BV – a Limited Liability Company in the Netherlands
BV or a private limited liability company is a legal form of business in the Netherlands with legal identity. This means that, factually, its directors are not liable for any debts with their private assets and property.
You can create a BV independently or with other founders. The capital of a BV is divided into shares owned by shareholders. They also own the right to manage the activities of the company, depending on the type of available shares.
Shares may give you the right to vote or receive a share of the profits. However, a private limited company, BV, may also issue shares without the right to vote or without the right for profit.
Shareholders make joint decisions at the general meeting of shareholders. The directors are responsible for the day-to-day management of the company. The directors of a BV company may form a separate supervisory board (two-tier board) or be the part of the management board (one-tier board). Small companies may have only one director, who is also the sole shareholder.
Benefits of a Limited Liability Company in the Netherlands
BV and NV or private and public limited liability companies are quite popular and desired forms of registration of new companies in the Netherlands. Among these two forms many non-residents who want to establish their own business in the country choose the very first form of ownership.
A private limited liability company (Besloten Vennootschap) has a number of advantages for the owner and founder. One of the advantages is the size of the authorized capital – you just need to open an account with a Dutch financial institution and put only one euro cent on it to start a business.
In the future, when conducting economic and entrepreneurial activities, the size of the authorized capital will gradually increase. As for the second popular format, NV or an open limited liability company, it will require an authorized capital in the amount of €45,000, so this form of a company is of interest to large business.
Other advantages of establishing a private closed limited liability company in the Netherlands include the possibility of concluding transactions with partners already during the registration of the company – you do not have to wait until the company is entered in the register of Dutch enterprises.
In addition, the founders do not risk their property and personal capital. Their liability is limited to the personal contribution of each of them to the amount of the authorized capital. Also, if you establish a holding business in the format of a limited liability company, you can save a lot on taxes – tax rates on income will be 0%.
Features of a BV, a Private Limited Liability Company
Business in the Besloten Vennootschap format is private limited companies, the authorized capital of which is minimal and can be divided by issued shares. There are no risks for the founders to lose their own capital and property: the maximum that “threatens” them is the loss of their own contributions to the authorized capital of the company.
Any closed private limited liability company in the Netherlands is required to have its own articles of association. This is the main corporate document, which describes the rights and obligations of the founders, directors and shareholders.
The articles of association must be drawn up in Dutch and English. A newly formed company is incorporated only when its articles of association are legally certified by a notary public.
Authorized capital of a BV in the Netherlands
A private limited liability company may have a minimum authorized capital in the amount of one euro cent. The amount of capital for this form of ownership is not described in the regulations of the current Dutch legislation.
When you register business, you need to open a bank account with a minimum deposit of €0.01, which is enough to pay for one share. Further, the founders have the right to increase the amount of the authorized capital without restrictions on its size.
How can one deposit funds to the authorized capital? As a rule, these are funds that are transferred from other bank accounts around the world or deposited in the form of cash. In addition, there is the possibility of using pledge assets, which must be appraised by an independent specialist, engaged from outside.
The authorized capital of the company is covered by shares, which can be of different types:
- Ordinary;
- Preference shares;
- With the right for profit;
- With the right to vote and so on.
The value of shares can be indicated both in € and in any other foreign currency. All shares of a Besloten Vennootschap company are inscribed, therefore, for the processes of sale or donation of the shares to other people it is necessary to re-register them with a notary.
Requirements for shareholders of a Besloten Vennootschap
The owners of the shares of a private closed limited liability company can be both individuals and legal entities, and there are no mandatory requirements for citizenship. In accordance with the Dutch law, at least one shareholder is required to register such a form of enterprise.
All information relating to the owners of the company’s shares shall be documented in a centralized registry. The data can be provided to third parties only if the applicants are registered on the website of the official Dutch Commercial Register and have paid for their application.
The managers of an enterprise of such form of ownership in the Netherlands must maintain their own register of persons owning shares in the company. This document must be kept at the registered office of the company located in the country.
Basic information on shareholder shall include:
- Information from pages of the passport;
- Data on the actual address of residence;
- Volume of shares on hand;
- Type of shares;
- Funds contributed for shares and so on.
Any changes regarding the structure of BV companies in the Netherlands must always be notarized. The financial liability of persons holding shares in a Besloten Vennootschap is limited solely to their personal investment in the purchase of securities.
Governing bodies of a Limited Liability Company in the Netherlands
A private limited liability company must be managed by a director. The director can be an individual or a legal entity without restrictions on requirements to citizenship. The tax residency of a person managing the enterprise also does not matter.
One shareholder, who will simultaneously be the director of a Besloten Vennootschap, is enough for functioning of enterprises of this form of ownership. If there are two or more shareholders, it is necessary to create a special management body – the Board of Directors. It is required to hold general meetings of shareholders where the director shall be elected.
In accordance with the norms of the law of the country, it is allowed to appoint a nominal executor of the functions of a director. This hired specialist receives a general authorization for operation, specifying his or her functions and responsibilities. As for the post of a secretary, it is not mandatory for the type of organizational legal form of the enterprise you have chosen.
It doesn’t matter if you are going to establish a property appraisal company or to engage in any other type of activity, your new company must have an office with an actual address in the country. At the same time, the meetings of shareholders shall not necessarily be held in the Netherlands only.
For meetings you can use any convenient place around the world, and there are no strict time limits regarding the frequency of such meetings of shareholders.
Responsibility of the founders
The main advantage of a BV enterprise format in the Netherlands is the minimum liability of the founders. This means that you, as a director, are factually not liable for debts and do not risk your personal property and personal capital.
However, there are exceptions to this rule. For example, directors take responsibility in case of mismanagement or if a BV is not yet registered with the Commercial Register. In all other situations you risk only your share in the authorized capital.
The process of registration of a BV company in the Netherlands
To register business in the BV format chosen by you, you must contact a notary who shall draw up a notarial deed containing the articles of association. The notary usually handles all matters relating to the registration of your BV company in the Commercial Register of the Chamber of Commerce.
Until the time of registration and entry to the register, you take personal responsibility if you act on behalf of a BV in obtaining bank loans, for example. In addition, you must contribute at least 1 euro cent to the company as initial capital.
This can be done with money and also in the form of pledged assets. After registration you also register the ultimate beneficial owners of your company. This shall be done in the UBO registry at the Chamber of Commerce and Industry.
Ultimate beneficial owners or UBOs are, for example, those who own more than 25% of the shares of a BV. You can conduct business with your company even before you create a BV. In this case registration in the Commercial Register is mandatory.
A private limited liability company shall be officially valid after registration and approval of the articles of association of a new enterprise, which shall be notarized. At the same time, you can engage in economic and entrepreneurial activities even up to the moment of incorporation, concluding transactions during the procedure of establishing a company.
Expenses
With a BV company, you will have to deal with notary fees, expenses for registration in the Chamber of Commerce and administration expenses. Notary registration fees vary by a notary. On average, registering a BV costs from €1,300 to €2,000.
In addition, there are expenses for the maintenance and administration of the company. For example, a legal address with a secretarial service will cost from €1,300 to €2,000 per year. Also, your company must prepare and submit annual reports annually. The information you need to provide depends on the size of your company. The average annual cost of administering a BV is from €3,000 to €4,500.
Choosing the name
It is a rather important point, because the name must be unique and original. You can use any words with some restrictions. The names of companies already existing in the country should not be “duplicated” and “inflected”.
If the name of the future company contains words from the banking and judiciary industry, the embassy and consular sphere and insurance terms, it will be necessary to obtain a special permit.
To create a BV company (the Netherlands), you need to collect a certain package of documentation, which shall include:
- Application of the established sample with the selected name of the enterprise;
- Data on the actual legal address of the office in the Netherlands;
- Description of what the new company will do;
- The amount of the authorized capital with an extract from the bank on crediting funds to the account.
The legal address can also be your home address if you live in the country. At the same time, you will need to confirm it every year by the relevant control authorities.
In order for the registration of the company to be successful, you will also need to provide complete information about shareholders, directors and founders. Individuals need to provide passport data (internal and international passport), certificates from the place of residence, paid bills from the place of residence.
All documents, including certificates of payment of utility bills, must be notarized and translated into English. Legal entities prepare their own package of documents, including registration documents, contracts, articles of association, certificates, and so on. All documents shall be translated and notarized.
Also do not forget about the necessity to open a bank account in the Netherlands,where you need to credit funds in cash or by bank transfer to confirm the existence of the authorized capital of the newly established company.
Buying a ready-made company in the Netherlands
Quite often there are situations when the applicant or founder is not able to wait for the official registration of the company. He or she needs to quickly start his or her activities in the country with minimal bureaucratic obstacles from the relevant authorities.
In such cases, the purchase of existing Dutch companies can be recommended as a good option. What are the advantages of such a solution in addition to saving time? The investor obtains ownership of a ready-made operating business.
You can choose by the name of the company from the proposed options, choosing a consonant solution related to the future type of activity of the company, goods and services it will sell, and so on. The companies that you can buy have a transparent and clean history, they have an actual legal address and a bank account with a minimum amount of the authorized capital.
You will receive a working seal of the company, as well as a ready-made articles of association and other documents necessary for the implementation of activities. Often, in this case, you do not have to even buy the entire company.
You should find three more founders and buy each 25% of the total value of the company. After that, you will become one of the co-owners, which allows you to conduct economic and entrepreneurial activities in the country in the format of a limited liability company. It is also possible to conduct business abroad.