Private limited company (BV)

A private limited company (BV) is a cooperative venture of shareholders. On incorporation, shares are issued to the incorporator(s) or to other parties contributing money or assets. The shares are registered. The names and addresses of the shareholders are kept in the shareholders’ register.

Since the introduction of the Private Company Law Simplification and Flexibilization Act in 2012, incorporating a private company in the Netherlands is relatively easy:

1. Shareholders have a certain amount of freedom in organizing the articles of association.
2. There is no minimum starting capital required.
3. There is no bank statement and audit for the contribution required.
4. There is a possibility to choose for free assignability of shares.
5. Taking decisions outside the general meeting is simplified.
6. It is possible to work with shares with no rights to vote or to profits.

The shares in a private company cannot be assigned freely unless determined otherwise in the articles of association. The choice can be made for freely assignable shares. This makes it easier to sell the shares.

On incorporation of a private company, there is no minimum capital required. A private company can be incorporated with a capital of 1 eurocent. Sometimes the undertaking is already acting prior to the incorporation of the private company. If you are considering this, please consult your legal counsel in advance, specifically because you are personally liable until the time of incorporation. If you pay shares in full, this could be done in money or in assets.

A private company has the following bodies:

• A general meeting that is entitled to:
  • Appoint and dismiss managing directors;
  • Amend the articles of association;
  • Issue new shares;
  • Decide to dissolve the company.
• A management board, consisting of one or more managing directors
• A supervisory board can also be appointed. This board is charged with supervising and advising the management board. The manner in which supervisory directors are appointed is mandated by law and further elaborated in the articles of association.

In a private company the shareholders are only liable to the amount for which they participate in the company. And because a private company is a legal entity, the managing and supervisory directors are in principle not liable for the debts of the company. However, if it is a matter of ‘mismanagement’ and if the company is damaged, the company can hold the managing and supervisory directors accountable.

The civil-law notary shall record the articles of association of the private company in the deed of incorporation. The articles of association include, among others, the following:

• The nominal amount of the shares;
• The procedures on how managing and supervisory directors are appointed and dismissed;
• The authorities of the various organs and how they meet;
• The rules for the transfer of shares.

The private company has to be registered with the Trade Register, to prevent personal liability of the managing director. This registration usually takes place under the supervision of a civil-law notary.

Each private company has to draw up and publish annual accounts. The legal requirements for this depend on the size of the company. If a director fails to publish the annual accounts on time, he is at greater risk to be held personally liable in case of bankruptcy.

In incorporating a private limited company, there are many issues on which we can inform and advise you. For example, organizing of the company bodies, preventing managers’ and officers’ liability, determining the amount of the share capital, designing the office and invoice stationary of the company, organizing the administration, the order confirmation, drawing up the general terms and conditions and suchlike.

Marks Wachters will be able to take the required steps such as drawing up a deed of incorporation, starting a shareholders’ register, registering the company at the Chamber of Commerce (often only 3 hours after incorporation), opening a bank account at your bank and administrative handling.