[intro]As part of the reforms of corporate law a legislative amendment will be enacted on 1 October 2012 with respect to what is known as the Flex BV. The Act entails several far-reaching changes in arrangements for private companies with limited liability (BVs), as given in Book 2 of the Dutch Civil Code. The change is intended to simplify access to this legal entity.[/intro]
An important change is that the requirement for a minimum fully paid capital of EUR 18,000 will be dropped. When parliament introduced the current rules in 1976 the aim was to give creditors assurance of recourse on the legal entity to settle any claims. This had in mind that the ‘limited liability’ meant no recourse against the company’s shareholders. The continued need for this guarantee has long been debated. However, in practice it has proved to be something of a damp squib. Creditors tend to find themselves at the bottom of the barrel in insolvencies. In line with regulations in other countries, such as the British ‘Ltd.’ and the American ‘Delaware Inc.’, the capital requirement is to be dropped.
There will be no corresponding changes to the liability rules of directors and other parties. Changes might have been expected in order to provide compensation for the removal of the capital guarantee, but parliament concluded that the existing protection against abuse, as provided in the rules for directors’ and officers’ liability and unlawful act (such as what is known as the Beklamel criterion) were sufficient.
Besides abandoning the capital requirement, far greater flexibility is possible in the structure of a company. The number of shares, the voting rights, and so on, are much less rigorously defined. For additional details see the report on the introduction of the Flex BV on the chamber of commerce website.
The changes will mean that more thought will have to be given to how to arrange the legal form of a company. The shareholders’ agreement, the articles of association and other contracts surrounding the legal organization of the company will demand greater attention. Vorstman Advocaten can be of service in these areas, working together with the civil-law notary handling the company’s deed of incorporation.