How do you negotiate and contract with as little risk as possible?
You limit risks by having the main points reviewed first and then recording the arrangements fully and unambiguously. A corporate law lawyer prepares the negotiation with you, conducts it on your behalf if necessary, and turns the outcome into a contract that works in practice.
A good contract covers at least the price, delivery, liability, term and termination, and which law and which court apply. A limitation of liability and a penalty clause also belong in it. Oral arrangements and emails can already create a binding agreement. That is why we also advise you before you confirm a quotation or sign a letter of intent.
Have you not agreed a payment term with another business? Then a term of 30 days applies, and an agreed term may as a rule not exceed 60 days (Article 6:119a of the Dutch Civil Code). Late payment makes the statutory commercial interest (wettelijke handelsrente) payable.
What should you look out for in general terms and conditions?
You must provide your general terms and conditions (algemene voorwaarden) before or when the agreement is concluded (Articles 6:233 and 6:234 of the Dutch Civil Code). If you do not, the other party can annul them.
For consumers, there is also a black list and a grey list of clauses that are, or are presumed to be, unreasonably onerous (Articles 6:236 and 6:237 of the Dutch Civil Code). Large companies, such as businesses with 50 or more employees, cannot rely on these grounds for annulment. If your terms conflict with those of the other party, Article 6:225 of the Dutch Civil Code determines which terms apply.
How do you record a cooperation with a partner?
You record a cooperation in a cooperation agreement (samenwerkingsovereenkomst), or, for a joint business, in a joint venture with its own private limited company. It sets out each party's contribution, the division of costs and revenues, control and the way to exit.
If you cooperate with a competitor, competition law plays a role. Article 6 of the Dutch Competition Act (Mededingingswet) prohibits arrangements that restrict competition, such as price fixing and market sharing. The Netherlands Authority for Consumers and Markets (Autoriteit Consument & Markt) supervises this. Since 1 January 2021, franchising has been governed by the Franchise Act (Wet franchise) (Article 7:911 et seq. of the Dutch Civil Code), which includes a standstill period of at least four weeks before the franchise agreement is concluded.
What do you do in a conflict with a supplier, customer or business partner?
In a business conflict, you first put your position on paper: what was agreed, what went wrong and what loss you are suffering. This is usually followed by a notice of default, a negotiation and, if that does not work, proceedings.
If a party fails to perform its obligations, this is a breach of contract (wanprestatie). You can then claim performance, damages or termination (Articles 6:74 and 6:265 of the Dutch Civil Code). You usually first have to give the other party written notice of default (ingebrekestelling) and a reasonable period (Article 6:82 of the Dutch Civil Code). If you receive defective goods or services, you must complain within a reasonable time (Article 6:89 of the Dutch Civil Code). Anyone who waits too long may lose their rights.
For unpaid invoices, a prejudgment attachment (conservatoir beslag) can be a strong means of pressure. For this you need leave from the preliminary relief judge (voorzieningenrechter). A claim for payment under an agreement is as a rule time-barred after five years (Article 3:307 of the Dutch Civil Code). Cases up to €25,000 are heard by the subdistrict court (kantonrechter); above that, the case goes to the district court (rechtbank), where you need a lawyer. In urgent cases, such as a supplier that suddenly stops delivering, summary proceedings (kort geding) can produce a decision within a few weeks.
Many business disputes end in a settlement, recorded in a settlement agreement (vaststellingsovereenkomst). Your corporate law lawyer negotiates this on your behalf and litigates where necessary, including in the case of a tort (onrechtmatige daad) committed by a business partner (Article 6:162 of the Dutch Civil Code).
How do you arrange the relationship with your co-shareholders?
You record arrangements between shareholders in the articles of association (statuten) and in a shareholders' agreement (aandeelhoudersovereenkomst). The articles of association are public and apply to every shareholder; the shareholders' agreement is confidential and binds only its parties.
A corporate law lawyer aligns both documents. The shareholders' agreement sets out, among other things:
- which decisions require unanimity or a qualified majority;
- the rules for selling shares, such as a pre-emption obligation (aanbiedingsplicht), drag-along and tag-along;
- what happens on departure, incapacity for work or death (good leaver and bad leaver);
- how a deadlock is broken;
- arrangements on dividend, financing and a non-compete clause.
What can you do in a shareholder dispute?
In a shareholder dispute, you can negotiate, use mediation or apply the statutory dispute resolution procedure (geschillenregeling) (Article 2:335 et seq. of the Dutch Civil Code). Where there is serious doubt about the company's policy, the inquiry procedure (enquêteprocedure) before the Enterprise Chamber (Ondernemingskamer) is the most far-reaching remedy.
Through expulsion (uitstoting), shareholders claim that another shareholder transfers his shares if that shareholder seriously harms the interests of the private limited company (Article 2:336 of the Dutch Civil Code). Through withdrawal (uittreding), a shareholder claims that the others take over his shares if his rights or interests are seriously harmed (Article 2:343 of the Dutch Civil Code). The court can appoint experts to determine the price of the shares.
The Enterprise Chamber of the Amsterdam Court of Appeal can, on request, order an investigation into the policy and conduct of affairs (Article 2:344 et seq. of the Dutch Civil Code). At most private limited companies, shareholders who together hold at least 10 per cent of the issued capital can make that request. The Enterprise Chamber can also order immediate measures, such as the suspension of a director or the appointment of a temporary director. A corporate law lawyer drafts the petition and speaks at the hearing.
When is a director personally liable?
A director is personally liable if he can be seriously blamed for his management. This applies towards the company itself (Article 2:9 of the Dutch Civil Code) and, through a tort, towards creditors (Article 6:162 of the Dutch Civil Code).
If the private limited company goes bankrupt, the trustee in bankruptcy (curator) can hold the directors liable for the entire deficit (Article 2:248 of the Dutch Civil Code). For this, the management must have been manifestly improper in the three years before the bankruptcy, and this must be an important cause of the bankruptcy. If the accounts are not in order or the annual accounts were filed late, the law presumes improper management. The annual accounts must be filed with the KVK (the Netherlands Chamber of Commerce) no later than twelve months after the end of the financial year.
A distribution to shareholders can also be risky. The board must approve every distribution, and directors who knew that the company could not then pay its debts are liable for the deficit (Article 2:216 of the Dutch Civil Code). Is the company unable to pay its payroll taxes, VAT or pension contributions? Then report this within two weeks to the Belastingdienst (the Dutch Tax Administration) or the pension fund, otherwise you risk personal liability. If you receive a liability claim, have a corporate law lawyer assess whether the claim is justified before you respond.
The dismissal of a statutory director takes place by a resolution of the general meeting. The director must first be given the opportunity to state his views on the proposed dismissal. If he is also an employee, employment law also plays a role in the termination and any compensation.
How does a corporate law lawyer guide a business acquisition?
A corporate law lawyer guides the purchase or sale of a business from letter of intent to transfer. Every transaction is tailor-made, because the risks differ from business to business.
- Letter of intent (intentieverklaring): the main points of the deal, often with exclusivity and confidentiality.
- Due diligence: an investigation into the legal, financial and tax risks of the business.
- Purchase agreement: the price, the payment arrangements, and the seller's warranties and indemnities.
- Transfer: for shares by notarial deed, for an asset transaction per component.
In a transfer of assets, the employees transfer to the buyer by operation of law (Article 7:663 of the Dutch Civil Code). A works council (ondernemingsraad) has a right to advise on an acquisition. Large concentrations must be notified in advance to the ACM (the Netherlands Authority for Consumers and Markets). This applies if the combined worldwide annual turnover exceeds €150 million and at least two parties each have a turnover of at least €30 million in the Netherlands.
What are your options if things go wrong financially?
In financial difficulties, a business can restructure through negotiations with creditors, a composition through the WHOA or a suspension of payments (surseance van betaling). The sooner you act, the more options you have.
The Act on Court Confirmation of Extrajudicial Restructuring Plans (Wet homologatie onderhands akkoord, WHOA) has applied since 1 January 2021. Under it, a business can offer a composition to creditors and shareholders outside bankruptcy. The district court can declare that composition binding, including on creditors who voted against it. During the preparation, the court can declare a cooling-off period of up to four months, which can be extended to a maximum of eight months.
If restructuring fails, bankruptcy often follows. The trustee in bankruptcy winds up the estate and investigates the role of the management. A corporate law lawyer with knowledge of insolvency law advises directors and shareholders on their obligations and assists creditors with their claims.
Which legal form suits your business?
The legal form mainly determines who is liable for the debts. In a sole proprietorship (eenmanszaak) you are liable with your private assets; in a general partnership (vennootschap onder firma, vof) each partner is jointly and severally liable. A limited partnership (commanditaire vennootschap) and a professional partnership (maatschap) have their own rules. A private limited company (besloten vennootschap, bv) is a legal entity: in principle only the company is liable. Since 1 October 2012, there has been no minimum capital for a private limited company; a private limited company is incorporated by notarial deed (Article 2:175 of the Dutch Civil Code). A public limited company (naamloze vennootschap) requires a minimum capital of €45,000. Different rules apply to a foundation (stichting) or association (vereniging). A corporate law lawyer helps you choose and aligns the articles of association and arrangements with your plans.
