The public limited liability company (N.V.)
A public limited liability company (N.V.) is a legal entity with one or more registered transferable shares or shares made out to bearer.
The N.V. is incorporated by notarial deed executed by one or more incorporators before a civil law notary on the BES islands. This notarial deed of incorporation constitutes the definitive statutes and regulations governing the company and conduct of its affairs. Those statutes and regulations are generally referred to as the articles of association.
Once incorporated, the company must be registered with the Commercial Registry of the Chamber of Commerce and Industry. Details to be filed include the object of the company, its share capital (if any) and the particulars of the managing directors, supervisory director(s) (if any) and possible attorneys-in-fact acting under general powers of attorney (procuratiehouders).
From a company law perspective there is no minimum share capital. Based on regulatory requirements there are, however, minimum capital requirements for finance companies issuing publicly traded debt bonds, investment institutions, insurance companies and banks.
Shares of a limited liability company can only be issued in registered form. Registered shares can be converted into bearer shares provided that the articles of association permit so. If shares are in registered form, a share certificate can be issued. For bearer shares share certificates must be issued.
A management board consisting of one or more managing directors (directeuren), who can be individuals or corporations, manages the N.V. The board of managing directors represents the company, defines its business policy and manages its affairs. There are no restrictions on the nationality of managing directors. At least one managing director must be a resident of the BES islands (either an individual or a corporation).
If provided for in the articles of association, a N.V. may have a board of supervisory directors (Raad van Commissarissen) to oversee the management of the company, to advise and to supervise the board of managing directors. A board of supervisory directors should consist of at least three natural persons.
Unless the articles of association determine otherwise, managing directors and supervisory directors are appointed by and can be suspended or dismissed by the general meeting of shareholders.
Unless the articles of association determine otherwise, shareholders meetings must be held on the BES islands. Attendance by proxy is permitted. Unless the articles of association state otherwise, a simple majority of votes present and represented at meetings can validly adopt resolutions with no quorum requirements. Written resolutions can also be adopted outside of a meeting, provided that all persons that are entitled to vote with regard to the subject have cast their vote.
An annual general meeting of the shareholders should be held at least once a year, usually within eight months after the end of a company’s financial year. At the annual general meeting the financial statements and a report of the managing board should be submitted for approval, together with such other matters as may be set out in the notice convening the meeting.
Extraordinary general meetings of shareholders may be convened from time to time to deal with matters that arise during the course of the year. Such extraordinary general meetings may also, in certain cases, be convened by the management or supervisory board at the request of shareholders controlling 10% or more of the issued voting shares.
The financial year of a BES islands company may be the calendar year or any other twelve-month period to be specified in the articles of association.
Each year, the board of managing directors has to draw up financial statements within eight months after the lapse of the financial year, which statements consist of at least a balance sheet, a profit and loss statement, and an explanatory note to these statements. The general meeting may extend this period by six months at the most, based on “special circumstances”. The Civil Code does not state what is considered to be a “special circumstance”.
Accounting and financial statements
The financial statements have to comply with generally acceptable standards and have to give such insight that a sound opinion can be formed on the capital and the results, as well as on the solvency and the liquidity of the company in as far as the nature of the financial statements allows this. The Civil Code does not state what rules as to financial reporting are considered to be generally acceptable.
For N.V.’s designated by Book 2 of the Civil Code as being “large”, specific and more stringent requirements apply with regard to the accounting principles and criteria for the composition of the financial statements, the publication of the financial statements, and the obligation to have them audited by experts.
Profits and distributions
The net profits of a N.V. are at the disposal of the shareholders who can either declare a dividend or reserve the profits. If the articles of association so provide, interim dividends may be declared from current year profits by the shareholders meeting or such other corporate body as appointed thereto in the articles of association. Dividends and other capital distributions cannot be paid and made if the equity capital is or becomes negative as a result of such dividend or distribution. If the company has a nominal share capital that capital is considered to be the limit.