The Dutch government has published a number of messages on the changes in Dutch company law, that follow below. Please note that these messages are short and do not contain all relevant information. [Ellen Timmer]
News item | 28-09-2012
As of 1 October 2012, it will be easier for businessmen to incorporate a private limited company under Dutch law; they will be given more freedom to shape such company at their own discretion. Unnecessary impediments have been removed. Measures providing a significant degree of simplification and increased flexibility in the rules governing this legal form will give the business community many advantages. This is clear from the new Act introduced by Mr. Opstelten, the Minister of Security and Justice.
An important change is the abolition of the minimum capital requirement of € 18,000 as the initial launch capital. Under the new system, businessmen are free to determine the amount they wish to contribute upon incorporation of the company. This measure is expected to have a beneficial economic effect, because it will become easier for smaller enterprises and beginning entrepreneurs to opt for the legal form of a private limited company. It will make investing in the business more attractive. The compulsory share transfer restriction clause, the bank declaration and the auditor’s certificate upon contributions in kind are also abolished.
For businessmen that want to establish a company governed by standard rules, the Articles of Association will fit on one A4-sheet of paper. That will mean that more elaborate rules governing the company and legal advice regarding the company’s incorporation are no longer necessary. The greater freedom offered to the business community is also evident from the option for each shareholder or group of shareholders to appoint their own director, the possibility of issuing non-voting shares, and the possibility of adopting resolutions outside a formal general meeting.
News item | 28-09-2012
Dutch public and private companies can opt for the so-called one-tier or monistic management model, which makes it possible to divide the duties within the management of a company among the executive and non-executive directors. This is provided for in an act drawn up by Minister Opstelten of Security and Justice that will enter into effect on 1 January 2013.
Opstelten intends to increase the usefulness of public and private companies in national and international entrepreneurial relationships, because the Netherlands is faced with more competition from legal forms abroad.
The fact that directors receive more information sooner than supervisory directors, irrespective of whether they are involved in general management or (also) in executive management, is mentioned as one advantage of the monistic or one-tier model. The act also contains rules for the consequences of a conflict of interest between directors and supervisory directors for decision-making within the company. If a director or supervisory director has a personal interest that is in conflict with the interest of the company, the starting point is that he does not participate in decision-making.
A balanced distribution of the seats of the management board and the supervisory board of ‘major’ public and private companies between men and women is assumed if both genders hold at least 30% of the seats. If this is not possible, the reason will have to be provided in the annual report.
The act furthermore limits the number of supervisory directorships at ‘major’ public and private companies and at ‘major’ foundations subject to an obligation to draw up financial statements. For example, a supervisory directorship may be combined with at most 4 other supervisory directorships at other large legal entities (a total of at most 5 supervisory directorships). Chairmanship of a supervisory board will count double.
A natural person cannot be appointed director or supervisory director at a large legal entity if he already holds the maximum number of supervisory directorships at other large legal entities. Persons appointed before 1 January 2013 can remain in office until the end of their term of appointment, irrespective of the number of the supervisory directorships.
A legal entity is considered large if it satisfies at least two of the three following criteria for two consecutive years: the value of the assets exceeds € 17.5 million, the net turnover exceeds € 35 million and the average number of employees is 250 or more.
News item | 12-06-2012
The Senate has adopted a bill drawn up by Mr Opstelten, the Minister of Security and Justice, making it easier for entrepreneurs to incorporate a private company with limited liability (“BV”) as from 1 October 2012. Unnecessary impediments have been removed. A drastic simplification of the regulations applicable to this legal form is very advantageous for the business sector.
An important change is the abolition of the required minimum capital of 18,000 euros as start-up capital. Under the new system, entrepreneurs will be allowed to determine the amount of money to be brought into the BV upon incorporation. Expectations are that this will have a positive economic effect, as it will become easier for small and starting entrepreneurs to opt for a legal form with limited liability. It will provide an incentive to invest in the business. The transfer restrictions, the capital contribution statement and the audit opinion in the event of contributions other than in cash will also be abolished.
The articles of association for a standard BV will cover only one page. It will no longer be necessary to lay down elaborate regulations in the articles of association and legal advice will not be required.
The extended freedom for entrepreneurs becomes particularly manifest in the wider range of possibilities to deviate from the legal provisions in the articles of association. Examples are the option to allow each shareholder or group of shareholders to appoint his/its own director, the issue of shares without voting rights and more opportunities to adopt resolutions outside general meetings.
With the new legislation taking effect on 1 October of this year, existing and future entrepreneurs and other parties involved will have sufficient opportunity to prepare for it. Incidentally, the new legislation on BVs does not contain requirements that must be incorporated in the articles of association right away.
The provisions on limiting the number of supervisory directors (involving an amendment of the Management and Supervision Act, Dutch Bulletin of Acts and Decrees 2011, 275, which has not yet taken effect) has not entered into force.
Press release | 28-05-2010
The Supervisory Board of a public limited company (NV) will in the near future be able to adjust the value of a promised bonus or claim back bonuses paid out on behalf of the company. In addition, the Supervisory Boards of listed companies will be obliged to make an assessment as to whether bonuses, which become unconditional in the event of a public offer, have to be adjusted. The council of ministers has, upon Minister Hirsch Ballin’s recommendation, agreed to a legislative proposal to that effect.
The regulation concerns the directors of all public limited companies, including those which maintain a bank or insurance company. The regulation has furthermore been extended to banks and insurance companies that make use of the legal form of cooperative society, mutual insurance association and private company with limited liability (BV). The cabinet expects that the measure will enable Supervisory Boards to ensure that the remuneration will contribute to the (long-term) interests of the company.
Excessive bonuses have contributed – when viewed in retrospect – to an irresponsible willingness to take risks within financial institutions, while the government had to support companies in this sector. The bonuses can be so high at other public limited companies as well, that the recipients are no longer guided by the (long-term) interests of the companies. The legislative proposal clarifies the current legal possibilities and provides supervisory boards with more starting points in the exercise of their powers with respect to the remuneration of directors. The new regulation also applies to existing contracts.
Supervisory Boards can adjust the value of bonuses if their payment would be unacceptable according to the standards of reasonableness and fairness. This is the case, for example, if the price of the shares, on which payment of the bonus depends, has increased excessively due to circumstances that could not have been foreseen. This is also the case if the economic situation of the company or the market is unfavourable, while this was insufficiently taken into account in the determination of the targets on which the bonus is based. Claiming back bonuses is possible if the targets on which the bonuses are based have not been achieved in actual reality, while this has been reported otherwise in the annual documents. The Supervisory Board must report, in the annual report, to the General Meeting on the use of, or the failure to use, the powers to adjust and claim back bonuses.
The council of ministers has agreed to the legislative proposal being sent to the Council of State for its opinion. The text of the legislative proposal and the opinion of the Council of State will published upon submission to the Lower House of Parliament.
Legislative proposal to change the right of inquiry of shareholders of large public and private limited companies
Press release | 29-04-2011
Access of shareholders of large public and private limited companies (NVs and BVs) to the Enterprise Section of the Amsterdam Court of Appeal will be restricted. In future, they must represent more shares to have the day-to-day operations of the company investigated. The Council of Ministers has agreed to a legislative proposal of Minister of Security and Justice Opstelten to that effect.
Currently, shareholders may go to court if the nominal value of their shares is at least EUR 225,000 (or if they represent 10% of the issued share capital of the company). The Cabinet finds this limit too low for enterprises having a large share capital. Therefore, shareholders must from now on represent at least 1 per cent of the share capital, if the public or private limited company has an issued share capital of 22.5 million Euro or more. Alternatively, their interest must have a market value of at least 20 million Euro. For companies with a lower issued share capital nothing will change. The new limits are in line with the recommendations of the Social and Economic Council in its ‘Balanced Corporate Governance’ report.
The right of inquiry is an important instrument to solve internal disputes in companies. The Enterprise Section of the Court of Appeal can take swift and effective action in the case of disputes between shareholders and problems between shareholders and directors. The Court may, for instance, decide to appoint temporary directors and to suspend resolutions. The recommendation of the SER to allow the NV or BV – represented by its Board of Directors – to request an inquiry itself, because of the policy of the shareholders’ meeting or the behaviour of individual shareholders, has also been adopted. The position of the Works Council does not change. The employees have access to the investigation proceedings via the unions or based on agreements with the legal entity.
The investigation proceedings will be improved in various aspects. This includes the substantiation of immediate relief ordered by the court, the possibility of making comments about the report of the investigators and supervision of the investigation by a justice and examining magistrate. In addition, the legislative proposal restricts the liability risk of investigators and sees to it that temporary directors or supervisory directors who set to work at the court’s request are no longer charged with the costs of defence, if they are held liable because of their activities.
The Council of Ministers has agreed to send the legislative proposal to the Council of State for its opinion. The text of the legislative proposal and the advice of the Council of State will be made public on submission to the Lower House.
NOTES BY ELLEN TIMMER
[note 1] This legislative proposal has not yet been accepted by parliament.
[note 2] This proposal has been accepted by parliament and will enter into effect on 1 January 2013