Incorporation of a company in The Netherlands

This is a short introduction about how Dutch companies can be set up. It serves to give you an idea of the rules and regulations applicable to the formation of a company in The Netherlands.

Two-tier corporate structure

Depending on the size of the company, either a one-tier board or a two-tier structure will be applicable. For companies with more than a hundred employees in the Netherlands (and conform with other formal requirements) a two-tier board must be introduced. This is the most prominent difference between Dutch and Anglo-American companies as Anglo-American companies only have one-tier boards. In the two-tier structure, the policies of the Board of Directors are periodically reviewed by a separate supervisory Board of NCO's.

Employee participation

Furthermore, the participation of employees in the corporate decision making process goes a lot further than in the UK or the United States. For companies with more than 50 employees it is obligatory to install an employees council. The employees council mainly has an advisory role, but does in certain cases have the power to block decisions regarding employees.

It is however unusual that conflict occurs between employees representatives and employers as there is generally a mutual understanding between the labour unions and the employer organisations who together with the Dutch government feel that there is a joint responsibility to improve the economy. General strikes – even strikes as such – are rare in the Netherlands.

Corporate Governance

The Netherlands has a formal Corporate Governance Code ("code Tabaksblat"). As in the UK, this code provides general minimum standards for corporate governance though it is permissible to deviate from the code to a certain degree ("comply or explain").

Though the Code does not formally apply to all corporate entities (small companies are exempt), it is of great importance to set up any corporate body and its in accordance with its spirit.

Incorporation of a "B.V."

The B.V. ("besloten vennootschap met beperkte aansprakelijkheid") is a legal entity with limited liability and is the vehicle most commonly used for small enterprises. Shares of a B.V. must be registered and are not freely transferrable. An N.V. is the Dutch equivalent of a public limited company and requires a significantly larger and freely transferrable share capital.

The minimum paid up share capital of a B.V. used to be EUR 18,000, but since the first of October, 2012, this minimum has been abolished, and the choice for the share capital is free. A B.V. can be set up by one or more shareholders, which may also be foreign entities. At least one company director must be named in the articles of association.

Procedure

Any resident or non-resident person (whether an individual or a corporate body) can incorporate a B.V. in the Netherlands. The incorporator/first director must arrange the following:

1. a written statement indicating the purpose of the company;
2. state the name of the future B.V.;
3. recite the objects of the B.V.;
4. decide on the amount of capital etc.;
5. make a choice with regard to the financial year of the B.V.;
6. choose a registered office and place of business (not a P.O. Box);
7. provide particulars of the managing director and, if applicable, other directors;
8. provide a letter of good standing;
9. provide proof that the minimum capital has been paid-up.

The entire procedure may take several weeks to complete, depending upon the specifics of the company.

If you are planning to start a business in the Netherlands, Kernkamp Advocaten can provide you with all necessary assistance and advise you on the incorporation of the company. Since the emphasis of our practice is on company law and transport law, we can help you not only with the process of incorporation itself, but also with drafting and fine-tuning of the articles of association, shareholders agreements etc. We also advise on the conclusion of employment or agency contracts for the new enterprise and can help you with the lease of business premises.

Please note that we do not provide fiscal or accounting services, nor do we provide a business address or domicile for structures set up for taxation purposes.

Further information

For further information, please feel free to contact our Company and Corporate Law contact person.