The demand of the Dutch business practice for a more competitive Dutch company with limited liability, and the developments in various European countries, have led to the legislative proposal “Simplification and flexibilisation of BV-Law”, which was submitted to the Dutch parliament on 31 May 2007. The purpose of this legislative proposal is to create a more flexible and simpler regime for Dutch private companies with limited liability (“BV”). It is expected that this legislative proposal will come into force on 1 January 2009. As a result of the proposed changes to the Dutch BV regime, the Dutch BV will become more user-friendly, and business parties will have more freedom when structuring their businesses, (group) companies and joint ventures. Some of the most important changes are set out below.
- Elimination of minimum capital requirements. Under existing law, a BV is required to have a minimum issued and paid up capital of EUR 18,000. Under the new law, a BV can start with a capital of just EUR 1. Furthermore, the capital contribution statement from a bank will no longer be required upon incorporation, and an auditors’ certificate is not required for contributions in kind.
- The ban on financial assistance is lifted. Under current law, essentially a company may not act as surety or otherwise bind itself for the purpose of the subscription or acquisition by third parties of shares in its own capital. Furthermore, loans for the purpose of the subscription or acquisition of shares in its capital, or of depositary receipts issued therefore may only be provided by a company to the extent of its distributable reserves and to the extent so permitted by its articles. These regulations will be cancelled.
- Elimination of the share transfer restrictions. Under the new law, shares in a BV can be made freely transferable;
- It will be possible to create shares without voting or profit rights.
- Managing directors. Under current law, only the General Meeting of Shareholders is entitled to appoint, suspend or dismiss a managing director. Under the new law, it can be determined that certain group(s) of shareholders (for example the holders of priority shares) are entitled to appoint suspend and dismiss a managing director or that certain shareholders will have increased rights to appoint a managing director.
- A distribution test will be introduced. A new distribution test under the responsibility of the management board will be introduced. If a BV wishes to distribute profits, purchase its own shares and/or reduce its capital, the management board must examine whether the company, after the distribution of profits, purchase of shares and/or reduction of capital will remain capable of repaying its creditors. If the management board does not perform this examination with due care, this can result in (joint and several) liability of the members of the management board.