THE STRUCTURE OF A NETHERLANDS ANTILLES (CURACAO) FUND
It is easy and not expensive to set up a SPV
From a legal point of view, establishing a fund in Curaçao has become very attractive since under new corporate law a private limited liability company (besloten vennootschap) can be established very quickly and very flexible. Virtually everything is possible with this new legal entity. There is no minimum issued share capital requirement. Incorporation can be done within a day and without the need for any prior governmental approvals. It is possible to split voting rights and dividend rights. There is no statutory requirement to have shares with a par value. The set up and maintenance costs of a private limited liability company are low. There is no annual government fee, only a one time fee at incorporation (US$ 175, incorporated in the notary’s fee) and an annual chamber of commerce fee. The articles of association can be in the Dutch, English, Spanish or Papiamentu language. Even another language is possible as long as the public notary understands it.
There is no requirement from a corporate law point of view for a fund to have any employees and it may have a single managing director (which can even be a corporate entity) who may be domiciled in the Netherlands Antilles or elsewhere, provided that the fund performs its business outside the Netherlands Antilles. There are no specific statutory formalities to comply with in order to have meetings of the board of managing directors (or board of supervisory directors). For instance, there are no statutory regulations in connection with the location of board meetings.
Transaction documentation does not have to be governed by Netherlands Antilles law and can be governed by any law. Moreover, (transaction) documents, including articles of association, can be drafted and filed in almost every language. Furthermore, there are no regulatory restrictions on commercial terms (including performance and other fee arrangements). Some people consider the civil law system of Curaçao as a weakness because its differences with common law to which certain investors are used. However, civil law produces a more stable environment and more predictable rulings. Often misunderstood, Curacao’s Civil Legal system can offer advantages over other established (Common Law) legislative frameworks as it provides a greater degree of stability and predictability through established legislation and a fixed ruling environment, as opposed to evolving jurisprudence. Curaçao forms an integral part of a larger whole, The Kingdom of the Netherlands and the European Union, nurturing a greater degree of comfort to investors as opposed to independent territories.
Investor considerations also often drive the fund location. The Netherlands Antilles are a so called associate member of the EU, which makes a Netherlands Antilles fund attractive to European investors. The Netherlands Antilles are also a member of the OECD. The jurisdiction of residence of a fund has become an increasingly important issue that may seriously affect the sale of securities to regulated EU investors. Also, from a reputational perspective certain investors are less comfortable with investing in a tax haven fund than in a fund incorporated in the EU or an associate member state of the EU.
A new regulatory regime (new National Ordinance Supervision of Investment Institutions and Administrators, National Ordinance Supervision of Trust companies and new anti-money laundering rules) provides for comfort to investors and Curaçao is not listed on any blacklist (OECD, FATF). The regulatory regime focuses on full and transparent disclosure, both in the offering documentation as to the regulatory authority. This enables prospective investors to make a thorough decision whether or not to invest.
Karel Frielink
Attorney (lawyer) / Partner
