Setting up a business in The Netherlands

If a company wishes to establish a subsidiary in The Netherlands, a choice will have to be made between several possible legal forms. For example, a Dutch private limited liability company or a public limited liability company? Dutch corporate lawyer Sander Schouten, owner at law firm AMS attorneys based in Amsterdam, explains.

How to start a company or open an office?

The most common legal form for a commercial organization is a private limited liability company, called a ‘besloten vennootschap’ in Dutch. This legal form, which is shortly called a ‘BV’, is most common when a company wishes to set up a subsidiary in The Netherlands. A public limited liability company, the ‘naamloze vennootschap’ (in short ‘N.V.’) is less common and is mostly used for large companies. The minimal paid in capital of a B.V. is EUR 18,000 and the minimal paid in capital for a N.V. is EUR 45,000. In contrary to the N.V., a BV can only have registered share The portion of registered capital of a private or public limited company
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shares
that are not freely transferrable.

Dutch law: is a shareholder or a director liable?

One of the reasons why B.V.’s and N.V.’s are mostly chosen as forms of a legal entity in The Netherlands, is the limitation of liability of the shareholders and directors. If creditors of a company are not paid in time, in principle they can only try to redress on assets The assets of a Dutch company reflect the value of all that the company possesses
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assets
of the company itself. In general shareholders are not liable for acts of the company and their liability is limited to the amount they invested. The director’s position is different. As a result of his responsibilities to lead and represent the company in a proper way, he can be held liable in certain situations. If the director does not fulfill his duty with care and attention, the company can hold him liable for damages. This will be the case if there is prove of serious misconduct. If the company is declared bankrupt, the receiver will investigate if the director has fulfilled his duty improperly. If this is the case, he will try to hold the director liable for all debts of the company that cannot be paid out of the assets of the company.

Notary: the incorporation is done by a notarial act

Both the B.V. and the N.V. have to be incorporated by a notarial act and articles of association A document, drawn up when a Dutch company or legal person is set up, and which regulates the operations of the company and defines its purpose.
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Articles of Association
will have to be drawn up. Both documents are usually drawn up in consultation with an attorney, who is skilled in corporate law. The B.V. and the N.V. have to be registered with the chamber of commerce. Year reports have to be deposited with the chamber of commerce. If this will not be done in time, this could result in a criminal act, and in case the company gets declared bankrupt later it will make it easier for the receiver to hold the director liable for the unpaid debts of the company. In the past the Ministry of Justice had to issue a statement of no-objection. This procedure used to slow the incorporation of the company with many weeks. Starting 1 July 2011 this procedure has been abolished. Therewith the incorporation procedure of a Dutch company became slightly easier and faster in 2011.

Dutch law firm in Amsterdam specialized in corporate law

Setting up a Dutch subsidiary will result in many choices to make and legal matters to take care of. Not only will you need legal advice about which legal entity to use, you will also need legal assistance when the company will have to be incorporated by the notary and with the drawing up of the Articles of Association. Furthermore it is usually necessary to have contracts drawn up, such as shareholders agreements, franchise agreements, the general terms & conditions and immigration matters will have to be taken care of. Our Dutch lawyers would be happy to assist you. If you have any questions, feel free to contact us.

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