MOVING?

Transfer of seat and cross-border conversion

Globalization has made it very common for people to migrate to other countries. This not only applies to natural persons however, but also to legal entities. I.e. it is also possible for companies incorporated under the laws of the Netherlands Antilles to migrate to other countries.

The possibilities are:

A Transfer of seat

In accordance with the statutory law of the Netherlands Antilles, a public limited liability company may transfer its seat to (1) another island or country within the Kingdom of the Netherlands or (2) a third country.

  1. In short, in accordance with the Kingdom Act Voluntary Transfer of Seat (in Dutch: Rijkswet Vrijwillige Zetelverplaatsing), in the event of war or political disturbance the seat of any public limited liability company may be transferred to another island or country within the Kingdom of the Netherlands. As the likelihood of the Netherlands Antilles becoming involved in a war and/or a political revolution is currently very small, I will not further elaborate on this stipulation. 
  2. In accordance with the Ordinance Transfer of Seat to Third Countries (in Dutch: Landsverordening Zetelverplaatsing Derde Landen) it is also possible to transfer the seat of a public limited liability company to a third country, as long as the articles of association of the company, effective on March 1, 2004, contained a so called ‘flight clause’ – this was the day on which Book 2 of the new Civil Code of the Netherlands Antilles became effective – and provided that the laws of that third country permit such transfer.

B Cross-border conversion  

In accordance with Book 2 of the Civil Code of the Netherlands Antilles a public or private limited liability company (NV or BV) may migrate to another jurisdiction by way of a ‘cross-border conversion’.

A public or private limited liability company may transform itself into a foreign legal entity provided that, according to the law governing such foreign legal person, the company will continue to exist subsequent to the conversion.

In order for a conversion to take place a resolution to that effect, unanimously proposed by the directors of the company, must be adopted by a meeting of the shareholders with due observance of at least the requirements for an amendment of the articles of association.

In addition to the above, a notarial instrument is required in which the resolution for conversion is established and to which the following documents are attached:

  1. A document issued by a person who or an authority which under the law governing the foreign legal person, would have the right to execute an instrument of establishment of such legal person, which document contains the provisions or articles which shall govern the foreign legal person after its conversion. This document is usually issued by a civil-law notary;
  2. A statement that states that once all formalities under the foreign law have been complied with, the consequence of the conversion shall be that the elected legal entity shall continue to exist in the chosen legal form. This statement may be given by the same person referred to under 1 or another expert in the field of law of the foreign legal person, this other expert is usually an attorney at law; and
  3. A declaration given and signed by all the directors, at the time of the resolution for conversion, and all the shareholders entitled to vote who did not vote against the proposal for conversion, in which declaration all the signatories jointly and severally assume liability for all the debts of the public limited liability company existing at the point of time when the conversion becomes inviolable. Except in the case of bad faith, this liability shall end three months following such point of time and in any event one year after the commencement of the continued existence of the public limited liability company in the chosen foreign legal entity. This notarial instrument may contain a condition precedent (in Dutch: opschortende  voorwaarde) for the conversion to take effect.

The conversion shall be irreversible as soon as the deregistration of the public or private limited liability company from the register of the chamber of commerce has taken place.

Jo-Anne de Wind
Lawyer – Spigthoff Curacao

(24 August 2010)

.

Leave a Reply

You must be logged in to post a comment.