Article 2:196 of the Dutch Civil Code (Burgerlijk Wetboek) sets the formal requirement for transferring shares in a private limited company (BV). The transfer of a share, and the creation or transfer of a limited right such as a pledge or usufruct, requires a deed executed before a civil-law notary (notaris) established in the Netherlands, with the parties involved. The issue of new shares requires a notarial deed as well (Article 2:204).
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Why is a notarial deed required?
For legal certainty and supervision. The notary checks the identity of the parties, the chain of title, the transfer restrictions in the articles of association and compliance with anti-money laundering rules. Without a notarial deed, the shares do not pass, however clearly the parties recorded their intention.
When does the buyer become shareholder?
Only when the notarial deed is executed. A signed share purchase agreement gives the buyer a claim to delivery, but not the shares themselves, nor the voting and dividend rights. The rights attached to the shares can be exercised against the company once the company has acknowledged the transfer or the deed has been served on it (Article 2:196a). If the company is a party to the deed, acknowledgement follows automatically. The board must then update the shareholders’ register (Article 2:194).
What risks arise between signing and transfer?
In an acquisition, there is often a period between signing and closing. During that time the seller still controls the company. Agree on conduct of business rules, conditions precedent and what happens if they are not met. The same applies when a new partner joins: the notarial transfer is the decisive moment.
Frequently asked questions
Can shares be transferred by a deed signed abroad?
No. The deed must be executed before a notary established in the Netherlands, although parties can be represented by power of attorney.
Does the transfer have to follow the blocking clause?
Yes. The notary checks compliance with the transfer restrictions under Article 2:195.
Related terms
- Share transfer
- Article 2:195 Dutch Civil Code (share transfer restrictions)
- Transfer of title
- Due diligence
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