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New legislation: the Flex BV in the Netherlands (effective October 1, 2012)

New legislation: the Flex BV in the Netherlands (effective October 1, 2012)

On October 1, 2012 the long-awaited legislation regarding the simplification and flexibilization of the rules on Dutch private companies with limited liabilities (Wet vereenvoudiging en flexibilisering bv-recht : the “Flex BV Act”), will come in effect.

The Flex BV Act is applicable to all existing private companies with limited liability (besloten vennootschappen met beperkte aansprakelijkheid:  the “BV) in the Netherlands. The Flex BV Act is meant to simplify company rules for BVs. It will also make the rules more flexible, which will create new opportunities and attractive possibilities for creating a BV and for existing and new joint ventures in the Netherlands.

The most important changes are:

• the private character of the BV will more or less disappear, as the share transfer restrictions become no longer mandatory;
• a lot more possibilities with the share capital of the BV: broad variety of shares with/without voting rights and other rights or obligations can be created;
• the strict rules on capital protection and protection of creditors will disappear: no further bank- or auditor’s statements are required for payment on shares, reduction of share capital or purchase of shares in its own capital by a BV;
• the distributions of profits and reserves becomes more flexible(***?);
• as a trade-off for the abolishment of the stricter requirements referred to above, the position of the managing directors and their liability increases a lot;
• the rules on decision-making will become more flexible.

If you would like a more detailed explanation of the most significant changes, with examples, please see our article (attached pdf).

Transitional law

As per October 1, 2012, the Flex BV Act will have immediate effect on the Articles of Association of a BV. It will be relevant for all existing BV’s: part of the current Articles will remain in force; other parts of the Articles will lose their relevance with immediate effect and be replaced with the new rules.

What to do?

The Flex BV Act creates possibilities, but also has significant effect on existing BVs.

It is important to review the articles of existing BVs to determine if they contain references to current law that will be changed or abolished under the Flex BV Act. It may be advisable to amend the articles of association to use the more flexible system under the Flex BV Act and to make them more customized.

The Flex BV Act and the new rules are not applicable to the legal form of a NV. It is good to know that the new rules of the personal liability for directors are not applicable to managing directors of NVs. For this reason it could be advisable to consider whether an existing BV should not be converted in a NV.

Should you wish to know what the Flex BV Act means for the Dutch companies in your structure or for your personal holding BV, we recommend seeking specialized advice of a Dutch civil-law notary. We are more than happy to assess the possibilities for you with our “Quick Scan for the Flex BV”.

Ton Lekkerkerker (civil-law notary) and Anne Claire Sillevis Smitt (candidate civil-law notary)

 

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