The besloten vennootschap, abbreviated B.V., is the standard company form in the Netherlands. It is a legal entity with its own assets and liabilities, its shares are registered and not freely transferable, and the shareholders are in principle not personally liable for the company’s debts.
Legal basis
The B.V. is governed by Book 2, Title 5 of the Dutch Civil Code, beginning at Article 2:175. Incorporation requires a notarial deed executed before a Dutch civil-law notary, containing the articles of association, and registration in the trade register held by the Chamber of Commerce.
Since the Flex-B.V. legislation of 2012 there is no minimum share capital: a company can be incorporated with an issued capital of one eurocent. The former mandatory bank statement and auditor’s report on contributions in kind have also gone.
How it works in practice
Shares are transferred by notarial deed. The articles may contain a transfer restriction requiring the seller to offer the shares to fellow shareholders first, or requiring approval of a company body, but since 2012 such a restriction is optional rather than mandatory.
Distributions of profit are subject to a two-stage test under Article 2:216. The general meeting resolves on the distribution, and the management board must then approve it; approval must be withheld if the board knows or should reasonably foresee that the company will be unable to continue paying its due debts. A board that approves anyway can be held personally liable for the shortfall.
Where it goes wrong
Incorporators frequently treat the model articles supplied by the notary as sufficient. For a company with more than one shareholder they rarely are: the model says nothing about deadlock, exit, valuation or non-compete, which is precisely what a shareholders’ agreement is for. The second recurring problem is the distribution test, which is often skipped entirely in owner-managed companies that pay out whatever is in the account.
Related terms
See also articles of association (statuten), shareholders’ agreement and directors’ liability.
Our corporate lawyers in the Netherlands advise on incorporation, restructuring and shareholder arrangements.
