The Netherlands Antilles ceased to exist as a country on 10 October 2010. Curacao and Sint Maarten have become independent countries within the Kingdom of the Netherlands, just as Aruba had already been for quite some time. Bonaire, St. Eustatius and Saba have become extraordinary municipalities of the Netherlands. These constitutional changes have resulted in far-reaching consequences for the cross-border conversion and cross-border merger of legal entities.
This posting is based on Book 2 of the Curacao Civil Code as applicable from 1 January 2012 onwards. As with the merger and split, the conversion has been regulated in Title 9 of this Code. It was not only the amendment to Book 2 of the Civil Code in 2012 that involved changes, the constitutional review as of 10-10-10 in particular has, as I mentioned, resulted in far-reaching consequences. There is therefore good reason to discuss those consequences.
Since 10-10-10 Curacao has its own Book 2 of the Civil Code. This applies equally to Sint Maarten. The BES Islands (Bonaire, Saba and St. Eustatius) also have their own Book 2 Civil Code, that (also) differs from Book 2 of the Civil Code in the Netherlands. As from the said date, seen from the perspective of Book 2 of the Curacao Civil Code, St. Maarten and Bonaire – just as had already applied to Aruba for quite some time – are to a certain extent to be considered as ‘a foreign country’. I say here ‘to a certain extent’ due to Article 38 paragraph 4 of the Charter of the Kingdom of the Netherlands. I will say more about this later.
Why as a legal entity would you want to move abroad? Some legal entities are established in Curacao for tax reasons and are for instance a member of an international group. When the tax base is no longer interesting or desirable for any reason whatsoever, it is possible to opt for a winding-up or conversion into a foreign entity. The latter will be preferable if the respective company is for instance bound to all kinds of contracts and its conversion into another entity is impossible or too complicated. It may also be the case that a winding up might indeed lead to disadvantageous tax consequences whereas a conversion would not. It is obviously also possible that foreign legal entities might also want to move to Curacao for the same reasons. (To be continued)
Attorney (Lawyer) / Partner
(11 February 2013)