On 1 March 2012 the Dutch Minister of Security and Justice confirmed that his target date for the entry into force of the legislation simplifying the rules applicable to private limited liability companies is 1 July 2012. The bills are currently before the upper house of the Dutch parliament. This newsletter summarises the most important changes under the proposed new rules.
The Private Company Law (Simplification and Flexibilisation) Bill – the “Flex BV Bill” – has been before the upper house of the Dutch parliament since 15 December 2009. An accompanying bill relating to the implementation of the Flex BV Bill – the “Implementation Bill” – was submitted to the upper house about a year later. The Minister of Security and Justice (the “Minister”) expects both bills to enter into force on 1 July 2012, on the same date as the Management and Supervision Act, also known as the One-Tier Board Act (See our newsletter of 21 December 2011).
The Flex BV Bill will simplify the statutory rules governing Dutch private limited liability companies (besloten vennootschappen met beperkte aansprakelijkheid, “BVs”) and offer a large degree of flexibility in the governance structure of this type of company. The Implementation Bill deals with a number of related topics such as the tax consequences of the new rules, the transitional rules and amendments to the statutory dispute resolution procedure. The latter amendments will also apply for Dutch public limited liability companies (naamloze vennootschappen, “NVs”).
The main changes under the new rules are, in short, as follows:
- The rules on capital protection and the protection of creditors – including the rules on share buybacks, financial assistance and distributions to shareholders – will become more flexible.
- The distribution of dividends and reserves will be made dependent on a test to be applied in advance; management board members and the recipients of a distribution may be liable for compensation if they do not act in good faith.
- The rules on decision making within BVs will be relaxed (more freedom in the allocation of voting rights, introduction of shares without voting rights and shares without a right to participate in the profits).
- The private character of the BV will become less strict (share transfer restrictions will no longer be mandatory).
- The statutory dispute resolution procedure will become more flexible, also for NVs.
In addition to elaborating on the above changes, we will also discuss the transitional rules set out in the Implementation Bill and the answers given by the Minister to questions regarding the tax consequences of the new rules.
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