Tag: The Netherlands

Exemptions from the interdiction to offer securities in The Netherlands to the public

Are there any exemptions or exceptions from the interdiction to offer any securities in The Netherlands to the public or to admit to trading on a regulated market that is either located or functioning in The Netherlands without making available to the public a prospectus approved by a competent authority (all as meant in article 5:2 Wft (Law on the financial supervision)?

In principle, no prospectus needs to be approved by a competent authority and made available to the public if one or more of the exceptions set forth in articles 5:3 and 5:4 of the Wft apply or if one or more of the exemptions sets forth in the ‘Vrijstellingsregeling Wft’ (exemption regulation Wft) apply. Pursuant to these articles and this regulation it is i.a. not necessary to obtain the approval of a prospectus from a competent authority and make it available to the public in case of:

  • An offer of securities addressed to fewer than 150 natural or legal persons (it is not relevant how many persons actually purchase the securities offered, relevant is the number of persons to whom the offer is made).
  • An offer of securities that can only be acquired for a total consideration of at least EUR 100.000 per investor, for each separate offer.
  • An offer of securities whose denomination per unit amounts to at least EUR 100.000.
  • An offer of securities with a total consideration of less than EUR 100.000.
  • Shares or certificates of shares representing, over a period of 12 months, less than 10 per cent of the number of shares or certificates of shares of the same class already admitted to trading on the same regulated market located or functioning in the Netherlands.
  • Securities offered in connection with a takeover by means of an exchange offer, provided that a document is available containing information which is regarded as being equivalent to that of the prospectus.
  • Securities offered by an association or institution (vereniging of instelling) without the intention of making a profit and with the intention of obtaining funds to realize its non-commercial aims.
  • The total value of the securities offered is less than EUR 5.000.000, calculated over a period of 12 months and provided the offer is in compliance with sub clause 3 and sub clause 4 of article 53 of the ‘Vrijstellingsregeling Wft’ (exemption regulation Wft).
  • More information about the Vrijstellingsvermelding (only in Dutch)

Tax structuring with Dutch private limited liability companies – shareholders’​ rights

Mainly due to its tax efficiency, the Dutch holding (BV) company regime is the most preferred holding regime in the world. The Dutch tax regime is beneficial regarding withholding tax, capital gains and income received from subsidiaries. Other advantages of a BV are the flexibility of Dutch corporate law and tax law, as well as the low costs of incorporation and maintenance. These factors make The Netherlands a good choice for group structuring and for international joint ventures. In this article I will discuss some important legal aspects related to shareholders’ rights of a BV.

Articles of association

In The Netherlands, a private limited liability company can only be formed with the aid of a notary, who will write the articles of association (AOA) of the company. These articles include the official domicile, the mission of the company, the share capital, corporate objects, types of shares, Shareholder obligations and requirements, corporate bodies and organs, the way in which to convene the general meeting of shareholders, representation of the company, issuance of shares, how and when decisions can be taken and which decisions require a supermajority of votes. The subjects that are not covered by the articles of association are regulated by the Civil Code of The Netherlands (BW). It provides general rules concerning the relationships among shareholders. The AOA stipulates the competence of the organs of the company.

In addition to these AOA the shareholders may want to specify the way these competences can be used. This is stipulated in a separate document, called shareholders agreement (SHA), that does not require the help of a notary.

Shareholders agreement

The shareholders agreement deals with the management and the the relation among shareholders in detail. They are only binding on the parties thereto. It may sound strange, but Dutch law does not prevent SHAs from regulating non-company matters as well. Examples of rules that can be found in the SHA are: funding of the company, division of tasks, transfer or sale of shares and minority shareholders’ rights. SHAs are not regulated in the BW. The general rules of Dutch contract law are applicable to SHAs.

Under Dutch case law, voting agreements must not be in violation of the Civil Code or any other rules relating to public morals. A shareholder should be able to pursue his own interest in exercising his voting rights, provided he takes into account his interest in the company alongside the company’s interests and the general principles of corporate law (see: M. Pannekoek, Shareholders’ rights in private and public companies in The Netherlands: overview).

Protecting minority shareholders

In Dutch company law a number of rights are given to all shareholders, irrespective of the number of shares they hold, such as the right to right to vote in the general meeting of shareholders. Book 2 of the BW provides important minority shareholders protection articles, of which the most fundamental one is section article 2:201:

  1. Except as is otherwise provided for in the articles, all shares shall rank pari passu (on equal footing) in proportion to their amount.
  2. A company limited by shares must treat shareholders and holders of depository receipts whose circumstances are equal in the same manner.

The relevant section of Dutch company law with regard to the principle of equality (2:201) subsection 2) is a direct result of the European Council’s second company law directive (section 42 of the directive of the European Council, 13 December 1976, Pb L 26/1, 31). This directive is limited to subjects related to capital protection and is also only applicable to public companies. However currently the principle of equality of shareholders applies not only to issues concerning capital protection but to all company law issues. Other important provisions for the protection of minority shareholders in Book 2 are sections 2:15 about the right to ask for nullification of a resolution if the shareholder who requests nullification has a reasonable interest in the due performance of the obligation which has not been performed; section 2:220 about the right for shareholders who together hold a certain percentage of the shares to convene a general meeting of shareholders; section 2:343 providing a shareholder an exit-opportunity in case the continuation of his shareholding can no longer be reasonably expected of him due to the conduct of other shareholders, and section 2:344-359 about the right to demand an official inquiry with the object being the policy and the conduct of business.

Book 3 of the Dutch Civil Code, containing property law in general, has two important provisions for minority shareholders. The first section, 3:13, forbids abusing rightfully obtained power. It is an elaboration the principle of reasonableness and fairness of section 2:8 of the BW. It means that shareholders of a company are obliged to respect the principles of reasonableness and fairness in their internal relations and actions. Laws, customs, AOA or resolutions will thus not be applicable when these rules are unacceptable according to the standards of reasonableness and fairness.

The second important section for minority shareholders is laid down in Book 3 of the BW; section 3:305a. This section allows minority shareholders (but the section is not limited to these shareholders) to organise themselves into an association or a foundation and to have the entity bring an action against the company for the benefit of the collective.

Conflict between the AOA and the SHA

It is important to know whether greater weight should be given to the AOA or to the SHA in case of a conflict between the two. In 1938 the Supreme Court of The Netherlands decided that the general meeting of shareholders can only deviate from the articles of association by amending these articles (Hoge Raad 8 April 1938, NJ 1938, 1076). Currently, article 2:8 BW stipulates that all those involved in a legal person must behave reasonably and fairly towards one another. In a recent court case (2014) it was ruled that articles in a SHA under article 2:8 of the BW are operative on the legal relationship within the company. Only when exceptional circumstances arise, shareholders are not required to observe a shareholders’ agreement in full.

Director’s liability towards the company

Directors have a large degree of entrepreneurial freedom in running the company. In general decisions that in retrospective cannot be seen as beneficial or even wrong, will not lead to a director’s liability.

Article 2:9 BW states that the director is obliged to fulfil his duties on behalf of the company in a proper way. If mismanagement (Dutch ‘wanbeleid’)is the case, the director is held personally liable for the damage towards the company. The Dutch Supreme Court has determined finds that mismanagement is the case when a director can be ‘seriously blamed’ for the actions involved and their consequences. Serious blame occurs when a reasonable and experienced director would not have made the contested decision. Some examples include: withdrawing funds from the company for personal purposes, fraud and others criminal acts, irresponsible and excessive financial risks. Only the legal entity itself may hold the director liable on the grounds of section 2:9 BW.

The yearly general meeting of shareholders normally grants discharge from liability for damages for directors. After having granted discharge from liability, the general meeting of shareholders may not hold directors liable for matters which it had knowledge of when granting discharge. In case of irregularities, for example, a 2014 court decision shows that payments to directors can reasonably be deduced from the accounts of the BV, and thus the discharge granted at the general meeting of shareholders covered the liability of the director.

Other issues

According to Dutch law, a legal transaction entered into by a company can be annulled in the event that the transaction is beyond the scope of the company’s objects and the other party to the transaction knew or reasonably should have known this without further investigation. It is generally accepted that acts of a company must be in its best interests, being in accordance with the objects of the company, stated in the AOA. Only the company itself is entitled to request the annulation of a transaction.


Doorman, A., & Timmerman, L. (2002). Rights of minority shareholders in the Netherlands. Default journal.

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