Dutch legal identities summary:

 

In order to help you to get a grasp of the different foundation possibilities in the Netherlands, we have summarised the most common structures for you.

 

If you register your company you must choose a legal form. In a legal unincorporated company, you and your personal assets are liable for the debts of your business. If you decide upon starting a Private Company or Limited Company, this is usually not the case. 

 

1. Legal unincorporated

 

Sole proprietorship

 

The only thing you need to do in establishing a sole proprietorship is registering your business with the Chamber of Commerce and having local address. Your sole proprietorship may have different trade names, activities and maintain facilities.

 

Company (vof)

 

If you want to start a company with other entrepreneurs, you may want to go for the vof. You are personally liable for the debts of the vof, even if one of your partners is responsible for the debt.

 

Limited partnership (CV)

 

The limited partnership (CV) is seen as a special form of the vof. However, there are two types of the central partners: general partners and silent (limited) partners. The limited partners are only involved financially. They cannot act on behalf of the partnership in public.

 

Drafting a partnership agreement is not required in setting up a CV. It is recommended that the agreements between the members are recorded in writing. An accountant or legal counsel may assist in the preparation of the deed, which should be checked by a notary. Also, registration with the Chamber of Commerce is required. The personal details of the managing partners are recorded, such as name and address. The silent partners are not mentioned, but the number and amount of their respective contributions are mentioned.

 

Partnership

 

The partnership is a form of cooperation between two or more persons ("bars") under a common name. Think of dentists, architects, lawyers and physiotherapists. Each brings something to the table, for example, labour, money or goods. The advantage here is shared.

 

Formation:

It is not mandatory to make a deed of the creation of a partnership. However, it is recommended that the agreement between the parties is recorded in writing. An accountant or legal adviser can help draw up a partnership deed, which can be checked by a notary. The partnership contract contains the following information:

 

- The contribution of the parties.

- Profit distribution. This is in proportion to the contribution, unless something else is agreed in the partnership contract.

- The division of power. Any party can conduct 'management action', unless another arrangement has been made.

- Agreements on the continuation of activities at resolving (ending) the partnership.   

 

2. With legal personality

 

Private company (BV) ;

 

If you establish a business, you can choose the limited legal form (BV). Advantage of the BV is that it is a legal person, which means that in most cases, the BV is liable for any debts. You are ‘just’ employed as a director of the BV and acts on its behalf.

 

How does the organisation of BV work?

 

The capital of one instance is divided into shares that are held by the shareholder(s). For a small BV, the CEO is often also the sole shareholder. If you have at least 5% of the shares or property, you will be managing director and major shareholder (DGA). The director is taking care of day-to-day management.

 

Requirements for establishing a BV:

 

- Notary deed

- No Objection Certificate by Ministry of Justice according to the concept notary deed. Founders and directors may not be involved in a property crime or bankruptcy in the last eight years.

- You must invest at least 18,000 euros in the company as working capital.

 

Limited company (NV) ;

 

A public limited company (NV) is a company of which the capital is divided into shares, like the private company (BV). An important difference is that the shares of an NV are transferable. Furthermore, the NV transferable shares are tradable on the stock market (bearer shares). 

 

Founding an NV:

 

Requirement for setting up NV are the same requirements as for the establishment of a private company (BV). However, for an NV, you must invest at least 45,000 euros.

 

Filing annual audit for the NV:

 

The BV and NV are obliged to submit the yearly audit rapport to the Dutch Chamber of Commerce. The way this should be done depends on the size and scope of the business.

 

Association

 

To achieve goals like improving your shopping area, sports, or music clubs, you might want to set up an association.

 

Organisation of an association:

 

- An association needs to have at least two members

- Members have basically all one voting ‘voice’ in the Assembly

- The meeting appoints the board, which in most cases consists of members

 

Cooperative and mutual insurance

 

The cooperative and mutual insurance associations are special associations. A cooperative takes care of the material interests of its members, through making agreements with the members. The profits may be divided between the members. A mutual insurance is an insurance company without shareholders, which is owned entirely by its policyholders.

 

Foundation (charity)

 

Would you like to promote a particular purpose or idealistic target e.g. helping other people, or raising funds to your favourite cultural club? And do you want to collect funds for this purpose or goal? Then, you can choose the foundation as a legal form.

 

To establish a foundation, a notary deed is required. You can set up a foundation alone (by your own will), or with others. A foundation can also be established by a BV. The deed needs to contain the following:

 

- The name of the foundation, with the word ‘foundation’ as part of its name;

- The purpose of the foundation

- How directors are appointed and removed

- The location of the foundation

- What will be done with the money if the foundation is dismantled

 

Usually, the deed also contains rules concerning the organisation.