The Aruba exempt company (A.V.V.)
New corporate law
The A.V.V. has been created with the help of the financial offshore sector of Aruba and should provide maximum flexibility with a minimum of formalities. The A.V.V. is similar to the N.V., however with some differences.
The concept of the Aruba Exempt Company (A.V.V.) shall no longer exist in Aruban law as soon as the new Aruban corporate law comes into effect. The existing A.V.V.’s shall keep their legal form until the articles of association are amended. In that event, the new law stipulates that the A.V.V. (and articles of association) shall be transformed into a public limited liability company (N.V.). The new corporate law is expected to be effective in the course of the year 2020. The below reflects the current laws and regulations.
An A.V.V. can be incorporated by one (legal) person.
According to Aruban law, the authorized share capital of the A.V.V. must be at least AWG 10,000 (approximately USD 5,586.59). The incorporator(s) is (are) not obliged to participate in the authorized share capital. There is no minimum amount of shares that must be issued. There should, however, be issued at least one share with full voting rights. The shares of the company should have a nominal value, which value is determined in its articles of association. Contributions of capital in excess of the nominal capital are treated as share premium (“agio”). If agreed upon with the company the shareholders may unlimitedly contribute share premium.
After the incorporation, shares are issued by the general meeting of shareholders. The shareholders’ meeting may transfer this authority to another corporate body of the A.V.V.
As of 1 February 2012 the A.V.V. can only have registered shares. The A.V.V. will exchange bearer shares issued prior to 1 February 2012 to registered shares, unless the A.V.V. has reasonable doubt that the bearer is not the rightful holder of the share or if the bearer does not cooperate with the shareholder registration requirements under Aruba law. The shareholder still holding bearer shares after 1 February 2015 cannot exercise his shareholders rights, but shareholders may still convert into registered shares after such date.
The board of managing directors must keep a regularly updated shareholders register (the “Register”). Unless the articles of association determine that there are different types of shares, all shares are regarded to have equal rights and obligations attached to them. In the articles of association exceptions to this can be made. If the articles of association so determine, an A.V.V. may have shares without voting rights under the condition that always one share with voting right has been issued. Certification of shares – the division between legal and economic/beneficial ownership of shares – is, although not specifically mentioned by law, yet regarded to be possible. Besides normal shares, preference and priority shares may be issued.
As of 1 February 2012 (and for existing A.V.V’s as of 1 February 2013) the Register must be filled with the Chamber of Commerce. The Register will be made available for inspection by the Chamber of Commerce to appointed authorities upon request of such appointed authorities. The authorities and the Chamber of Commerce may not make the Register public without the permission of the company.
The A.V.V. is managed by one or more managing directors. The managing directors can be natural persons or legal entitities, provided that legal entities established in Aruba may only act as managing director of an A.V.V. if such legal entity is an N.V., of which the purpose, laid down in its articles of association includes acting as managing director of A.V.V.’s and provided that the N.V. possesses a corresponding business license. All managing directors are individually authorized to represent the A.V.V., unless determined otherwise in the articles of association. Besides having one or more managing directors, the A.V.V. must at all times be represented by a legal representative (wettelijke vertegenwoordiger). The legal representative of the A.V.V. is not a managing director, although he has to a large extent powers of representation. The legal representative must be a N.V. established in Aruba. Such N.V. must have (also) as its purpose acting as a legal representative of A.V.V.’s, while it must also possess a corresponding business license.
The general meeting of shareholders has all powers that have not been assigned by law or the articles of association to another corporate body of the A.V.V.
A general meeting of shareholders should be held at least once a year to approve the financial statements. The financial statements and explanatory notes thereto should be made available for review of the shareholders from the day the meeting is called to approve the financial statement.
The shareholders’ meeting need not necessarily be held in Aruba; it may be held anywhere, if provided for in the articles of association. Unless otherwise determined in the articles of association the announcement to attend the annual meeting should be made in the Official Gazette of Aruba and if the articles of association determines that the meeting be held outside of Aruba, also in a local newspaper of such place. The board of managing directors, each member of the board of managing directors and the legal representative of the A.V.V., are authorized to call for a general meeting of shareholders. The articles of association may grant this authority to others, such as individual shareholders. The shareholders may also request the board of managing directors to call for a general meeting of shareholders. Every shareholder is entitled to attend the shareholders’ meeting. Attendance by proxy is permitted.
The financial year of an A.V.V. may be a calendar year or any other twelve-month period to be specified in its articles of association.
After the end of each financial year, the board of managing directors has to draw up financial statements within eight months after the lapse of the financial year. The general meeting of shareholders may extend this term in “special circumstances”. The law does not qualify what would be considered to be a “special circumstance”. The financial statements consist of at least a balance sheet, a profit and loss account, and an explanatory note to these statements. The statements have to be signed by all managing directors and supervisory directors (if any). Often the articles of association stipulate that in the event one or more managing directors do not sign the statements, the reason(s) therefore must be stated.
The A.V.V. must file the financial statement with the Chamber of Commerce within eight days after it has been approved by the shareholders, or within eight days after it should have been approved. The financial statements will be made available by the Chamber of Commerce to appointed authorities for inspection upon request of such appointed authorities. The authorities and the Chamber of Commerce may not make the financial statements public without the permission of the company.
Profits and distribution
Unless otherwise determined by the articles of association, the net profits of an A.V.V. are at the disposal of the general meeting of shareholders who can either declare a dividend or reserve the profits. If an A.V.V. has made a loss in a certain year that is not covered by a (dividend) reserve, no dividend can be declared until the loss has been cleared.