Company Formation in Holland

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Company Formation

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Incorporation in Holland is a 6-stage process. This is as follows:

1. Deposit the minimal capital required into a bank account. This takes a day.
2. Check the company name with the Chamber of Commerce. The cost varies but there is an approximate of around ?90. This takes 3 days.
3. Submit details to the Ministry of Justice about the incorporators and managing directors for approval. This takes 3 days and costs approximately 100 Euros.
4. Sign the company's deed of incorporation. This takes a day and costs approximately 1800 Euros.
5. Obtain a registration number from the Chamber of Commerce, a process which takes a day and costs approximately 125 Euros.
6. Register with the tax authorities; this can be done in a day but the tax office will take 4-6 weeks to provide the tax numbers.

In the Netherlands, an enterprise may operate in the form of a separate legal entity:

• Private limited company - Besloten Vennootschap (BV)
• Public limited company - Naamloze Vennootschap (NV)

A company may also operate in the form of a non-legal entity: a sole proprietorship or partnership. There are other kinds of business entity, however, they are rarely used.

The private limited company (BV)

Used by many businesses, including some larger companies, this is the most popular form of company. A BV can be incorporated by one person. The minimum share capital is 8,000 Euros. The share capital is made up of registered shares, and has to include limitations on their transferability. A BV has to publish financial statements every year. Like NVs, small- and medium-sized BV's are immune from some disclosure requirements.

The public limited company (NV)

An NV is commonly used by large companies; particularly quoted companies. The minimum share capital is 45,000 Euros. Share capital can be constructed of bearer shares or registered shares. Restrictions on the transfer of shares can be included in the articles of incorporation (for example, to protect against hostile takeovers.) An NV is required to publish financial statements every year. However, small- and medium-sized NVs are immune from many disclosure requirements.

Formation of a NV or BV

Incorporation is carried out with a public notary. The approximate formation costs for a BV with the minimum share capital is 2,000 Euros, including the notary's fee, assistance by an accountant, a name search, etc. The formation period for a BV is approximately a fortnight.

Formation regulations:

• If the founder is an individual, his or her full name, address, date and place of birth, nationality and occupation must be stated
• If the founder is a company, its full name, address and country of incorporation must be stated
• The name must not be ambiguous, too general, or too similar to an already existing company
• At least 20% of the authorised capital must be issued and paid, with a minimum issued capital of 18,000 Euros for a BV and 45,000 Euros for a NV
• The company's fiscal year can end at any time. However, the calendar year is commonly chosen
• For managing directors (directeuren) and supervisory directors (Raad van Commissarissen) there must be given the full name, address, date and place of birth, nationality and occupation. Passports must be submitted

Partnerships or joint ventures

Partners can be individuals, corporations (joint ventures) or both. There are three forms of partnership:

• De vennootschap onder firma - A general partnership. All partners have unlimited liability. Name, location and purpose of the partnership must be filed with the Chamber of Commerce
• De commanditaire vennootschap - A limited partnership. Partners have unlimited liability, but non-managing partners (limited partners) are only liable up to their personal share in the partnership
• De maatschap - A partnership for professionals. Partners are liable for debts they accumulate themselves, as well as a part of debts for which the partnership is lawfully abided

Non-resident individuals of a partnership operating a business in Holland will be deemed to have a permanent establishment (branch) for tax purposes.

Offshore Companies

By choosing to incorporate an offshore company, business owners and  investors can set-up a business outside the jurisdiction of its operations. Offshore companies are traditionally, but not exclusively, incorporated for lower fees and taxes. Business owners must abide the regulations of the offshore jurisdiction, and must not trade within the jurisdiction.

The benefits are vast. As aforesaid, reduced tax and fees are often big factors when considering offshore incorporation. A company may also choose and offshore location to:

• Simplify set-up and maintenance - entrepreneurs may find bureaucracy and red tape less of an obstacle in offshore jurisdictions
• Assume anonymity - the names of owners and directors are not for public record, and references to the company may only be made in its registered agent
• Ensure legal protection - for instance, some jurisdictions favour corporate governance, meaning a company is only liable to offshore laws as opposed to those in its areas of operation
• Protect assets - business owners may opt to arrange their assets and transactions in such a way that protects them from liability

Characteristics of an offshore company:

• Memorandum and Articles of Association
• Certificate of Incorporation
• Registered Office/Agent
• Shareholders / Members
• Directors / Managers
• Company secretary
• Statutory Register
• Bookkeeping

Traditional locations for offshore incorporation are tax havens, such as the British Virgin Islands, Panama and Monaco. Other favoured areas include India, the Bahamas, Dubai, the Cayman Islands, Cyprus, Seychelles, Marshall islands, Delaware, Turks & Caicos Islands, Hong Kong, Jersey, Guernsey and the Isle of Man.

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