PROPOSED REVIEW CORPORATE CODE ON ULTRA VIRES
The rules with regard to ultra vires are fundamentally changed
Ultra vires means ‘beyond power or authority’. An ultra vires act is one beyond the purpose clause as laid down in the Articles of Association of a legal entity, for instance a foundation or a limited liability company (NV or BV).
Early in 2010, a draft bill was proposed to amend the Corporate Code (Book 2 Civil Code) of Curacao, St. Maarten, Bonaire, St. Eustatius and Saba (which formerly constituted the Netherlands Antilles). Among other things, the provisions with regard to ultra vires acts (transgression of the object) have been reviewed.
With regard to the foundation, contrary to other legal entities, it is provided that invocation of ultra vires cannot be excluded in the Articles (Article 2:13 paragraph 2 of the bill). This would obviously be contrary to the nature of a foundation. After all, a foundation is often created by designating certain funds for a certain purpose that cannot be changed unless it is allowed pursuant to the Articles.
The rules with regard to ultra vires are also fundamentally changed on a different point. It is provided that pursuant to a resolution of the general meeting a legal entity (not being a foundation) can confirm a legal act which transgressed the object or can waive the invocation of ultra vires. In that case Article 10 paragraph 4 BW applies likewise (Article 2:13 paragraph 3 of the bill). Invalid resolutions based on ultra vires cannot be confirmed under current law. The original third paragraph in which the power to invoke annulment was linked to an expiry period (vervaltermijn) of six months, is deleted.
Karel Frielink
Attorney (Lawyer) / Partner
(16 February 2011)
.
