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Company Law in the Netherlands

Company Law in the Netherlands

The Company Law in the Netherlands is represented by Book 2 of the Civil Code and any legal entity is incorporated, conducted and closed by its regulations.

The Netherlands has a so-called closed system of legal persons, which means that the law indicates when a legal entity is incorporated and what are the rules by which it functions. For example, a self-invented entity with legal personality is possible outside the framework of Book 2 of the Dutch Civil Code.

The Company Law in the Netherlands is systematically built up in several topics, which cover the entire rage of business forms and rulings for company activity in the Netherlands: General provisions, Associations, Cooperatives and mutuals, Limited liability partnerships, Private companies, Foundations, Merger and division, Disputes and right of inquiry, The annual accounts and the annual report.

The Company Law in Netherlands recognizes the following types of business forms:

– Dutch company forms without legal personality: partnership or general partnership, limited partnership or CV.

– Company forms as a legal entity to participate in the trade in Netherlands are: limited liability company or NV, private company or BV, co-operation, cooperative with limited liability (BA), cooperative with excluded liability (UA), cooperative with liability (WA), companies with mutual insurance.

The Company Law in the Netherlands contain general rules that apply to all entities in Book 2 of the Dutch Civil Code. The first article of the Book 2 provides certain public corporate entities with legal personality under the given Civil Law. Some of these entities are mentioned by name (for example the State, provinces and municipalities), but the scheme has an open end. These forms can also be recognized as public bodies which have legal personality under Civil Law and depend on the public body or regulatory authority which has determined that it has legal personality by law.

Denominations have their own rules in Article 2. These entities are actually placed outside the context of Book 2 of the Civil Code and have therefore, by way of exception, their own rules and recognize internal organization as well as representation towards third parties.

In Title 7 of the Company Law in the Netherlands, the mergers and division rulings are defined. Under these laws, it is possible to merge legal entities together or split them in certain forms. The legal merger and division should not be confused with the share merger, business combination or converting an entity in another legal form.

The framework of the requirements for financial statements of the cooperative, the mutual insurance company, the public company and private company is also laid down in the Company Law in the Netherlands. These rules also apply to certain general partnerships, limited partnerships or to foundations and associations with a certain size (the so-called commercial association and foundation). These rules are a special addition to the general rules for the keeping of financial records.

In 2001, the Book 2 of the Civil Code (the Company Law in the Netherlands) was amended at the point of discharge of directors and auditors. Where previously directors and auditors were automatically discharged when determining the financial statements by the General Meeting, now the point of discharge should be treated separately. In October 2004 the structure plan was modified, with the main change to the appointment of auditors by the General Meeting and not by the board itself.

Contact our Dutch lawyers for further details about the Company Law in Netherlands and find our more about the legal provisions when running a business in the Netherlands.