As of January 1, 2009, Aruba introduced a new legal form: the Vennootschap met Beperkte Aansprakelijkheid (VBA), a form of limited liability company. This new, modern legal form, characterized by flexibility and simplicity, is aimed at improving the Aruban investment climate and further developing its financial services sector.
Below, we will explain the main features of this new legal form and explain how this new legal form, which can be custom-designed to resemble an Anglo-American LLC, a general partnership or a limited partnership, contributes to the modernization of Aruban company law.
A VBA is incorporated by notarial deed, after obtaining a declaration of no objection from the Aruban Ministry of Justice (through a simplified procedure). A declaration of no objection is not required for any subsequent amendment of the articles of association. A VBA can be incorporated by one or more persons, who are not obliged to participate in the capital of the VBA. The deed of incorporation may be drafted in any language. If the language is not Dutch, English or Papiamentu, a translation in one of these languages must be attached to the deed of incorporation. Like all Aruban legal entities, a VBA requires a business license in order to conduct business in Aruba, and a director's license for each of its non-Aruban directors.
The required content of the articles of association is limited to (1) the name, (2) the corporate seat, (3) the corporate objective of the VBA and (4) any limitations to the director's (or directors') representative authority. All other matters can be dealt with in a regulation (reglement), which does not have to be notarized or made public.
The VBA offers a large degree of flexibility in its funding. Capital may be denominated in any freely marketable currency. There is no minimum capital requirement (note, however, that shares cannot be issued for no consideration (om niet), which means that, in practice, the VBA's capital should be at least 0.01 cent). Shares can be issued with or without nominal value. Different classes of shares may have different nominal values. Shares can be issued with or without voting rights, or with limited voting rights. Furthermore, shares can be issued with or without profit rights. Only one restriction applies: there must be at least (i) one share with full voting rights and profit rights, or (ii) one share with full voting rights and one share with profit rights. This share (or these shares) must be held by a party other than the VBA or a subsidiary of the VBA.
In principle, shares in the VBA are freely transferable. However, the articles of association may provide for a transfer restriction.
Liability of shareholders
In principle, a VBA is incorporated on a limited liability basis. However, the articles of association or regulation may stipulate that all shareholders, or holders of a particular class of shares, are personally liable for all or specific types of debt of the VBA, in which case the VBA can be compared to a general partnership (a vennootschap onder firma) or a limited partnership (a commanditaire vennootschap), respectively. The personal liability of a shareholder can be limited to a maximum amount, or to situations of bankruptcy. The Aruban commercial register must be informed about the existence of shareholders who are personally liable. A shareholder with personal liability who has sold his or her shares, remains liable during a minimum period of five years.
The VBA's organizational flexibility allows for different managing board structures: both a one tier board (comprising of both executive and non-executive directors) and a two tier board (where the managing board and the supervisory board are separate corporate bodies) are possible. Alternatively, the VBA can opt for the 'simple' model of a managing board without a supervisory board.
The VBA is obliged to have a legal representative residing in Aruba, who will serve as a first point of contact for Aruban authorities. This can be a director (being a natural person) of the VBA residing in Aruba, or, if the director of the VBA is a legal entity, a director (being a natural person) of this legal entity residing in Aruba. The legal representative can also be an Aruban N.V. (a different form of limited liability company) with the explicit corporate objective to represent VBAs (it does not become a director of the VBA), and which has a specific business license to do so.
To protect creditors of the VBA, the law forbids a distribution to a shareholder if such distribution would mean that the VBA's equity capital falls below the amount of capital paid up by the shareholders. The amount of the issued and paid up capital of a VBA must be made public in the commercial register. Any distribution in violation of this rule is null and void.
Conversions, mergers and divisions
Along with the introduction of the VBA, a number of new restructuring instruments have been added to Aruban company law which apply to all existing legal forms, including the VBA: the (cross-border) conversion (omzetting), the (cross-border) merger (fusie) and the national division (splitsing).
The VBA is subject to the regular Aruban corporate income tax regime, with a tax rate of 28%. However, if it fulfills the applicable criteria, the VBA can choose to be subject to each fiscal regime available in Aruba, including the fiscal transparency regime and the tax exempt status.
The most important feature of the new and modern VBA is its flexibility. Incorporators can custom-design the VBA to fit their needs. There is no minimum capital requirement. Shares can be issued with or without voting rights or dividend rights. Shareholders can exclude liability or can be personally liable. The managing board can be construed as a one tier or a two tier board. And along with the introduction of the new VBA, new legal possibilities for conversions, mergers and divisions are introduced.