The role of local company secretary in a Dutch company
Company Secretary Netherlands
In the Netherlands, a private limited liabilities company or in Dutch a besloten vennootschap “BV”. is a legal entity which is commonly used by foreign or local companies to establish a business in the Netherlands.
There are an increasing number of foreign private companies choosing the Netherlands to open their subsidiaries, since they are owned and operated by overseas entities, the board and its board secretary are usually non-resident.
To provide context for the role of a company secretary in supporting and guiding the board, it is useful to first outline the statutory duties of a Dutch director.
Management of a Dutch company
The management of a company is carried out by the Management board. Their main responsibilities are the management and administration of the company’s day-to-day activities, the administration of its assets and the operation of its business.
The managing directors of a Dutch company need not be Dutch nationals or residents. They can be non-residents except the Articles states otherwise.
What are the statutory duties of the management board?
Apart from its management and administration of the Dutch company’s business, the below are the specific duties of the managing director;
1. Within 6 months after the end of the accounting year;
Draw up the balance sheet and profit and loss accounts.
Report activities over the previous financial year to the Annual General Meeting;
File the annual report at the KVK within 8 days of adoption by the Annual general meeting
2. The management board must keep a record of shareholders’ resolutions which must be made available for inspection by shareholders and holders of depositary receipts
3. There are no specific rules for convening board meetings, the deed of incorporation may provide which requirements must be observed.
4. the board of directors is obliged to store the books, documents, and other data storage for seven years
5. Provide the right to vote on a resolution – when preparing a general meeting of shareholders, the director must ensure anyone who has a right to vote is invited to the meeting.
5. Ensuring the company complies with relevant legislation and regulations, such as current rules on UBO declaration for all beneficiaries with more than 25% ownership or voting options in the company.
Liability of directors
The managing director can be held personally liable to the company if the following scenario occurs:
Misrepresent annual accounts – when there is supporting evidence showing that the directors have published incorrect or misrepresented financial accounts to the company;
Losses – the company incurs substantial losses due to the gross negligence of the board;
Failure to observe the internal rules – if the loss arising from such transactions as a result of directors failing to observe the rules laid down in the Deed of Incorporation, comply with Dutch corporate law or if they exceed their authority limit in representing the company;
Unable to pay taxes – The director(s) must notify the tax authority if the company is unable to pay its taxes, they may be held jointly and severally liable for the company’s failure to settle any taxes.
What is the role of a Company Secretary?
The company secretary is also known as a corporate secretary. They can be seen as a company’s internal housekeeper.
Like other commonwealth countries, the company secretary plays an important role to assist the general counsel and the board members with ensuring the board functions efficiently and the regulatory and statutory requirements are complied with.
What are their company secretarial duties?
Organizing Annual General Meetings “AGM”: The company secretary ensures that AGMs are properly organized by observing the rules laid out in the Deed of Incorporation and ensuring that all parties who have the right to attend the meeting are accounted for.
For example, in addition to shareholders who have the right to attend the AGM, parties such as pledgees who have a right to attend due to the pledged shares must also be included. Therefore, it is important to check the relevant documents to confirm their attendance.
Internal rules and check other contractual parties’ internal rules: When entering into an agreement, corporate secretaries need to check who has the authority to represent the company. Similarly, they need to ensure that whoever signs the agreement has the authority to represent their company.
If interested, this post explains how to search for information about a Dutch company in the Netherlands.
Maintaining statutory books and certain statutory registers: The corporate secretary ensures that the Dutch company’s books and records are accurate and up-to-date;
Keep a record of the deed of share transfer,
Keep a record of any amendment of the deed of incorporation,
the UBO register, this is the register of people with more than 25% holding in shares or voting right in the dutch bv structure, this is an additional register which a company can keep to assist with record keeping,
the shareholder register – this contains the records of those who the shareholder(s) is/are in the company. The shareholders and their shares must be correctly listed in the shareholder register.
In addition, it also contains information on whether the shares of the Dutch company are pledged
Organising board meetings: The company secretary ensures that board meetings are properly organized, documented, and minuted and that all necessary resolutions and filings are completed.
Keep in good standing and avoid files – ensuring all the filing requirements required by a Dutch bv are prepared and submitted in accordance with relevant deadlines and requirements, such as filling financial statements, quarterly VAT returns, ICP returns (if applicable), wage tax returns and Corporate income tax returns.
Execution of documents – Ensuring all the contracts, and agreements are executed either by the managing directors or authorised signatories. A Dutch company has no corporate seal and therefore, the signing of a document by authorised managing directors or an authorised signatory is sufficient to bind the company.
What are the challenges that the foreign board encounter when attempting to keep a Dutch bv in good standing?
Understanding Dutch laws and regulations: The board and their company secretaries may not be familiar with Dutch laws and regulations, which can make it challenging to comply with local requirements such as submitting annual reports, maintaining accurate records, and adhering to Dutch company law.
Accessing local expertise: They may struggle to access the expertise and resources they need to keep the BV in good standing, particularly if they are based outside of the Netherlands.
Managing UBO reporting requirements: The BV is required to maintain a register of ultimate beneficial owners (UBOs) and submit annual UBO confirmation statements to the Dutch Chamber of Commerce. Keeping the UBO register up-to-date and submitting accurate statements can be challenging, particularly if there are changes to the UBO(s) or their information.
Language and cultural barriers: They may encounter challenges related to language and cultural differences, particularly if they are not fluent in Dutch or unfamiliar with Dutch business practices.
Managing relationships with stakeholders: The BV may have a range of stakeholders, including shareholders, employees, customers, and suppliers. Managing these relationships and ensuring that the interests of all stakeholders are balanced can be challenging, particularly if the foreign board and their company secretaries are not familiar with the local business environment.
Overall, the foreign board and their company secretaries may face several challenges when attempting to keep a Dutch BV in good standing. Overcoming these challenges may require access to local expertise, effective communication, and a strong understanding of Dutch company law and business practices.
Local company secretaries help non-resident directors to fulfil their director duties
Our company secretarial services are specially tailored and made for foreign directors who are not based in the Netherlands.
Having served foreign directors for over 15 years, we understand the issues they repeatedly encounter and with which tasks they need assistance with.
For these simple reasons, we have created a cost-effective package to ensure that all your compliance, legal obligations and administrative issues are covered for non-resident directors.
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Other services which non-dutch residents may be interested
- Set up a dutch company
- Handle your incoming dutch official correspondence
- change of UBO
- ensure the company comply with the dutch law such as statutory filing required by a dutch company is filed on time.
- Record the decisions made by the company and safeguard the minutes of general and board meetings.
- change of address of a dutch company.
- Appointment of a new director of a dutch company
- Resignations of director of a dutch company.
- download KVK company extracts
- Handle liaising with auditors, tax advisers, lawyers, bankers, and shareholders on board governance issues with a high level of efficiency and professionalism.
- Submit annual accounts to the AGM for approval and filing at the KvK within the required timeframe.
- If your Dutch company has employees, we will handle administrative duties like ensuring that wage tax is paid to the tax authority by the set deadlines.
- Make sure VAT returns are submitted to the tax authority within the required time frames.
- Maintain your company’s book and records for at least seven years.