Change the Company Activity Description
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How to update your Company Activity Description
When you start a Dutch business, you (as shareholder) will describe your business activities in your Formation Deed/Statutes.
It’s important to describe your activities or company objective as broadly as possible n the Statutes. The fact that the target description is stated as broadly as possible does not mean that the BV is obliged to actually carry out those activities. It does, however, offer the option of setting up a subsidiary BV yourself as a BV, to take over shares from another BV or to participate in another company in some other way.
The company objective determines the limits of the activities of the BV. Within these limits, directors can act on behalf of the BV. If the directors take actions on behalf of the BV, but are not actually authorized to do so, the BV can destroy the agreement. As a result, the director who entered into the agreement without permission has now become a party to the agreement. He is therefore bound by the agreement and has to pay himself. This can have very far-reaching financial consequences.
It may be that a BV carries out activities that cannot be covered by the formulated objective. The management then enters into agreements for and on behalf of the BV or performs other legal acts that are not mentioned in the articles of association. There is then talk of 'objective violation'.
Such a transaction can be brought down later. If the management performs a legal act that exceeds the object of the BV, this legal act is voidable if the other party knew this or had to know without its own investigation (Article 2: 7 BW) .
Pay attention. Only the BV itself has the right to cancel the agreement in question. If the agreement works out favorably for the BV, it will simply remain in effect. However, if it turns out afterwards that the deal is less lucrative than hoped, it can be destroyed by the BV.
It is therefore not necessary to immediately run to the notary to adjust the purpose description in the articles of association of the BV. The BV will therefore not suffer any direct damage. Nevertheless, it is advisable to change the objective in the articles of association, when your actual type of operations change.
Your company activity description at the Chamber of Commerce (SBI)
Apart from your company objectives which are included in the statutes, your type of activities are also registered at the Chamber of Commerce. This is public information.
An SBI code (Standard Business Classification) is intended to classify companies according to economic activities. The SBI code indicates the activity (ies) of a company. The first 4 digits of the SBI code are usually the same within Europe. The 5th digit is a further specification for Dutch industries. You can look up SBI codes here.
Example SBI codes:
96021 - Hair care
6201 - Development, production and publishing of software
When registering by the Chamber of Commerce, the SBI code is assigned by the Chamber of Commerce: make sure that this is done correctly. If a company has multiple activities, there may be grounds for multiple SBI codes.
An incorrect SBI code can have financial consequences. Even if a company carries out several activities with the company, it is important that this is properly registered. Incorrect codes or incorrectly registered codes can cause a company to pay too much insurance premium or that the bank will block the account.
But in practice, SBI codes are typically used by the public sector as mentioned below, and it does not ‘really’ restrict your company to operate any kind of activity.
As shown below, it’s easy to add as many SBI-codes to your company as you wish.
Who uses your SBI information?
With the correct SBI code, your company can be found in the trade register by (potential) customers who search for business activity.
Statistics Netherlands makes business statistics based on the SBI code. A correct SBI code contributes to the quality of statistics about your industry. And if Statistics Netherlands sends a survey to your company, you will receive the correct survey with the correct SBI code.
Government agencies use the SBI, for example, for laws and regulations that apply to specific industries, when issuing some permits or granting subsidies.
Non-governmental organizations can also use the SBI and ask for your SBI code, such as sector organizations, pension funds, banks and insurance companies.
How to update your SBI code, or activity description, at the Chamber of Commerce?
You can notify the extension or change of your business activities via the online portal of the Chamber of Commerce. Enter your company name or Chamber of Commerce number and go through the steps. You can either send the data digitally (if your identity can be verified online) or you can print them and send them together with a copy of a valid ID from the signatory to the COC postal address.
Before the Chamber of Commerce updates the SBI code, they might ask you for additional evidence.
Updating your SBO code is free of charge.