THE FORMATION OF A PRIVATE FOUNDATION IN THE DUTCH CARIBBEAN
Formation requires a notarial deed
A Private Foundation (PF) is formed by a notarial instrument executed by a Netherlands Antilles civil law notary and registered in the Register of Foundations at the Chamber of Commerce.
The articles of incorporation of the PF includes the name of the PF and the word PF (or a translation thereof) as part of the name, the object(s) of the PF, the manner of appointment and dismissal of board members, the Island territory where the PF has its seat and the allocation of any liquidation surplus in the case of dissolution of the PF.
The …
Read the rest »
THE SHAREHOLDERS REGISTER OF A DUTCH CARIBBEAN LIMITED LIABILITY COMPANY
Shareholders may inspect the register
Every shareholder of a Netherlands Antilles NV or BV may inspect the register of the company regarding the shares held by them. The articles of association of a particular company may confer the right for inspection on others. In most cases a shareholder may however only inspect the register of the company in so far as the shares held by him are concerned.
Shareholders, who alone or jointly with other shareholders, may cast at least ten percent of the votes with regards to a specific matter, may request in writing that the management or supervisory …
Read the rest »
STATUTORY MERGERS IN THE DUTCH CARIBBEAN
A notarial deed is required
A statutory merger involves at least two legal entities. The law uses the terms acquiring and disappearing legal entity. The law specifies that only legal entities having the same legal form may merge, specifying that a BV (closed limited liability company) and a NV (public limited liability company) are considered to be the same. Statutory mergers usually take place within a group of companies.
Essential for a statutory merger is that all assets and liabilities of one legal entity transfer as a whole to another legal entity. An actual transfer does not therefore take place.
PIERCING THE CORPORATE VEIL IN THE DUTCH CARIBBEAN
Ignoring the legal personality of a company
A shareholder is not personally liable for acts performed in the name of the company and is not liable to contribute to losses of the company in excess of the amount which he must pay to the company as contribution for his shares. There is therefore a legal separation between the assets and liabilities of the company and those of the shareholder.
Piercing the corporate veil in its purest form means making a shareholder responsible for the actions of the company. In essence this means ignoring the separate legal identity of the company. …
Read the rest »
INDEPENDENT SUPERVISORY BOARD IN THE DUTCH CARIBBEAN
Should be mandatory for government-owned entities
Under the laws of the Netherlands Antilles, the main task of a board of supervisory directors is to supervise the board of managing directors of a limited liability company (NV or BV).
The Corporate Code provides for two different kinds of boards of supervisory directors, a “regular” board of supervisory directors and the so-called “independent” board of supervisory directors (Section 2:139 Netherlands Antilles Civil Code). Within this context the word independent means that the supervisory directors are independent of the shareholders, interest groups (“belangengroepen”) and to a certain extent from the shareholders’ meeting.
An …
Read the rest »
THE MANAGEMENT BOARD OF A DUTCH CARIBBEAN CORPORATION
The concept of corporate officers is unknown
The management board has the function of managing the corporation, i.e., making policy and conducting the day-to-day management of the corporation. The management board is responsible for the management of the BV and is authorized to represent it, except where restricted by the articles of incorporation.
The management board is the corporation’s centre of gravity. The management board of a Netherlands Antilles corporation combines the functions of executive directors and senior officers in a U.S. corporation, unless the articles provide for a single-tier board. There is no position equivalent to that of chief …
Read the rest »
A DUTCH CARIBBEAN BUSINESS LICENSE
License required
According to the Netherlands Antilles Ordinance on the Establishment of a Business (Landsverordening betreffende vestiging van ondernemingen, PB 1946 nr. 43), a license is required to establish a company (vestigingsvergunning) as well as one to operate a company as an individual director who is not a “citizen” (directievergunning).
According to the published policy of the Department of Economic Affairs (Dienst Economische Zaken) that is responsible for the enforcement of the Ordinance, a “citizen” is a natural person who is born in the Netherlands Antilles, or one of whose parents was born in the Netherlands Antilles or someone who …
Read the rest »
DUTCH CARIBBEAN CORPORATE LAW IN PRESSING CIRCUMSTANCES
Rules of law, articles and contract may be set aside
According to Section 2:7(2) of the Netherlands Antilles Civil Code, any rule imposed, for instance, on board members or shareholders of a limited liability company, will not be deemed to apply, to the extent, in the given circumstances, that these would be unacceptable in terms of reasonableness and fairness.
Generally speaking, the management board of a company is not entitled to sell the company’s business or a substantial part thereof, without the approval of the shareholders’ meeting.
However, in the event an immediate and urgent decision is absolutely necessary for the …
Read the rest »
CAN A FOREIGN COMPANY BUY SHARES IN A DUTCH CARIBBEAN COMPANY?
Generally speaking: yes
Under Netherlands Antilles law, no specific requirements exist regarding the purchase of shares in a Netherlands Antilles offshore company by a foreign company. The Netherlands Antilles do not have any anti-trust regulations.
In the Netherlands Antilles there are no statutory requirements preventing the sale of one or all the shares issued and outstanding or any requirements in the form of governmental license or registration. Certain restrictions apply however, if the target company is a bank or insurance company.
According to Netherlands Antillean corporate law shares are transferable, in principle. However, there is one exception. The articles of …
Read the rest »
PREJUDICED INTERESTS OF MINORITY SHAREHOLDERS IN THE DUTCH CARIBBEAN
A minority shareholder may force the company to take-over his shares
Article 2:251(1) Netherlands Antilles Civil Code reads as follows: “A shareholder of registered shares, whose rights or interests are prejudiced to such an extent, by the conduct of the company or one or more co-shareholders, that a continuation of his shareholding cannot reasonably be required of him, may institute a claim against the company for withdrawal, demanding that his shares be acquired against payment in cash”.
This provision may only be successfully triggered in exceptional circumstances. This could be the case if the company or co-shareholders have a structural policy …
Read the rest »
DRAG-ALONG RIGHTS UNDER THE LAWS OF THE DUTCH CARIBBEAN
Drag-along rights may be validly created
A drag-along right is a right that enables a majority shareholder to force a minority shareholder to join in the sale of his shares in a company (NV or BV). The majority shareholder doing the dragging must give the minority shareholder the same price, terms, and conditions that apply to him. The question with regards to Dutch Caribbean law is whether the articles of association of an NV or BV may contain drag-along provisions.
Article 2:257(1) of the Netherlands Antilles Civil Code reads as follows: “The articles may provide that, in cases to be …
Read the rest »
WHAT IF A LENDER BECOMES A SHAREHOLDER OF THE BORROWER IN THE DUTCH CARIBBEAN?
The obligation to repay still ranks pari passu
If a lender takes over the shares in a borrower, the ranking of the borrower’s obligation to repay the loan does not change. Such obligations will continue to rank pari passu with the other creditors.
Let me give you an example. In the event of dissolution of the borrower, assuming the borrower is a company, all creditors must be satisfied as far as possible. A shareholder is, however, not considered to be a creditor of the company.
Under Article 2:30(1) of the Netherlands Antilles Civil Code, the liquidator must realize the assets …
Read the rest »