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Articles of Association/Statutes/Formation Deed (in Dutch: Statuten)
One of the most important statutory documents of your Dutch (limited) company is the Formation Deed, also called the Statutes.
In this article we will explain you the details of the Formation Deed, and why they are so important. And why it’s so important what they say…
An average Formation Deed consists of about 20 pages, or even more. So this article will provide you a summary of the important matters, and it will also provide you a Presentation with a template Formation Deed. You could even use this Formation Deed to contact a notary to start your Dutch business.
The Formation Deed is drafted by a Dutch notary, and has to be executed in the Dutch language. The formation deed has to contain (i) details regarding:
the shares issued upon incorporation
the payment on the shares (in cash or in-kind) and details regarding the incorporator(s)/shareholder(s);
the appointment of the first (registered) managing directors and (optional) the first supervisory directors; and
the company's Articles of Association.
It’s also required to keep a shareholders register. There is no requirement to keep a directors register. The statutory documents of the Dutch B.V therefore only include three documents:
Deed of Incorporation (which includes the Articles)
Extract from the Trade Registry (also called a Certificate of Good Standing, of which we also provided an example below)
Articles of association/Formation Deed
The Articles of Association set out the mission and objectives of the company and its internal regulations.
Besides the company name, the registered office and the company's objectives, the Formation Deed contains the following items, some of which some are prescribed by law while others represent general good practice:
Financial year in The Netherlands
The formation deed will state that the company's first financial year is shortened, or extended, typically so that it can end on the 31st of December o the next calendar year. This way, the nest book year will run from 1st of January till 31th of December, but you are free to decide your own financial book year. The maximum amount of time that the first financial year can take is 24 months minus one day.
Directors and Supervision
The B.V., like most other Dutch legal entities, require the appointment of at least one Managing Director.
There are no stipulations concerning the amount, nationality or residence of managing directors.
Individuals as well as legal entities can be managing directors. In addition to a Board of Managing Directors, the Articles of Association may provide for (i) a Board of Supervisory Directors, or (ii) for a one-tier Board, with Executive and Non-executive Directors to supervise the Management/Executive Directors.
Legal entities may not be supervisory directors. The company's Articles of Association have to contain specific regulations regarding the absence or inability to act of all directors.
The Board of Directors is always authorized to represent the company towards third parties. Unless stipulated otherwise in the Articles of Association, the individual managing directors are also authorized to represent the company.
The Formation Deed of Dutch Companies would typically include that:
the signatures of a particular number or class of managing directors, acting together, are required to represent the company, and/or
certain management decisions/actions are made subject to the prior approval of the General Meeting of Shareholders or the Board of Supervisory Directors.
Share capital and the value of each share
The share capital of a Dutch legal entity is divided into shares with a nominal value.
Aside from the ‘ordinary’ shares, it is also possible to create other types of shares, such as preference shares (carrying financial benefits), priority shares (conferring rights of corporate control), non-voting shares and shares without a profit entitlement. Note that the minimum issued share capital for BV's of EUR 18,000 has been cancelled. The share capital can be EUR 1 or even less. Generally speaking, the shares must be paid in cash or in kind.
Share transfer restrictions
By law transfer restrictions with respect to the transfer of shares to others than fellow shareholders, spouses, close relatives and the company itself (third parties), are applicable. The transfer restriction by law results in the obligation of the transferring shareholder to first offer the shares to the fellow shareholders. If a transfer restriction is not required or if another substantiation of transfer restrictions is considered appropriate, these other arrangements must be included in the Articles of Association.
There is one yearly shareholders' meeting on the approval of the annual account. Other meetings are convened as often as the Board of Directors or shareholders deem necessary. The company's Articles of Association contain specific requirements for a general meeting.
The B.V. must keep a shareholders’ register, which lists the names and addresses of all shareholders, the amount of shares they hold, and the amount paid-up on each share.
The articles of association of the B.V. must include transfer restrictions in respect of the transfer of shares to others other than existing shareholders, their spouses and close relatives.
Shares in a B.V. may only be transferred by deed of transfer, executed before a Dutch civil-law notary.