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most commonly charities or institutions in the field of healthcare, social work, or culture. Foundations can also serve as vehicle for undertaking commercial activities. Given the restrictions on making distributions such commercial activities mostly are in function of the idealistic objectives. Another purpose for foundations is to serve as an instrument for separating share dividend rights from voting rights via so-called ‘certification’. As a result of the certification of shares the voting rights attached will be exercised by the board and the dividend rights will accrue to depository receipts issued to third parties. In doing so the holders of the depository receipts will in fact own shares without voting rights. This practice is common in the Netherlands and mainly used for structuring ownership of (family) businesses. Typically, one or more (family) members who are involved in the business will hold ordinary shares and the board position(s) in the company as well as in the foundation, whereas the other (family) members will hold the depository receipts with dividend rights. Another solution to trim the right structure is the creation of shares without voting rights. Certification of shares can also be used as a shield by N.V.’s listed on the stock exchange. In that case a sizeable part of the shares are held by a foundation and listed in the form of certificates. The voting rights attached to the shares are exercised by a board, which aims to protect the interests of the company. Sole proprietorship An individual which is taking up a business and who acts in the course of that business without choosing a legal entity or partnership with other entrepreneurs, is acting as the sole proprietor. Rights and obligations of the
business are of the individual as are any liabilities. Nevertheless, such an entrepreneur may have employees. Those employees are employed by the entrepreneur himself. Partnerships The partnerships available in the Netherlands are listed hereunder. These entities are tax- transparent, meaning that tax is levied at the level of the partners, not at the level of the entity itself. There are two types of partnerships: the maatschap and the vennootschap onder firma . The maatschap is intended for co-operating professionals, such as lawyers, dentists, doctors, architects, and accountants. The vennootschap onder firma or v.o.f. for short is intended for other business. Characteristic for both types is that the partners have contributed monies or goods and provide their (skilled) labour to the partnership. The main distinction between the maatschap and the vennootschap onder firma is that partners in the maatschap will be liable towards third parties in proportion to their number (with 3 partners every partner will be liable for 1/3), whereas partners in the vennootschap onder firma will be liable jointly and severally each for the full amount of the liability. A special sub-type is the Limited Partnership called commanditaire vennootschap or c.v. for short. It is a partnership with one or more public partners and one or more so-called silent partners added. The silent partners contribute money or goods to the C.V. but are not known to the public and they may not perform acts on behalf of the C.V. They may participate in decision making. The silent partners are not registered at the trade registry. Only the number of silent partners and the amount of the capital they paid has to be registered. Business is conducted on behalf of C.V. The
ILN Corporate Group – Establishing a Business Entity Series
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