Memorandum and Article of Association of a Dutch limited Liabilities company: what's included
The equivalent of an article and memorandum of association of a Dutch private company is the Deed of Incorporation (Akte van oprichting).
The deed of Incorporation is a legal document that is executed by a Dutch law notary after the incorporation. It forms the basis of the corporate governance of a dutch private company.
During the company formation process, the deed of incorporation is one of the documents provided by the Notary for you to review and comment.
What is included in the Deed of incorporation?
1. the Dutch company details such as the company name;
2. the name of its incorporators;
3. the authorised share capital;
4. its object clause or the scope of business;
5. the company address or registered office;
6. the financial year if it is not the calendar year;
7. the rules of transfer of shares;
8. the authority of the board of directors;
9. the institution of a supervisory board if any;
10. Rules governing the appointment and removal of managing director or supervisory board;
11. Rules concerning the convening and procedure at general meetings of shareholders.
Duties and Authority of Dutch company directors
The Deed of Incorporation sets out the rules and procedures for the management, it identifies the duties, authority, roles and responsibilities of directors.
One of the primary duties of a Dutch director is to act in the best interests of the Company.
They have the responsibility to oversee the day-to-day operations of the company, ensure effective financial management, and supervise the performance of employees.
Allocation of powers of the Board
The deed of incorporation also sets out the rules for the allocation of powers and responsibilities of the board.
It grants them the power to represent the company externally and make binding commitments on its behalf such as entering into contracts, negotiating partnerships, and engaging in other business transactions.
To maintain proper control and accountability, the deed of incorporation also defines mechanisms through which directors are supervised.
This can include regular reporting requirements, internal auditing processes, and the establishment of board committees to oversee specific areas such as finance, risk management, and corporate social responsibility.
Furthermore, the Deed of Incorporation may outline procedures for the appointment, removal, and remuneration of directors, ensuring transparency and fairness in these processes.
Decision-making process
It establishes the decision-making process for the company’s governance bodies, such as the management board and the general meeting of shareholders.
When it comes to making decisions such as amendments to the articles, the board of directors needs to ensure that the requirement of a specific majority at general meetings is met.
Therefore, it is important to refer to the Articles/deed of incorporation whenever necessary to ensure that all the rules and procedures are observed.
If you find yourself unfamiliar with the rules and procedures, enlisting the support of a local company secretary can greatly facilitate the management of your dutch company.
To learn more about the roles of a company secretary in a dutch company.
The Rights and obligations of shareholders
The Articles establish the rights and obligations of its founding members/shareholders and other stakeholders.
If you are interested in investing in a Dutch company, it is useful to find out your rights as a shareholder and what the obligation of the Dutch company is towards you.
For example, do you receive notice of a general meeting? Does the notice of the meeting provide you with sufficient time to vote? How about the accessibility of the voting method for you?
If you were a minority shareholder, does the deed of incorporation include provisions that protect the rights of minority shareholders?
How about the transparency and accountability of the company’s management?
The above is all the practical considerations to look at when one considers investing in a Dutch company.
Overall, the deed of incorporation plays a critical role in shaping the corporate governance of a Dutch company and serves as a foundation for its legal and regulatory compliance, as well as its relationships with other authority and its stakeholders.
Own bespoke articles
It is possible to write custom articles, for example, you would like to add another class of shares in your company.
Some companies may want to create a new type of shares class (for example, a type with no voting right), the purpose is to raise funds while retaining the control of the company.
You may also want to exert control over the power of the board, such as requiring majority voting for certain company decisions.
Whatever your purpose, you can communicate them with your company formation agent or the notary.
Companies House/chamber of Commerce versus Kamer van Koophandel "KVK"
In the Netherlands, the counterpart to the UK’s Companies House and the Chamber of Commerce in other countries is known as KVK.
KVK is similar to a state company database where you can search for information about Dutch companies.
When a dutch company is incorporated, its deed of incorporation among other documents is required to be submitted at KVK, which also applies to any subsequent amendments.
If needed, a copy of the deed of incorporation can be obtained from KVK for a fee.
Make a change on the Deed of incorporation after the company formation
It is possible to make amendments to the deed of incorporation after company formation.
However, it is important to refer to the existing deed of incorporation to understand the rules and procedures required for amendment.
Furthermore, any amendments will be formalized through a new deed (akte van statutenwijziging) which will be executed by a civil law notary.
It is crucial to maintain meticulous records of all changes made within the company and ensure they are stored in a centralized location.
We have come across cases where new directors and their company secretarial team assume control of a company following the departure of the previous directors, only to realize that they are unaware of which deed is the most recent and which rules should be followed.
To prevent such issues, it is vital to establish a reliable system for documenting and organizing all amendments, ensuring seamless transitions and continuity in the company’s operations.
Confused with all the information available online?
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