Flex BV 1 October
On 12 June 2012 the Upper Chamber has adopted the “Act for simplification and flexibilization of company law”. The act will come into force on 1 October 2012, and from that date the ‘Flex BV’ can finally be established.
It will become simpler to set up a limited liability company and there are more ways to tailor the company setup.
In summary the main changes:
Capital and creditor protection
• No longer minimum capital requirement of EUR 18,000, one euro is sufficient;
• The bank declaration of cash deposit of shares upon incorporation will be abolished;
• The accountants declaration upon deposit of shares in natura will be abolished. The requirement of the contribution description by the directors or founders will be maintained. Take note of the fiscally evidential value and the great importance which is connected to the contribution description;
• The nominal value of shares may be in a currency other than the euro;
• The requirement to include authorised capital lapses;
• Post-formation acquisition and financial assistance are abolished;
• Limits and regulations for repurchase of shares and the capital reduction are largely eliminated;
• The board will have the right to approve distributions to shareholders. Below that will be further explained, for directors this brings many obligations;
Distribution to shareholders
• Directors require approval to distribute profits to shareholders. Repurchase of own shares and repurchase of capital reduction also fall under this;
• The entire equity of the company may be distributed to shareholders with the exception of the reserves which the company must hold on the basis of the law or their statutes;
• Directors must check whether the company can continue to fulfil its payable liabilities. If the outcome of the test is negative If the outcome is negative, the board must not give their approval. For the check board must look ahead around twelve months. The adoption of policies with a negative test outcome leads to the joint and several liability of the directors if they knew our ought to have foreseen this during the distribution with regard to the company. They are then jointly and severally liable for the deficit which is caused by the distribution plus the statutory interest from the date of distribution;
• The same applies to all the shareholders who receive the distribution, there is the obligation to pay compensation of at least the amount of the distribution received by them, plus statutory interest from the date of distribution;
Decision making and profit-sharing rights for shareholders
• Decision making without a meeting is already possible if all persons entitled to attend meetings agree. After the Act comes into force the requirement of unanimity expires for this form of decision making, as well as the requirement to record such decisions in writing;
• Shareholders’ meetings may be held outside the Netherlands;
• The notice period for shareholder meetings will be shortened to eight days;
• Allocation of voting rights to individual shareholders will become much more flexible. Also the appointment (and dismissal) of ‘own’ directors by shareholders is made possible. Particularly in joint ventures and family companies can such agreements provide a solution;
• Non-voting shares will become possible;
• Shares without profit rights may also be included;
• A clearer system for certificate holders whereby the statutes of the company must indicate if they have the right to attend meetings;
• The shareholders (and possibly other members) will receive more authority to instruct the board;
Transfer of shares
• It is no longer required to have a provision restricting the transfer of shares to be included in the statutes of a company;
• If a blocking scheme is included, the new law provides more room to make detailed agreements over the price;
• Moreover a lock-up provision can be included in the statutes where transfer of shares during a certain period is excluded;
Dispute regulation (Also changed for NV’s)
• The dispute regulation provides that a shareholder who harms the interests of the corporation may be expelled and that an impinged shareholder may withdraw. Expulsion is also possible because of past behaviour.
• The current dispute regulation is cumbersome, time-consuming and inflexible. The intention is to make the procedure faster and more efficient for all parties. The possibilities for immediate appeal is severely limited. The company and its shareholders get more space to change one of the legal disputes regulations in the statutes or by agreement.
• All the above schemes (except the distribution effects, which apply to all companies including existing) are optional and thus not mandatory. If you do not arrange anything than the statutes can fit on a mere a4 sheet;
• If there is a need for all the necessary options then it is 100% customized and no two statutes are identical. So know what you want to arrange and make regular checks. Not arranged is not applicable. Where now everything is governed by law soon there is complete contract freedom and the this brings obligations to the advisor;
• The expectation is that because of the distribution restrictions and the liability of directors a considerable number of existing private companies will be converted to the public NV form. For public companies there is no liability for directors.