Finance News & Insights

Flex BV Act Streamlines Doing Business in the Netherlands

NFIA_articleimageCompanies that wish to do business in the Netherlands now have a much easier time doing so, thanks to some major new changes to Dutch corporate law governing BV companies.

The Flex BV Act, which took effect last year, is designed to increase flexibility for limited liability companies and, overall, make it easier to incorporate and do business in the Netherlands.

The new rules apply only to privately held corporations, or BVs. They do not affect NVs, which are publicly held and traded companies.

The new legislation simplifies the rules regarding the share capital of the BV, creditors’ protection rules, voting rights and profit entitlement. The new Act gives more flexibility to tailor the articles of association of the BV, and, as such, will fit the needs of the current practice.

Among the major changes that are part of the Flex BV Act:

  • No required minimum capital, bank statement or auditor’s statement at incorporation, allowing  for a faster, more streamlined incorporation process. Shares may be valued in Euros or a foreign currency.
  • The inclusion of share transfer restrictions are no longer mandated in articles of association.  Under the new legislation, there is more flexibility to tailor the articles of association to the needs of the specific company.
  • The new rules cancel previous provisions that barred a BV and its subsidiaries from providing any form of security for the purpose of acquiring shares in the BV’s capital by third parties.
  • BVs may now establish shares with no voting rights, shares with multiple voting rights, or shares that are partially excluded from profit sharing and/or from distributions of revenues.
  • There are now increased permissions for shareholders to include certain matters in the articles of association rather than in a separate shareholders’ agreement.

The Flex BV Act has sped up the process of incorporation by removing needless red tape. This includes simplified rules regarding general meetings, which facilitates the decision-making process for shareholders.

The capital reduction procedure is another area that has been simplified. Under the previous rules, it could take more than two months to complete the process to repatriate funds to the U.S. in a tax-efficient manner. Now it can happen within a day.

The new laws apply to both new and existing Dutch BVs. It is recommended that existing BVs review their articles of incorporation to ensure they make full use of the opportunities under the new law, and to avoid legal uncertainty. Changes have been made in virtually every major category, including capital/shares, formal procedures, distributions, shareholders/general meeting requirements, and blocking clauses.

 

For more information, please visit our web site at www.nfia.com.

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