Private & public limited companies

The private company with limited liability under Dutch law (BV) and the public company under Dutch law (NV) are two of the most common legal entities in the Netherlands.

Unlike a natural person, a legal entity is a legal fiction. After all, a person physically exists and can assume rights and obligations. A legal entity, on the other hand, is just a legal figure created by law that can only be established by the persons who compose it or act for it in exercising its functions (the shareholder(s) and/or director(s)).

So why do people set up a BV or NV?

Roughly speaking, there are two reasons for incorporating a BV or NV:

  1. To run a business (with several people) in which private liability is limited.
  2. To hold the capital together.

Liability

When a person runs a business, they assume rights and obligations, for example, by entering into a contract for the sale of products with a party. If these products are not delivered, this party can start legal proceedings, claim damages and, if awarded, recover the damage or loss from that person’s private assets.

When a company is operated by means of a BV or NV, it is only the BV or NV that assumes said rights and obligations. This also means that, in principle, only the BV or NV is liable towards, for example, the contracting parties and that these parties can only recover any damage or loss from the assets of the BV or NV. The private liability of the persons who compose the BV or NV is protected, and so is their private capital. These only come into play in the case of, for example, improper management.

Capital

The company and assets of a BV or NV are the company and assets of that BV or NV. Personnel changes within the BV or NV (such as a change of directors and shareholders) do not affect this. The company and its assets can therefore be sold by selling and delivering the shares in the BV or NV, without, for example, having to take over contracts and change the name.

BVs and NVs distinguish themselves from other legal entities (e.g. a cooperative, association or foundation) by being companies with share capital, i.e. the capital of a BV and NV is divided in shares.

Experience and specialisation

Operating a business by means of a BV or NV is not easy and it is therefore always a good idea for such a legal entity to obtain legal assistance from experts prior to any legal action or dispute. Hekkelman’s notaries and lawyers are experts with extensive experience.

Our notaries provide advice and/or assistance to entrepreneurs on, for example:

  • Establishing a BV or NV (e.g. drafting the articles of association)
  • Amending the articles of association
  • Transferring shares
  • Issuing depositary receipts for shares
  • Effecting a merger or division

Our legal experts provide advice and/or assistance to entrepreneurs on, for example:

  • Decision-making (e.g. appointing or dismissing a director)
  • Drafting/closing contracts (e.g. employment, management or purchase agreements) and drafting general terms and conditions
  • Shareholders’ disputes
  • Governance
  • Obtaining financing and creating securities
  • Other disputes
  • Bankruptcy and suspension of payment
  • Intellectual property rights
  • Directors’ and officers’ liability

In addition, our expert notaries and lawyers occasionally join forces to provide advice and/or assistance to entrepreneurs on, for example:

  • Drafting shareholder agreements
  • Business succession
  • Corporate takeovers
  • Reorganisations

Want to know more?

If you have any questions about a legal form or related subjects, please do not hesitate to contact one of our experts. He or she will advise and help you and, if necessary, refer you to the right expert at our firm. Please feel free to contact us for an exploratory discussion to see exactly how we can help you.