[ESTABLISHING A BUSINESS ENTITY IN THE NETHERLANDS] 353 353
apply to acquisitions of goods which did belong to incorporators or shareholders by the N.V. in the period from incorporation until two years thereafter. This is called Nachgründung . Step 5: the civil law notary will register the entity at the trade registry held by the chamber of commerce, in principle on the same day as the incorporation. An extract showing the registration can be obtained immediately afterwards. The time it takes to follow these five steps for incorporate will largely consist of the time it takes to provide the civil law notary with the proper instructions and documentation. Incorporation and registration itself only take one day or some days at the most. Partnerships Partnerships are established pursuant to a private agreement concluded between the parties becoming a partner to the entity. There are no formal requirements to be met, other than that the partnership has to be filed at the trade registry upon its establishment. The name and address of each partner will be recorded, as well as the address of the entity itself, which should be an address in the Netherlands. GOVERNANCE AND ONGOING MAINTENANCE Legal entities Governance Next to governance issues, which are previously mentioned, there is a noteworthy new law in effect per the 1 st of July 2021 named Wet bestuur en toezicht (Act on governance and supervision) . Following out of this new law governance of all legal entities will become more like the B.V./N.V. structure by opening up the possibility of a one-tier board, by standardizing conflict of interest provisions and by expanding the liability of the members of
the management board and the supervisory board. Maintenance In this summary, we confine ourselves to the most common entities for commercial use, being the N.V. and the B.V. Pursuant to the Dutch Civil Code, the management needs to keep account of the rights and obligations of these companies on an ongoing basis, in order that at any given moment the financial status may be known. Books and documents need to be stored for at least 7 years. Furthermore, each year within 5 months from the financial year end (or 10 months if prolonged by the general meeting of shareholders), the management is obliged to prepare the annual accounts and to present these to the general meeting of shareholders. The shareholders have to adopt the annual accounts within two months upon the end of the 5- or 10- months’ term. Within 8 days from establishment the annual accounts need to be filed at the trade registry. If the company at least fulfils two of the following three criteria, it will be required to have the annual accounts audited by a certified public accountant: (1) a turnover of more than EUR 8,800,000, (2) a balance sheet total of more than EUR 4,400,000 and (3) an average number of full-time employees of 50 or more. Non-compliance with these financial rules may give rise to criminal fines for the management. In the event of a bankruptcy this non- compliance in the three years prior to the bankruptcy form a irrefutable presumption that the management acted improperly, and it is assumed that the improper performance is a material cause for the bankruptcy. This may lead to personal liability of all board members for the total deficit in a bankruptcy of the company.
ILN Corporate Group – Establishing a Business Entity Series
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