The private company with limited liability (BV)
The BV offers protection to the director(s) of the company provided that the director(s):
- timely files the annual accounts;
- does not perform any activities other than allowed for by the purpose clause;
- informs the tax and customs administration immediately in the event of inability to pay;
- properly performs his duties as a director;
- does not enter into obligations which cannot be met by the company.
The shareholders hold the shares of the company. Various rights may be attached to these shares. The most common situation in this regard is that profit-sharing rights (right to dividend) as well as controlling rights (voting rights) are attached to the shares.
Where it concerns a smaller BV the director is often the sole shareholder; this is not always the case where larger enterprises are concerned.
In the event that the shareholder is also director of the BV, it is of major importance that a clear distinction is made as to the capacity in which he will act. The direction of the BV must serve the interests relating to corporate law, whereas the shareholder in principle wishes to serve his own financial situation.
Since the introduction of the new BV-law (flex-BV) the statutory provisions regarding the BV have become more flexible and it has become easier to set up a BV. The formation of a BV does not require payment of an obligatory minimum capital. A BV can be set up with a share capital of € 0.01.
The new rules with regard to BV-law are aimed at the equity that leaves the BV.
In the event that part or all of the equity leaves the BV, a so called distribution test must be done. If, for example, there is a dividend distribution, the general meeting (of shareholders) takes a resolution to pay the dividend concerned. This resolution can be implemented only after it has been approved of by the direction.
The direction must judge whether the BV can continue to meet its obligations after having made the dividend distribution. In the event that a director knows or ought to know that the BV can no longer meet its obligations after having made the distribution, this director is severally liable for the deficit, whereas the shareholders need not repay more than the amount of the distribution at the most. Within this scope one must look ahead at least one year or one year and six months in the future.
Setting up a BV
Should you wish to set up a BV it would be wise to obtain information from a (junior) civil-law notary. In a meeting held within that scope the following issues will emerge:
- purpose of the company (is the BV going to perform management and holding activities or actual work activities?);
- name of the company;
- the town where the company is domiciled pursuant to its articles of association. This is the “domicile” of the BV and may be relevant in legal proceedings but also if for example a subsidy grant is applied for.
- the town where the company has its principal place of business, therefore the address of the BV;
- the intended share capital at the formation of the BV and the manner in which it will be paid-up (in cash or by means of transfer of, for example, an enterprise);
- who will be shareholder/shareholders and who will be director(s) of the BV;
- whether there must be special shares. This may include non-voting shares or shares without profit entitlement and also (cumulative) preference shares, shares denoted by letters etc.;
- whether it would be advantageous to appoint a supervisory body (Supervisory Board) right from the start of the formation or whether this is perhaps wished in a future period of time and to have that latter possibility already be provided for in the articles of association.
Apart from that we can inform you about specific regulations to be complied with by BV’s that will perform certain activities. Consider for instance companies working in the field of care. Regulation of the Care Institutions Supervision Act [Wet Toezicht Zorginstellingeni] may be applicable to such activities. PlasBossinade has a vast knowledge and experience to advise you in this field.
Should you wish to receive more information about setting up a BV and/or the possibilities in your specific situation, please contact the civil-law notaries of PlasBossinade.