for members of management and supervisory bodies at foundations only: they may be dismissed at the public prosecutor’s or an interested party’s request if they damage the organisation’s interests in such a way that it is no longer reasonable to tolerate their continuing in their position.
The draft bill also contains a statutory basis for the creation of a supervisory body at associations and foundations, but does not offer the option of a one-tier board at these entities. According to the legislature, there was no practical need for this. For cooperatives and mutual insurance associations, an online consultation was held in 2013 about a proposal enabling these entities to establish a one-tier board, but a bill to that effect has not yet been submitted.
The consultation ends on 6 May 2014.