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profit is split between all partners in a way determined by the deed of partnership. Losses are borne by the C.V. as such, but silent partners will not be liable to provide extra capital in such circumstances nor will they be liable towards third parties who may have a claim on the C.V. Liability of the silent partners towards third parties will be triggered when such silent partner performs an act on behalf of the C.V. THE INCORPORATION PROCES Legal entities Articles of association Legal entities are incorporated by notarial deed passed by a Dutch civil law notary. The notarial deed contains the articles of association, which provide for the name, objective, number and type of shares, authorized and paid in capital, number and authority of the directors and (optional) supervisory board and all other regulations concerning the governance and operation of the entity. Apart from the incorporation of a coöperatie or onderlinge waarbormaatschappij , all legal entities may be incorporated by a single incorporator. Acts before incorporation It should be noted that the vesting of rights and obligations in a legal entity will only be realized upon incorporation of the legal entity followed by filing the entity in the trade registry in the Netherlands. Acts performed prior to incorporation or registration will only become acts of the entity once ratified by the board after the registration has taken place. If ratification does not take place, or is done prior to registration, the persons acting on behalf of the entity remain personally liable towards third parties. For the N.V./B.V., if such ratification is done by the board whilst it knows or should have known
that the N.V./B.V. will not be able to fully comply, personal liability of the persons who acted will revive and the board members who ratified the acts may also be held liable. Incorporation step-by-step The steps to be taken in the course of incorporating a legal entity are the following. Step 1: a civil law notary will have to be instructed to make a draft deed of incorporation. Step 2: once the deed is in conformity with the requirements of the incorporator, incorporation can take place immediately. Incorporators do not have to attend the incorporation in person. They may be represented by local residents based on a legalized and apostilled power of attorney. In all cases the civil las notary will have to confirm the identity of the incorporators through an apostilled legalization. If an incorporator is a legal entity itself, the authority of this representative will also have to be confirmed. Persons incorporating a company in the Netherlands, as well as (foreign) companies acting as such will be screened pursuant to the Anti-Money Laundering and Counter- Terrorist Act (WWFT). For this reason, some other formalities may have to be fulfilled. Step 3: in the deed of incorporation, the initial board member(s) and (if applicable) the first supervisory board member(s) will be appointed; Step 4: for the N.V./B.V. the share capital needs to be paid in forthwith upon incorporation. For the N.V./B.V. contribution in kind is possible but a description of the goods and a valuation are required. For the N.V. additionally a statement of a certified public accountant which confirms the sufficient value of the contribution is required. These rules also
ILN Corporate Group – Establishing a Business Entity Series
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