The Dutch Corporate Law, also referred to as the Company Act in Holland, is the most important source of legislative rules and regulations for company formation and management in the country.
The company law
contains the types of Dutch companies
available for incorporation, the rules for the set-up procedure, taxation and compliance for corporate entities as well as governance and the procedure for bankruptcy or company mergers and acquisitions. The distribution of power and responsibility in a company is also stipulated in this document.
Company incorporation in the Netherlands
The Company Act in Holland
provides the business forms that can be registered
and the rulings and regulations applied for each of them. For example, in accordance to the type of activity and the desired manner of running a business, an entrepreneur may choose to open a limited liability company
or BV, the joint stock corporation or NV, the general partnership or the limited partnership. The Dutch partnerships are not recognized as legal entities.
The formation and corporate purpose of a company are also described in the company law. The incorporation procedure must be performed according to law and the needed documents, such as the deed of incorporation need to be drafted in front of a Dutch notary. The representatives of the company, its managing directors, will bear liability according to the characteristics of the company they choose to open. The company will need to have a paid-up capital at the time of the incorporation and the subsequent transfer of shares is also regulated by the company law.
All the regulations provided by the Civil Code in Holland are established in accordance to the European Community Directives, the Act on the Supervision of the Securities Trade and the Listed Companies Act which regulate several aspects of running a company in the Netherlands. A company due diligence process can be performed in the Netherlands by foreign investors who want to do business here.
Company management in the Netherlands
Corporate management in the Netherlands, as described in the corporate law, is based on a two-tier system: the management board entrusted with executive functions and the supervisory board that has advisory duties and supervises the management board. This system is applicable both to the NV and the BV companes. The two boards are mandatory for companies that are considered large.
The appointment of the management board is made by the company founders at the time of the incorporation. The collective powers and responsibilities of the management board are included in the articles of association. The duties and liabilities of company directors are established by law and they can include civil and criminal liability.
Apart from the company law
, business owners who hire personnel in the Netherlands need to observe the employment law
. It provides essential ruling regarding the requirements for employment
, the rights and obligations of the employer and employee, the grounds for dismissal, working hours and wages. The labor law in Holland is rather flexible in terms of workforce and it is characterized by plenty of particularities.