A vennootschap onder firma, or vof, is a partnership in which two or more people carry on a business under a common name. It has no legal personality but does have a separate estate. The partners are jointly and severally liable for the partnership’s debts.
Legal basis
The regime is in Articles 15 to 34 of the Dutch Commercial Code, supplemented by the provisions on partnership in Book 7A of the Civil Code. Article 17 of the Commercial Code provides that each partner may act on behalf of the partnership unless excluded; Article 18 makes each partner jointly and severally liable for its obligations. The Supreme Court confirmed in Carlande in 2015 that a creditor may pursue both the partnership and the partners personally, and that bankruptcy of the vof does not automatically entail bankruptcy of the partners. Registration in the commercial register is compulsory; limits on authority to represent only bind third parties if registered there.
How it works in practice
A partnership deed is not compulsory but is prudent. It should at least cover each partner’s contribution, the division of profit and loss, the allocation of authority with a threshold for major decisions, and provisions for withdrawal, incapacity and death. Without that last provision the partnership in principle ends when a partner withdraws. For entrepreneurs wanting to limit personal liability, a BV, or a vof whose partners are themselves BVs, is the alternative.
Where it goes wrong
Partners start without a deed and fall out over the profit split or over who was entitled to sign. A second risk is joint and several liability, including for debts one partner incurred alone. Third, a departing partner remains liable for debts arising before withdrawal; deregistration from the commercial register changes nothing.
Related terms
The vof sits alongside the private limited company, connects to joint and several liability and to the trade register.
Working together without recorded arrangements? Our corporate law specialists draft the partnership deed.
