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The constitution of a limited liability company in the Netherlands

If you wish to set up a company in the Netherlands, you can opt for “private limited liability company”, also known as a BV. This legal entity is comparable to the Belgian BVBA. You can have a number of motives for establishing a BV.

Why should I use a Dutch BV?

Although you can also do business with your Belgian BVBA across the border, a Dutch BV, which has a business address in the Netherlands, can give your local customers, business partners and employees just a little more confidence in your organization. And once you operate in the Netherlands, you will soon have to deal with Dutch regulations.

The advantage of a BV is that it is a legal entity so that it can participate in legal transactions under its own name and can thus conclude a purchase agreement itself.

At a BV continuity is guaranteed because death or bankruptcy of a director or shareholder has no consequences for the survival of the company. The shares in a BV can also be transferred relatively easily.

And vice versa: the director and shareholder are – in principle – not liable with their private assets for the debts of the BV or, for example, in the event of bankruptcy of the company. A BV has equity from which creditors can recover. However, please note that under Dutch law a director can in certain cases be held liable for debts of the company.

How do I set up a Dutch BV?

A BV is only possible with a notary and this cannot be deviated from. A notary draws up a deed of incorporation of which the articles of association of the BV to be part of. The articles of association are the basic rules and in any case contain information about the name, purpose, seat and shares (including who will receive shares and the price of the shares).

In Dutch law, many provisions state that the main rule can be deviated from in the articles of association. You can use a BV as you wish within the limits of the law.

From the moment that the notary public passes the deed of incorporation, the BV must be registered in the Trade Register of the Chamber of Commerce. In general, the notary takes care of that registration.

The Shareholder Agreement

If you have more shareholders, you can draw up a shareholders’ agreement, preferably prior to the establishment of the BV. Here you can lay down agreements that are not included in the deed of incorporation (the articles of association) or that require further elaboration, such as that shareholders may not compete with each other, regarding the exercise of voting rights, when the shares may be transferred to a third party (or must be offered to the other shareholders) and the board decisions that must first be submitted to the shareholders for approval.

You can make the shareholders’ agreement as extensive as possible if you wish, but this must be in line with the deed of incorporation.

The management agreement

It is often recommended that the rights and obligations of the director(s) vis-à-vis the company be laid down in a management agreement. This may include arrangements regarding, among other things, the management and expense reimbursement of the director, the decisions that the director must first submit to the shareholders for approval, non-confidentiality and non-competition agreements, the core duties of the director and the way in which the director must carry out work.

If the director is a natural person, he or she may be qualified as an employee under Dutch employment law. If that is the case, it has employment law and tax consequences. A management agreement often stipulates that the director is not regarded as an employee, but as a contractor. But whether there is a pure contract or an employment contract, that is determined by Dutch law; the name of the contract is inconclusive. More information about Dutch employment law can be found here.

Is a minimum capital required?

When establishing a BV you do not have to pay a mandatory minimum capital. You can set up a BV with a capital of one euro cent.

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