Civil Code, Book 2 - Explanatory statement
- January 10, 2008 11:49 AM
Laying down the text of book 2 of the Civil Code
No. 3
PARLIAMENT OF THE NETHERLANDS ANTILLES
SESSION 2002-2003
General
Advisory Council
Explanatory Statement
SER-opinion
General provisions
Title 1 General provisions
Title 2 The Foundation
Title 3 The association
Title 4 The cooperative society and the mutual insurance association
Title 5 The limited liability company
General
1. Important parts of the new Civil Code were introduced per January 1 and 15 2001. Attached is presented a proposal for Book 2 (legal entities). A new milestone in the modernization of civil legislation has thus been reached.
2. In the preparation of Book 2, the Dutch example was followed to a certain extent. As in the Netherlands, general provisions have been incorporated in a first title. These general provisions are of importance to the legal entities under private law that are regulated in the following titles. According to article 1 first paragraph, they are successively: the foundation, the private fund foundation, the association, the cooperative society, the mutual insurance association, the limited liability company and the private limited company. Meanwhile there are also important differences with the Dutch regulations. Thus the idea was abandoned to include also provisions concerning legal entities under public law and religious associations. Articles 1 and 2 of the Dutch Book 2, which are devoted to these legal entities, have no practical meaning. But they did lead to extensive and not particularly conclusive academic discussions. These kinds of discussions had better be avoided. In the proposal hereby presented the only provision that extends beyond the legal entities regulated in Book 2 is the second paragraph of article 1. For this, please see the explanation to that article.
3. Also the arrangement of Book 2 differs in some respects from the arrangement in the Netherlands. Thus, significantly more provisions of the separate titles have been transferred to Title 1. On a number of points this led to simplification. In other cases some differences in the wording and system – that could not readily be explained – could thus be detected and straightened out. When numbering the articles and for the arranging in titles, a system was followed that aims at enhancing the practical manageability of the code as much as possible. At the introduction of Books 1 and 3 et seq., the numbering of the Dutch example was followed to the extent possible. With Book 2, however, that system would not be of any benefit. This becomes evident at the very first title (general provisions), the arrangement of which, as said above, deviates considerably from that in the Netherlands. The same goes for the fifth and sixth titles (limited liability and private limited company). In the sixth title the National Ordinance Private Limited Company ([Landsverordening Besloten Vennootschap] “LBV”, Official Gazette 1999, no. 241), introduced in 2000 and having an arrangement entirely of its own, is built on. Title 6 in turn served as a starting-point for the regulation of the limited liability company in title 5, be it that the limited liability company, as explained below, has acquired a character of its own. Next, substantial parts of the Dutch Book 2, including title 8 “NedBW” [Neth. Civil Code] (rules on the settlement of disputes and right of inquiry) and title 9 NedBW (the annual accounts and the annual report) have not been taken up, or have been taken up to a very limited extent only. Title 7 NedBW (merger and division), however, has been taken up – with some adaptations. As for the merger it appeared possible to follow the Dutch numbering (articles 309 to 334, inclusive). But that was not the case with the division. The reason is that the introduction of the division in Netherlands led to a numbering starting with article number 334a and ending with article 334ii. From an aesthetic and practical point of view it did not seem desirable to follow this numbering, however much the text of the articles substantively agrees with the text in the Netherlands. Considering everything, a numbering was opted for in the end that shows the following characteristics. The titles following upon the first one each start with a round figure: 50, 70, 90, 100, 200, 250 and 300. The provisions concerning the limited liability company and the private limited company run largely parallel, despite a number of differences to be explained below. In order to mark well this parallelism on the one hand and the differences on the other, the provisions running parallel have been numbered so that the difference is always a hundred. This “100- parallelism” aims at making it easier to look up and remember the numbers of the articles. The implementation of this system led to articles 205 and 200 to 226, inclusive, lacking in the “bv”-title [private limited company title]. Also lacking at the end of most titles is a number of articles. In title 8, divisions 2 and 3, in which the Dutch numbering of the merger regulations has been followed to the extent possible, an article 323a had to be inserted whereas articles 329, 330 and 332 are lacking. Finally, it must be mentioned that the regulations of the foundation – which include those of the private fund foundation – have not been placed in title 6 as in the NedBW, but in title 2, immediately following the general provisions and preceding the other legal entities regulated in Book 2. This move does not have a significance based on grounds of principle. It was implemented for practical reasons.
4. The regulation of the separate legal entities deviates substantively on some points from that in the Netherlands. The clearest instance of this is the case of the limited liability company and the private limited company. This is connected with the given that with the LBV an entirely new regulation was introduced per January 1 2000 for the private limited company, which served as an example for that of the limited liability company. With respect to the private limited company a number of starting-points was formulated in the Explanatory Statement at the time. The most important ones of these, briefly stated, amount to this. It must be possible for the formation to take place swiftly and without many formalities; with respect to the arrangement as expressed in the shareholders’ rights, management structure, capital protection, the choice of language and currency, a great degree of freedom is given; as against this freedom of arrangement there are proper rules for the protection of creditors and minority shareholders; rules have been provided that aim at increasing compatibility with the Anglo-American system. These points of departure apply unimpaired – and now also for the limited liability company – now that the regulation has been included in Book 2. The consequence of the first starting-point mentioned (it must be possible for the formation to take place swiftly and without many formalities) among others is that now the declaration of no-objection has been eliminated also for the limited liability company. In the Explanatory Statement to the LBV, that elimination was explained in the general section under 5 and in article 1. The Dutch bill, mentioned there, for the elimination of the formal preventive supervision was given statutory force in the Netherlands on September 1 2001. For the rest, some amendments have been introduced in the regulations of the private limited company. One amendment that can be deemed striking is the replacement of the liability regulation of article 42 LBV by a regulation geared to the Dutch system. Article 42 LBV obliges the board of management to file a petition to obtain an official moratorium when certain criteria concerning the capital have been met. Failure to comply with this obligation creates liability in respect of debts arisen from legal acts performed after that. It has appeared that this regulation – it is also called the “Ueberschuldingsregeling” – in the practice is experienced as too burdensome. This is why that regulation has been dropped in the present proposal and the Dutch regulation for directors’ and officers’ liability, as laid down in articles 2:138 and 2:248 NedBW (article 16), has been reverted to. In respect of the Dutch regulation, for that matter, some easing has been introduced that will lead to managing directors and officers being less quickly liable in the practice. This easing up is explained below in article 16. Attention may also be given to the fact that in the arrangement of Book 2 on the one hand the semi-contractual character of the private limited company has been further accentuated, whereas on the other hand conditions have been created with the limited liability company for a development to be explained under 5 in the opposite direction. The “semi-contractual” character of the private limited company is particularly accentuated by the regulation in the seventh division of Title 6, articles 239 up to and including 242. In these articles the “shareholder-managed” company is introduced as an option for the private limited company. This company has no board of management. The joint shareholders act as managing directors, which leads to a certain simplification. The formalities of appointment, suspension and dismissal of managing directors have disappeared. The difference between shareholders’ meeting and board meeting in principle has ceased to exist. In a shareholders’ agreement the shareholders may lay down specifically the manner in which the company shall be managed by them, the division of the tasks among themselves as arranged by them and the remuneration and management’s decision-making process. If so desired, the regulation for the shareholder-managed company may be combined with the regulation for personal liability of the shareholders as laid down in article 202, paragraphs five, six and seven. Thus a legal concept may come about that in material respect bears close resemblance to the partnership, the partnership firm or the limited partnership, with this difference that it has legal personality, otherwise than under prevailing law must be assumed for the personal companies. The “member-managed” limited liability company of the Uniform Limited Liability Company Act (1996) in the United States, which is followed by many American states, has served to a certain extent as an example for the shareholder-managed company. So, with the introduction of the shareholder-managed company, compatibility with the American legal system is enhanced, and this can be of great importance to the development of the corporate sector. In this connection it may be recalled that through the LBV already the possibility was introduced to follow a management system that broadly speaking runs parallel to the American “one tier board” system. In the bill this regulation of the LBV (article 40), with some improvements, was transferred to article 18 (general provisions). So, in the future this regulation will be capable of being applied by all legal entities regulated in Book 2, including the limited liability company. It goes without saying that also other regulations of the LBV, that were specially geared to American wishes, were maintained in the new system. As such can be mentioned: the free language choice for the articles of incorporation, the absence of the obligation to allot a nominal value to shares and the possibility of shares with no voting right.
5. The arrangement of title 5, in which a new regulation for the limited liability company has been laid down, was preceded by extensive consultations with experts in the field and the corporate sector. The question asked was: what function would the limited liability company have to fulfill next to the private limited company. The conclusion was that in principle the limited liability company must show the same flexibility as the private limited company, be it that – as of old – it must know bearer shares. This last requirement means that on some points the regulation must be formulated differently and at times a bit more tightly. It was furthermore concluded that it would seem advisable to prepare a development whereby the limited liability company can develop into a legal form that, more so than the private limited company, is suitable for relatively large enterprises that demand the special interest of the public and the authorities. The elaboration of this thought is found mainly in two places. In the first place at the regulation of the arrangement of the annual accounts, the audit and the publication. The main rule in effect for all commercial legal entities, hence also for the limited liability company, is that annual accounts must be drawn up that meet the standards considered acceptable in social and economic life. The performance of an audit and publication of the annual accounts are not obligatory. For the limited liability company that meets certain criteria, pointing to a certain social importance, however, a tighter regime applies. With this company the arrangement of the annual accounts must meet IASB-standards and an audit is required (articles 120 and 121). The annual accounts must also be accessible to interested parties (article 122). Thus international views regarding transparency and publicity are met. The regulation moreover can contribute towards a certain inurement to publicity, which will make it easier to follow the developments in this field. In the second place the regulation in articles 139 et seq. can be pointed to here. According to article 139, the articles of incorporation may provide that the supervisory board is “independent” in terms of that article. In that case, the supervisory board must consist of at least three persons, who are appointed for at least three and at most six years, and who cannot be suspended or dismissed by the general meeting. That can happen only in accordance with the procedure prescribed in article 142. The institution of such an “independent” supervisory board therefore is not obligatory but a facility available to the limited liability company. It is conceivable that this will be used in special cases. Consider for instance businesses in the financial sector or (privatized) public enterprises. In this setup it fits that the company that avails itself of this concept is obligated to follow the tighter regime with respect to the annual accounts as just described (article 144). See also the explanation to articles 139 et seq. In connection with the above considerations, provisions have been taken up here and there with the limited liability company that make this legal form – more so than the private limited company – suitable for acting as a listed company. In this connection, the sixth paragraph of article 110 and the third paragraph of article 132 can be pointed to. Analogous provisions are absent in the regulation of the private limited company.
6. Connected with titles 5 and 6, a regulation is given in title 7 for buyout, retirement (forced takeover) and compulsory transfer of shares. The buyout regulation has been taken over from the Dutch law virtually in its entirety. The regulation concerning retirement is an improved and additionally extended version of the regulation pertinent thereto in the LBV. Added has been among others the regulation taken up in article 253, that makes it possible to enforce the takeover of the shares on the sole ground that the shareholder against his will found himself in a minority position. Added as well is article 254, in which the retirement regulation is also declared applicable in situations where a shareholder finds himself in an awkward position due to quality requirements laid down in the articles of incorporation (or by law) or a blocking regulation. Furthermore has been added article 255 in which the making of temporary arrangements in an involuntary takeover procedure is further regulated. Finally has been added article 257, in which on the one hand transfer-obligations according to the articles of incorporation are allowed, and on the other hand also the shareholder affected by those obligations is offered financial protection. The direct cause for the addition of article 254 first paragraph under a. and article 257 was the introduction in 2001 of the Act revising preventive supervision in the Netherlands. A series of provisions was thereby introduced, offering a legal basis for provisions in the articles of incorporation that contain quality requirements, suspension regulations or transfer obligations. The legal basis was deemed necessary because the departmental guidelines that allowed provisions of this nature lost their function through the cancellation of the formal preventive supervision. The validity of this kind of provisions has seldom been doubted in the Antilles, also having regard to the practice in the Netherlands and the guidelines in effect here for the limited liability company. Meanwhile the preventive supervision and the guidelines connected therewith are cancelled now also for the Antillean limited liability company. This gives rise to the question as to whether the said provisions should not get a legal basis also in the Antilles. Should that not happen, then the threat of an a contrario argument looms. Specially having regard to the last possibility and the uncertainty accompanying same, a legal anchoring is opted for in the present proposal. The Dutch regulations can be found in articles 2:87a, 87b, 117 third paragraph, 118 first paragraph NedBW and the provisions in the bv-title connected therewith. In a certain respect these provisions follow the provisions that give an elaborated regulation for the blocking regulations known as of old (articles 2:87 and 195 NedBW). The LBV and the present bill allow blocking regulations without restrictions or further elaborated rules. This is why in article 254 first paragraph under a. and article 257, another system better fitting in with the Antillean regulation is followed. The thoughts underlying this regulation meanwhile are the same. The occasion has been used to include in article 254 first paragraph under b. a regulation that to a certain extent connects with the rule laid down in the Netherlands that a blocking regulation may not exclude the transfer or make same extremely problematic. In this regard it must be noted, finally, that the provisions in article 117 third paragraph, first sentence, and article 118 first paragraph, third sentence NedBW have not been taken over. The fact that a rule according to the articles of incorporation as referred to in article 118 first paragraph, third sentence NedBW is allowed in the Antilles readily follows from articles 132 and 232. A rule as referred to in article 117 third paragraph, first sentence NedBW is not unquestionable. There will be a difference of opinion in many cases on the question as to whether an obligation laid down by law or in the articles of incorporation has been fulfilled. It will not do to exclude the person involved from attending the meeting at which that matter may be discussed. The meeting itself decides then on the order of the meeting. So, considering all this, in the opinion of the undersigned, there is no need for a rule as stated.
7. Title 8 contains a regulation of the conversion, merger and division. The conversion regulation has been largely taken over from the LBV. The “cross border” conversion has been maintained, now in articles 303 to 305 inclusive, and extended to include all legal entities. The regulation stated in articles 309 et seq. concerning the merger and the division has been derived from the Dutch one virtually in its entirety. Also the text of the law to the extent possible follows the text of the Dutch provisions. With respect to the merger, as stated, even the numbering of the articles corresponds with that of the Netherlands. This arrangement means that for getting to the bottom of the material, the Dutch literature and legal precedence can be used with less chance of mistakes being made. For such a technical subject as the merger and the division, this would seem the indicated way. For the rest the Antillean regulation on one or two points offers more facilities than the Dutch one. Thus, under article 323a it is made possible that, as a legal entity ceasing to exist, a foreign legal entity with comparable legal form can act. Article 66 LBV served as an example for this regulation. For the rest, please see the explanation to articles 309 et seq.
8. The foundation, including the private fund foundation, is regulated in the second title. The regulation largely follows the Dutch example. Striking deviations will be explained below. The same goes for the regulation concerning the association, the cooperative society, the mutual insurance association in the third and fourth titles.
9. In the explanation of the individual articles, in many cases mention of the provision of the LBV or the Dutch law from which the article has been derived, has sufficed. For a further explanation to the article, one must then look at the explanation to the LBV or the state of affairs in the Dutch law. This mode was deliberately followed. A more extensive explanation would amount to an interpretation of the Dutch law or a second explanation to the LBV. The confusion that this could lead to must be avoided as much as possible.
10. In the explanatory statement to the LBV, it is indicated in the general section under 5 that it was the intention of the then minister to create a committee by National Decree to “monitor” the development of the BV-law to the extent possible and to report thereon periodically. So far that intention has not been executed, and this also because it soon appeared that a furtherreaching development, namely the realization of Book 2, was imminent. Now that this is a fact, the thought expressed at the time will be taken up again. The committee to be instituted by National Decree will be given the explicit task of following the development of the new law of legal persons and to report to me on same in a term of three or four years following the time of implementation, in an evaluation report that may contain recommendations for supplementation and improvement. The committee will be requested to report in the interim, whenever that would seem advisable. The task of the committee also includes that, as the occasion arises, it determine a position, requested or unrequested, with regard to the interpretation of the legal regulation and the admissibility or inadmissibility of provisions under articles of incorporation, whenever there are doubts in this respect. These positions of the committee naturally will have no force of law. For the notarial profession, however, to a certain extent they can be directional and in that sense offer support.
11. The bill has been prepared by a committee of government commissioners, consisting of G.C.A. Smeets, LL.M. (chairman), Prof. P. van Schilfgaarde, LL.M. and Prof. A.L. Mohr, LL.M. The committee was assisted by W.R. Flocker, LL.M., secretary. The arrangement was extensively discussed with representatives of the judiciary, the notarial profession, the legal profession and the corporate sector. Also the transitory law, embodied in a separate national ordinance, was thereby given the necessary attention. The proposals were generally greeted with much approval. It may be expected that the new Book 2 will contribute to an important extent towards the economic development of the country.
Advisory Council
The Advisory Council has been asked for a formal opinion. The Council gave its opinion on March 21 2003, RvA NO. RA/09-03.
The Council comments that it is gratifying that now also Book 2 is being modernized, after this was the case in January 2001 with the Law of Persons, Family Law and the Law of Property (books 1, 3, 5 and 6 BW). The Council recommends that government proceed at short term also to the revision of book 4 BW, the Law of Succession. The Council indicates that the fact that so many Antilleans reside in the Netherlands and so many European Dutchmen in the Netherlands Antilles, makes it advisable for the law of succession to concur to the extent possible in the countries of the Kingdom. It is indeed Government’s intention finally to come with a proposal for the revision of the law of succession.
The Council deplores the fact that it appears nowhere that an attempt has been made also in respect of Book 2 to realize the wish for concordance issuing from the Charter and the Cooperation Regulation. Such wish for concordance indeed is not evident anywhere. Government does propose, however, to contact the Government in Aruba at short term following the introduction of Book 2, in order to consider this question.
The Saleh-Van der Grinten draft for a new NV-law that Government submitted to Parliament at the time will be revoked, as recommended by the Council. In accordance with the Council’s recommendation the draft has been submitted, via the Minister of Finance, to the Tax Directorate for its formal opinion. The comments of the Tax Directorate are not expected to lead to a delay in the introduction of the new regulation or parts thereof. The recommendations of the Advisory Council were included in the draft, whenever this seemed advisable. Comments follow below specifically for instances where there was no cause for following such recommendations.
Article 5
Government would not wish to follow the Council’s suggestion to add to the text of article 5 third paragraph, a sentence providing that the notary shall forfeit a penalty of NAf 1,000 for each week or part thereof in which he fails to act upon the provisions laid down in the preceding paragraphs. According to the current text of paragraph 3, the notary is threatened with personal liability as against those who have suffered a loss due to the notary’s failing to perform his obligations issuing from the first and second paragraphs. For the time being that should suffice. Government for the rest holds the view that it is up to the Notarial Professional Association to see to the performance of these obligations and to take disciplinary measures in case of failure to perform.
Article 8, fifth paragraph
According to this fifth paragraph, the legal relationship between a managing director and the legal entity is not considered, or also considered, an employment contract. The Council observes that this provision compels an amendment of article 3 second paragraph of the National Ordinance on wage tax 1976 (Official Gazette 1975, no. 254). This observation is correct. Consultations with the Minister of Finance regarding the necessary amendment are taking place.
Article 15, second paragraph
The recommendation is followed, but not for article 120: for the large company’s annual accounts, the question as to what at least same should consist of is governed by the standards of the IASB, as appears from the third paragraph.
Article 25, second paragraph, end
Government would not wish to adopt the Council’s recommendation to set up a foundation in order to cover the costs of publication, insofar as these cannot be recovered from the legal entity concerned. Costs that remain for the account of the Chamber of Commerce must be met out of the charges at registration. Government does not share the Council’s expectation that the Chamber will make little active use of the powers described in article 25. Extensive consultations have been conducted with the Chamber of Commerce on the substance of the provision. The Chamber expects that introduction will lead on the one hand to considerable clearing of the trade register, and on the other hand to an improvement of the payment performance as regards the charges imposed. In this connection it may be noted that a new trade register ordinance and a new trade register decree have been formulated in close consultation with the Chamber of Commerce. The object of the new trade register ordinance is the registration of all enterprises and legal entities in one register. These new regulations are expected to become effective simultaneously with or shortly following the entry into force of the new Book 2.
Article 50, fourth paragraph sub b
The Council indicates that it has serious objections to this provision. The Council remarks that the article 50 fourth paragraph sub b., now proposed, will throw into confusion the system of article 50 in which two separate legal forms – the foundation and the private fund foundation – have been opted for. According to the Council, that provision accomplishes that as and from the dissolution of the foundation there is no longer a material difference with the private fund foundation.
Similar remarks have been made by the Social-Economic Council in its opinion of April 4 2003. Government would react on this question as follows. The third paragraph of article 50, containing a prohibition from making distributions to founders and other categories of persons, is literally identical to the third paragraph of article 2:285 NedBW. As for the question whether this distribution- prohibition also covers distributions at the foundation’s dissolution, there is a difference of opinion in the Dutch literature. Such literature, for that matter, is scanty. There are no authoritative decisions of the judge. Legal history offers few reference points. The thought behind the proposed fourth paragraph sub b. was to cut the knot on this point. On further considering this question, however, Government is of the opinion that the criticism of the Advisory Council and the Social-Economic Council must weigh heavily. In the text now offered the provision has been deleted. As a result, the situation is again similar to that in the Netherlands, which means that on this point the development of the law must be awaited.
Article 50, sixth paragraph sub b
With the term “subsidiary” the case was considered where a majority interest is held in a company. This concept already falls under having “interests” in a company. Hence the words “subsidiaries and”, upon reflection, may be deleted. Reconsideration of the text then led to tighter wording, whereby the term “other companies” has been replaced by “another legal entity”. Thus it is expressed that also having an interest in a foreign legal entity falls under the exceptive rule.
Article 73, first paragraph
The first paragraph does not prohibit an association, the articles of incorporation of which have not been stated in a notarial deed, from being a beneficiary of a specific legacy. The same is assumed under Netherlands law for article 30 first paragraph Book 2 NedBW, from which article 73 first paragraph has been derived.
Article 119, second paragraph under c
As appears from the text of this provision, the IASB-norms must be observed when determining the nett turnover. It depends on those standards whether the criterion has been met. The same applies for that matter in respect of the criterion under b. All this is already stated in the explanation to article 119.
Article 240, second paragraph
In the explanatory statement to article 240, it has been explained why non-compliance with the regulation that the shareholders’ agreement be laid down in writing, shall not lead to invalidity. The Council holds the view, however, that there must be some form of sanction. This sanction lies in the fact that the party invoking a provision that has not been laid down in writing, is confronted with difficulties when furnishing proof. The shareholder who seriously defaults in complying with the regulation, considering the circumstances may also be blamed for improper performance of duties in terms of article 14 or mismanagement in terms of article 16.
Article 250, first paragraph
For the question as to whether deferred loans should pertain to the equity capital, in principle the annual accounts as drawn up and adopted must serve as a basis. Generally, deferred loans are not included in the equity capital. On applying article 250 first paragraph, it is otherwise of little consequence that this be the case or not. For the determining factor is the percentage of the equity capital that is held by a shareholder, or two or more group companies.
Article 254, first paragraph, under a
Government would not wish to follow the Council’s recommendation to insert after “the shareholder who”: “in consequence of an amendment introduced to the articles”. For the intention of the provision is to protect also that shareholder who, through a situation involving him personally, no longer meets a quality requirement according to the articles. In this case one can consider the case where he no longer pursues a certain occupation, loses or acquires a nationality, etc., and the articles contain quality requirements in connection therewith.
Article 300, second paragraph
The Council recommends that, in the case referred to by the Council, a prior approval of the Inspector of Taxes be required in addition. Government would not wish to adopt this recommendation. It is Government’s opinion that the Tax Department disposes of sufficient means to preclude fiscally undesired effects of a conversion. Insofar as that should not be the case, however, the tax legislation can be tightened.
Article 300, third and fourth paragraphs
According to article 50 seventh paragraph, in the cases where the law speaks of foundation, the provision shall also apply in respect of the private fund foundation, unless otherwise shown. From this provision it follows sufficiently clearly that the third and fourth paragraphs of article 300 also apply in respect of the private fund foundation. In the explanation to article 300 this is pointed out. The Council’s recommendation to name also the private fund foundation in the third and fourth paragraphs next to the foundation, would lead to systematic difficulties. For if one should want to avoid an a contrario argument, then this would have to be done in all the provisions in which the foundation is mentioned. The purpose of article 50 seventh paragraph is precisely to avoid such an operation.
As for the conversion of the foundation into a private fund foundation, the Council furthermore holds the view that the same reasons that led at the time to a prohibition being included in the National Ordinance on foundations for the conversion of a foundation into a private fund foundation by means of an amendment to the articles, argue in favor of a general prohibition of converting a foundation into a private fund foundation. In this connection, Government would comment as follows. A prohibition to convert a foundation into a private fund foundation, by itself, would be rather ineffective. For the possibility would then always remain to convert a foundation into another legal entity and subsequently, after a shorter or longer period of time, to convert such other legal entity into a private fund foundation. Hence the prohibition would be effective only if every conversion into a private fund foundation would be excluded. Doing so, however, would place the private fund foundation entirely outside the conversion system and the question is whether that would not be too severe a measure. A second remark is that, pursuant to the fourth paragraph, judicial authorization is required for the conversion of or into a foundation (hence also for the conversion of or into a private fund foundation). For such a judicial authorization, the fifth and sixth paragraphs provide a relatively heavy procedure. It may be expected of the judge that he be extra on the alert when a private fund foundation is involved. The grounds for refusal described in the sixth paragraph and the authority stated there to attach conditions to the granting of the authorization, provide the judge with sufficient elbow room. Benefiting or prejudicing no doubt will also include fiscal benefiting or prejudicing.
Article 317, fifth paragraph
According to this provision, in principle the prior approval of the judge is required for every merger involving a foundation. An exception is made only for mergers involving ordinary foundations or private fund foundations. Such exception applies only, however, if the articles of incorporation make it possible for all the provisions thereof to be amended. The Council wonders why this heavy requirement is made. In this connection, the following is observed. The requirement laid down in this provision that all the provisions of the merging foundations or private fund foundations must be capable of being amended has been derived from article 317 fifth paragraph NedBW – which for the rest is less tightly formulated. The background is this. Often the articles of a foundation contain the stipulation that some provisions, including the objective, cannot be amended. If a merger with another foundation would now be possible without judicial authorization, then such requirement of the articles could easily be evaded. For the only requirement then would be that the acquiring foundation shall not contain such a stipulation. The judicial authorization requirement in the fifth paragraph prevents this short cut from being used. The provision to such extent also connects with the provision of article 51 second paragraph and article 53 first paragraph.
Explanatory Statement
[Dutch abbreviation: “MvT”]
MvT page 2
The Council observes that here no reasons are offered for the arbitration procedure and the right of inquiry not having been taken over from the Netherlands. Instead of an arbitration procedure according to Dutch model, the Antillean Book 2 has a regulation for “retirement and compulsory transfer” in title 7 (article 251-257). As set forth in the explanation to article 251, that regulation originates from article 50 LBV, which provision in turn contained a simplified, partly also differently arranged version of the Dutch arbitration procedure. There is no reason to deviate from thiscourse taken in the LBV. The extensions in respect of article 40 LBV have been based on recent amendments to Dutch acts, be it that also in this respect a course has been followed that in Government’s view is more efficient and fits in better with the Antillean system. The right of inquiry thrives in the Netherlands thanks to the institution of a specialized Enterprise Section with special powers, composed of five members. The institution of such a Section in the Antilles would exert unacceptable pressure on the judiciary. Moreover, a need for a right of inquiry to be in effect for companies in terms of the Dutch legislation, up till now has not become apparent in the Antilles. Such a need is apparent for foundations, however. Hence the inclusion of a regulation in that spirit for the foundation. Finally, it may be noted that the seventh title in article 255 contains a regulation for making an arrangement during the course of a retirement suit. This regulation has been largely based on the Dutch regulation to make temporary arrangements in the event of inquiry. The practice in the Netherlands has shown that it is precisely that regulation that is needed. It is expected that the new Antillean regulation proposed may fill a need, but then without excessively burdening the judiciary.
MvT, page 4
The Council remarks that as regards the publication of the annual report and accounts, the draft takes quite a step backward rather than forward, compared to the existing NV-legislation in the Commercial Code. This remark of the Council has led to the addition of a sixth paragraph to articles 116 and 216.
MvT, page 5
The Council observes that a regulation as referred to in article 117 third paragraph NedBW does appear in the articles of Antillean companies. It is not clear to the Council why the provision is not unquestionable. The Council’s observation has led to an adaptation of the explanation to article 131 and of the general part of the explanation under 6, end. It has also led to an adaptation of articles 131 and 231 second paragraph.
MvT, page 14
An observation as referred to by the Council has been inserted in the explanatory statement to article 16.
MvT, page 17
The Council’s suggestion has been followed with the amendment of article 37 first paragraph.
SER-opinion
The Social-Economic Council [“SER”] too has been asked for a formal opinion. SER gave its opinion on April 4 2003.
Also SER’s opinion in a number of cases has led to an amendment of the bill or to supplementation of the explanatory statement. A number of points will be dealt with individually below. SER observes that the legal form of a legal entity under public law is increasingly being used in our community. Reference is made to the APNA [Netherlands Antilles General Pension Fund], SVB [Social Insurance Institute], BNA [Netherlands Antilles Central Bank], as also various intentions of Government within the framework of the so-called new government (Official Gazette 2001 no. 75). SER remarks that, of the general provisions of the bill, only article 3 is applicable to public-law legal entities where the basic distinctive feature of a legal entity is laid down, namely that as far as the law of property is concerned, a legal entity is on a par with a natural person. SER holds the view that more basic articles are suitable for thus being declared applicable, and SER gives some examples. Government with SER is of the opinion that the applicability of more basic articles will be possible, also with these public-law legal entities. Government considers, however, that such applicability must be declared in the relevant public-law regulation. It can then be considered per case how such declaration of applicability works out. In addition to this, the second sentence of article 1 second paragraph may offer a solution in certain cases. According to that second paragraph, all the provisions of the first title can be analogously applied to other legal entities, hence also to legal entities under public law, insofar as the contrary does not result from the law and the nature of the legal entity does not oppose this. SER remarks that articles 309 to 323a inclusive (juridical merger of legal entities) may be considered general provisions. The question is raised by SER as to why these provisions were not included in title 1 “General Provisions”. It may be conceded to SER that also in this case one could speak of general provisions. The material is so technical, however, and application of the provisions requires so much specialist knowledge that there is every reason to deal with these regulations in a separate title. An important advantage to this is – and SER itself rightly points this out – that thus a connection is made as closely as possible with the Dutch regulation, which in turn means that for getting to the bottom of the regulation, the Dutch literature and legal precedence can offer maximum support. In connection with all this, Government observes that the scope of the regulation is such that it would fit in poorly with title 1. SER finally points to the existing regulation becoming extinct and the need for a transitory regulation. Regulations in this spirit are provided by the Implementation National Ordinance Book 2 BW that is being, or will soon be, dealt with by Parliament.
General provisions
Dissolution “non-existent” legal entity
SER observes that it would seem more correct to the Council to speak in article 2 fourth paragraph, as in article 24 fourth paragraph, of the grounds for dissolution. In Government’s opinion, SER here overlooks the fact that the possibly imputable fault in article 2 lies in the non-creation of the legal entity. Dissolution can follow after a legal entity has been created still by a judicial decision, but that is not necessary. Also for this reason it would be incorrect to speak of the grounds for dissolution in article 2 fourth paragraph.
Language
SER remarks that within the framework of uniformity it would be recommendable that a kind of manual be prepared, with the Papiamentu translation of the main legal-technical terminology of this act. Possibly this fine suggestion can be pursued by the notarial professional association. It is furthermore noted that, in the event that the language of the deed is Papiamentu, the law does not require but does allow the addition of a Dutch translation. Such a translation can solve the translation problem as pointed out.
Liability with legal entity in process of formation
Under this heading SER discusses article 6, specifically the second paragraph. The provision has been derived from article 20 LBV. The explanation to article 20 second paragraph at the time contained the following passage: “Parties for the rest are free to deviate from this regulation in any sense desired, provided that takes place explicitly”. This explanation also applies here. SER’s request for a further explanation has thus been answered. Next, SER recommended that Government consider whether the concept of a legal entity in the process of formation must überhaupt be maintained. With regard to this question, the following brief remark can be made. The concept of the legal entity in formation cannot be eliminated from the legal system by deleting some provision. The question that keeps on being raised is how to decide in the case where, prior to the formation of a legal entity, a person performs an act in the name or for the benefit of the legal entity to be set up. If the law of legal persons does not contain specific provisions, then one must fall back on general tenets, such as representation and caretaker-management. Experience in the past has taught that this will not lead to univocal solutions. The regulation proposed, derived from article 20 LBV, aims at offering the opposite party of the founder reasonable protection while at the same time promoting legal security to the extent possible.
Notification in the Curaçaose courant [Curaçao gazette]
SER queries the publication in the Curaçao gazette as required in article 5, in addition to the registration in the trade register. The answer to this is that publication in the Curaçao gazette is necessary in order to inform the citizen of the formation. It is only when he is informed that he can, if so desired, look more specifically for further details in the trade register. SER observes that, as is now the case with the BV, the starting-point in general must be: swift formation without all too many formalities. Government shares this view. Therefore the regulation has been derived from article 5 LBV. Publication in the Curaçao gazette, as is the case with publication in the trade register, must take place afterwards. This publication cannot be considered a formality that impedes swift formation.
Reasonableness and fairness
Government does not share SER’s fear that the norms of reasonableness and fairness, as expressed in article 7, can lead to unnecessary de-formalization of mutual relations with commercial legal entities. What reasonableness and fairness will entail is not determined by parties’ subjective views. For this, a thorough investigation into the system of the legal regulation and the factual circumstances is required in each case. The flexibility that can be achieved with this on applying the rules in special cases must not be confused with de-formalization.
Conflict of interests
Transgressing the scope of the object. The regulation concerning transgression of the object is laid down in article 13. SER remarks that the protection of third parties dealing with the legal entity is virtually nil and that the legal entity has the freedom simply to exclude a plea of transgression of the scope of the object. According to SER, this fully removes the point of an object clause. SER therefore also wonders what the ratio is of including the object clause in the articles and of making this information available via the registers. The following comment is made in this regard. The restriction of a plea of transgression of the object by third parties is entirely in agreement with the international trend in Europe and the USA. As far as the legal entity itself is concerned, it is free to exclude a plea of transgression of the object but also not to do this, so that within the bounds of article 13 a plea of transgression of the object by the legal entity will remain possible. The legal entity can enhance the protection that it can derive from the object clause by accurately defining the objectives aimed for. Specifically with non-commercial legal entities this may be desirable, for reasons of self-protection. The ratio of the provision has thus been given.
Liability of board members / liability in case of bankruptcy
SER’s considerations give no reasons for further comments by Government, except for the following. SER observes that in the case of the supervisory board the manifestly improper substantiation of the task, namely the supervisory function, has a different effect when compared with the management. SER believes that for that reason the personal liability of supervisory directors in case of bankruptcy deserves separate attention and declaration of articles 14 and 16 analogously applicable cannot suffice. Government shares SER’s view that the supervisory task of the supervisory board must be clearly distinguished from the task of the management. Government does not share SER’s view, however, that this given would impede a declaration of analogous application of the provisions in effect for management. Admittedly, this can lead to doubt on a few points. In the explanatory statement mention is made in this regard of the doubt that can arise with the analogous application of article 16 second paragraph. The decision of the Supreme Court (“HR” [Supreme Court] June 28 1996, “NJ” [Neth. Juristic Gazette] 1997, 58, Bodam Jachtservice), however, may be considered directional. It is furthermore noted that also the Dutch legislation follows the system of declaring analogous applicability. Deviation from the Dutch regulation on this conceptually difficult point is not to be recommended.
The independent Supervisory Board ([Dutch abbreviation:] “RvC”)
Government with appreciation has taken cognizance of SER’s approbation with respect to the regulation proposed. SER’s remarks have led to an amendment of the seventh paragraph of article 19, a further explanation to article 19 fourth paragraph, an amendment of the heading of title 5 division 6, and a further explanation to article 140 second paragraph. SER proposes that in article 141 second paragraph the possibility for the supervisory board itself to draw up a binding nomination, be deleted. According to SER, the appointment provisions offer sufficient guarantees for the independence – otherwise subscribed to by SER. Government would not wish to adopt this recommendation. Attention may be given to the fact that this binding nomination is not a compulsory requirement, but is optional. Under certain circumstances, there may be a need for thus accentuating the independence.
SER draws the attention to the interlocking provisions of article 140 third paragraph and article 142 first and second paragraphs. SER foresees the possibility of deadlocks if several parties involved should exercise their powers in connection with the suspension of managing directors and supervisory directors. SER’s remark by itself is correct. These kinds of deadlocks, however, cannot very well be prevented. It is also for this reason that article 140 second paragraph provides that the suspension of a managing director by the supervisory board shall cease if the party involved has not been suspended within two months from the day of the suspension.
Dissolution
SER’s remarks with regard to the sequence of the making available for inspection, announcement and publication, and creditors’ objection has led to an adaptation of article 31 third paragraph. Government would not wish to adopt SER’s suggestion that, for a request to reopen the liquidation, a ten-year period from the end of the liquidation shall apply. Experience has taught that also after the end of that period reopening is sometimes necessary in order to arrive at a reasonable solution to a problem that arose. The sole criterion therefore is that the party requesting reopening thereby has a reasonable interest. It can be left for the judge to decide whether that is the case. The fact that over ten years have elapsed and that the books and records are no longer being kept in custody may give rise to the view that there is no reasonable interest.
Publication
SER suggests that Government consider to involve also certain legal entities other than “large” limited liability companies in the obligation to publish the annual report and accounts, such as the (public) foundation, foundations with a central social function, the 100% public-NV, the savings and credit cooperative societies, public-law legal entities. Government shares SER’s view that a possible duty for these legal entities to publish must be considered. In Government’s view, however, it is not recommendable to lay down a general regulation in Book 2 for this kind of cases. At the formation of the legal entity concerned attention can be given to that question. Each legal entity is free to include in its articles of incorporation a duty to publish in terms of article 122. The obligation to do so can be required additionally in the public-law regulation that is applicable in the case in question.
II. The foundation
SER observes that it cannot agree to the provision that at the foundation’s dissolution, distributions as referred to in the third paragraph of article 50, can be made. A similar observation was made by the Advisory Council. In connection with these observations, article 50 fourth paragraph sub b., as originally proposed, has been deleted. All this has been explained in this statement at the comments on the opinion of the Advisory Council.
Mini-inquiry
SER’s suggestion for a non-limitative list to be given in the explanatory statement of those who at any rate are to be deemed interested parties, has been adopted. With regard to article 54, SER makes the observation that the subject regulated there is a big step in the desired direction, namely that foundations that de facto perform a general task for and on behalf of the community, can now be checked by and on behalf of the community. SER observes that the report to be rendered by the examiner may conclude that there is a question of mismanagement or something similar. An interested party can then request the judge to dismiss one or several officers. A suspension for the duration of the suit can be requested before that in accordance with article 54 fourth paragraph juncto 255 third paragraph. SER suggests that Government consider a consequence by operation of the law, or else the judge acting in virtue of his office. SER notes that the interested party / applicant is then released from the obligation to take further action casu quo to institute proceedings, with all the consequences thereof as regards relations and finances. Although Government can appreciate SER’s consideration, it would not wish to adopt SER’s suggestion on this point. If a public interest should require additional intervention by the judge, the public prosecution can act. If that is not the case, then the interested parties must take the initiative, whether or not supported by the authorities as (fellow) interested parties. It would not fit in with the role of the judge, to whom already ample powers have been given in article 55, to extend such powers even more.
III. The association and the cooperative society
SER points out that there are various categories of associations, including associations the articles of which have not been laid down in a notarial deed. The Council wonders to what extent the possibility of oral arrangements and written rules laid down in a self-prepared document, would still be up to date. The answer to this is that in social life numerous associations have come into being in an informal manner, whereby it is difficult to draw the line between an informal assembly (card-playing club, fishing club, nature-loving friends hanging around together) and an association in terms of the law. An informal club can also develop into an “association”, for instance by laying down certain rules. It would mean too great a burden on judicial matters if a notarial deed would be requested every time. Of course notaries are free to assist, if necessary pro deo, as suggested by SER.
Pursuant to article 78 first paragraph under c., membership can be terminated by notice of termination given by the association. This termination option is further elaborated on in the second paragraph of article 78. SER remarks that the addition: “reasonably it cannot be required of the association that it cause the membership to continue in effect” creates lack of clarity. SER points out that the addition is of a mandatory nature and will also apply in respect of savings and credit cooperative societies, where financial interests play a leading part. SER cannot agree to this. With regard to this question Government remarks that the addition, it is true, is of a mandatory nature, but that on the other hand the association or cooperative society is free to further regulate in its articles the details of the termination. This appears from the final sentence of paragraph 2: “Unless the articles of incorporation should charge another body with this, notice of termination shall be given by the management committee”. Thus, specially in respect of the grounds for termination discussed by SER, the articles could provide that the authority to the effect is granted to a body other than the management committee, for instance the general meeting. In Government’s view, the provision also leaves space for a provisional decision by the management committee and an additional decision – as a result whereof materially a right of appeal is created – by another body. The interests of the members of the savings and credit cooperative societies may be adequately safeguarded in this way.
SER makes a remark about article 83 second paragraph. It is observed by SER that this paragraph, correctly so, expresses the absolute right of all the members of an association or a cooperative society jointly. SER believes, however, that the addition “provided if adopted with the prior knowledge of the management committee” detracts from the essential starting-point and hence should be omitted. In Government’s view, that addition does not detract from the essential starting-point. This here is a rule that must promote the orderly functioning of the management committee in its relation to the members. The management committee ought to know the mind of the members and the existing intentions for decisions to be made. On principle, the management committee cannot hinder such decision-making.
Some other remarks by SER have given cause for amending the explanatory statement on some points.
IV. The cooperative society
With respect to article 94, SER makes the observation that the authority given in that provision to the general meeting for it to modify all or certain items, is going rather far. SER recommends the addition here of: “… and this after in consultation with an accountant omissions have been found …”. Government remarks that the general meeting has the authority commented on only when the articles so provide. There is no objection to an addition, as referred to by SER, to that provision in the articles. Government would not wish to make this a condition prescribed by law. Seriatim explanation of the articles
Title 1 General provisions
Article 1
In the general part it has already been observed that the second paragraph of article 1 is the only provision that extends beyond the legal entities regulated in Book 2. In this provision mention is made of other legal forms that are to apply as legal entities. With the wording it is expressed, clearer so than in the Netherlands, that it is not the prerogative of the legislator to determine what bodies are and what bodies are not legal entities. From the system of the law in its entirety – in which the act plays an important role – it must be deduced whether a legal form can constitute a legal entity. It is the judge who ultimately decides this. In this context the second paragraph of article 1 just mentioned provides that article 3 also applies in respect of the legal entities not regulated in Book 2. For the rest please see the explanation to that article. The second paragraph of article 1 next stipulates that the other provisions of the first title can be applied analogously to other legal entities – that is to say: to legal entities not regulated in Book 2 – insofar as the contrary does not result from the law and the nature of the legal entity does not oppose this. With this stipulation religious communities and related bodies were specifically considered, insofar as the judge considers these to be legal entities. Analogous application of general provisions other than article 3 to public-law legal entities generally will not be compatible with the regulation and the nature of those legal entities. The third paragraph of article 1 corresponds with article 2:25 NedBW. Attention may also be given to the fact that in the first sentence of the first paragraph it is readily stated that the legal entities regulated by law have been classified into separate legal forms. This is specially important because the difference between an amendment to the articles and conversion is connected therewith. Through an amendment to the articles, the rules in effect for a certain legal entity may be modified, insofar as the rules of such legal form shall allow this. The switch-over to another legal form requires the heavier procedure of conversion, regulated in title 8.
Article 2
To a certain extent article 2 follows article 2:4 NedBW. Otherwise than in the Dutch example, however, the possibility of legalizing a “non-existing legal entity” is provided in the third paragraph. Paragraph 4 corresponds with article 24 ninth paragraph. The last-mentioned provision has been derived from article 6 paragraph 7 LBV.
Article 3
The first paragraph of article 3 is virtually identical to article 2:5 NedBW. It is said that, as far as the law of property is concerned, a legal entity is on a par with a natural person, insofar as the contrary does not result from the law. Thus the main characteristic of the legal entity is expressed in this provision, namely that it is a person holding legal rights and as such essentially in the law of property it must be treated on the same footing as the natural person. Connected with a legal entity being a person holding legal rights is the fact that in principle it is liable for its own debts and that other persons holding legal rights are not, insofar as the contrary does not result from the law, even if these other persons holding legal rights are involved in the organization of the legal entity. In the Netherlands a provision based on this thought is found in the regulation for the limited liability company (article 2:64 first paragraph) and the private company with limited liability (article 2:175 first paragraph). Thus also article 33 WvKNA [Neth. Ant. Commercial Code]. There it bears on the shareholders and is limited to “that which is performed in the company’s name”. In article 1 third paragraph LBV the same thought is found, now also bearing on the managing directors. It applies generally, however, in respect of all the debts of the legal entity and of all the persons holding legal rights involved in the organization of the legal entity. Therefore it would seem better to phrase this thought in broader wording in the general provisions, as was done in the second paragraph of article 3. The rule applies insofar as the contrary does not result from the law. Here one can consider such provisions as article 16, article 24 paragraph nine, article 92, and article 202 paragraphs five, six and seven.
Article 4
The first and third paragraphs have been largely derived from article 2 LBV. In the second paragraph a provision has been included that in the Dutch legislation has been spread over the individual titles.
Article 5
Article 5 first paragraph has been derived from article 5 LBV. In the second sentence the notary is obliged to see to the registration of the legal entity in the trade register with the lodging of the documents mentioned there. This obligation leaves intact the obligation to register appearing from article 5 Trade Register Ordinance, resting on the managing directors of the legal entity. If a managing director has complied with this, then the notary is released to such extent. For the managing directors the reverse applies pursuant to article 5 second paragraph Trade Register Ordinance. In the second paragraph, now also the amendment to the articles is regulated. It is prescribed that also the amended articles must always be lodged. For the informal association, see article 73 third paragraph. The third paragraph of article 5 has been derived from articles 2:27 fifth paragraph NedBW and 2:286 fifth paragraph NedBW. In the Netherlands no similar provision applies for the limited liability company with limited liability. This is possibly connected with the preventive supervision existing at the time with those legal entities. However that may be, there is no reason for not having the rule of the third paragraph apply to all legal entities in the Antillean law.
Article 6
In article 6 is followed the thought of HR January 24 1997, NJ 1997, 399, that the rules on acting on behalf of an NV or BV to be formed may apply analogously to other legal entities. The provision has been derived from article 20 LBV. The term “explicit” has been replaced by the regulation offering more certainty that a deviating stipulation must have been made in writing.
Article 7
Article 7 has been derived from article 8 LBV and article 2:8 NedBW. The legal entity is not only a person holding legal rights but always also – leaving aside the cases in which all powers are concentrated with one person – an organizational relation. Within this relation article 7 applies under all circumstances as independent norm. Sometimes there is also a contractual relation. Consider the agreement between the managing director and the legal entity or the shareholders agreement of articles 127 and 227, third paragraph. In that case there is a question of a convergence between article 7 and article 248, Book 6. Convergence can also occur with article 2, Book 6. Reference to article 7 is made in article 21 third paragraph under b.
Article 8
As the main rule it can be assumed that every legal entity has a board of management. This only does not apply to the shareholder-managed company referred to in article 239. In the second paragraph it is expressed that the management authority may be restricted by law, the articles of incorporation, a resolution adopted pursuant to the articles, a regulation laid down pursuant to the law or the articles or, when individual managing directors are concerned, a resolution of the board of management. A restriction by law is readily found in the fourth paragraph. A legal restriction issues from article 73 first paragraph for the management of an informal association. Generally one can consider legal provisions that assign the authority in respect of certain matters expressly, or at any rate primarily, to another body. So it is that pursuant to articles 104 and 204 the general meeting of a company is primarily authorized to resolve to issue shares. Restrictions by the articles of incorporation are mostly found in provisions requiring the prior approval of another body for (a resolution for) entering into certain categories of legal acts. This kind of approval clause may also be embodied in regulations laid down pursuant to the law or the articles of incorporation, or a resolution adopted pursuant to the articles. Article 140 fourth paragraph gives an example of a legally prescribed rule. Certain powers that the law confers upon the board of management expressly – usually in the form of an obligation – may not be restricted. Consider here the duty of article 15 to conduct an administration, the obligation in effect for all commercial legal entities to draw up annual accounts meeting certain standards (articles 94, 116, 120 and 216), the obligation of the board of management of an NV or a BV to keep a shareholders’ register (articles 109 and 209) etc. The articles of incorporation and a regulation laid down pursuant to the law or the articles may also contain provisions giving another body the right to give instructions. For the NV and the BV under Dutch law, in the fourth paragraph of articles 129 and 239 NedBW this right to give instructions has been limited to the general lines of the policy to be pursued in certain areas. This limitation has not been taken over. A broader right to give instructions is not contrary to the law. After all, the law does not exclude the possibility for certain powers, that generally are included under “management”, to be taken away from the board of management and conferred on another body – for instance the “ava” [Dutch abbreviation for: general shareholders’ meeting]. This is excluded only with the powers stated above, that are explicitly assigned to the board of management by law. The system of the law does imply, however, that the totality of limitations may not go so far as to leave nothing standing of an independent management authority, also outside the area granted to the board of management by mandatory rules of law. The last sentence of the second paragraph rests on the thought that the board of management acts as a body and ultimately bears responsibility as a body. Also article 14 third paragraph is based on this thought. The third paragraph of article 8 provides that the board of management must conform to the interest of the legal entity and, insofar as there is a question of that, the enterprise connected with it. A similar provision has been included in the Dutch law for the supervisory board of commercial legal entities but nobody doubts that this provision also – or precisely – applies to the board of management, also for the management of non-commercial legal entities. Mention of this obligation in article 8 therefore would seem the indicated way. As for the position of supervisory directors, reference is made here to the explanation to article 19. The fourth paragraph has been derived from article 42 seventh paragraph LBV. The fifth paragraph aims at simplifying the complex discussions being conducted in the Netherlands on the relation between managing directors’ position under the law of legal persons (corporate law) and under labor law. The provision does not prevent the parties involved from declaring in their agreement that certain or all private-law provisions concerning the employment contract are analogously applicable. For the judge, in addition the provisions concerning instruction can be a source of inspiration. It may also be observed that the provision does not prevent the managing director from being in the service of another legal entity, for instance of a group company. The sixth paragraph is connected with the fifth. Because the legal relation between the managing director and the legal entity cannot constitute an employment contract, article 36 of the Bankruptcy Order 1931 – cf. art. 40 NedFw [Neth. Bankruptcy Act] – is not applicable. On the other hand the rule, accepted also in the Netherlands, that the managing director as such cannot be dismissed by the trustee, applies. On this point, the body under the law of legal persons coming into consideration for this remains competent. One question is then whether the considerations to which the managing director can lay claim would be for the account of the estate. In Dutch juristic literature it is assumed that this is not the case when there is no question of an employment relation. That view is followed here. One consideration in this is that as and from the day of the bankruptcy the managerial and relating tasks are discharged by the trustee and have been taken away from the board of management. Any tasks still remaining by and large will be very limited. The examining magistrate, however, may decide otherwise. There can be a cause for this when it is in the interest of the estate for the managing director to continue for some time still with the discharge of his remunerable activities. The seventh paragraph declares the regulation to be analogously applicable to members of other bodies. It must be noted still that it is not the intention that the working of the fourth paragraph cause any change to occur in the fiscal position of the managing director or in the area of social insurance.
Article 9
The first paragraph of this provision generalizes a procedural provision of the corporate law. Cf. article 43 LBV. Instances where a legal entity has no registered office may specifically occur with the informal association. Cf. article 72, first paragraph. The second paragraph gives a regulation that connects with article 1020, fifth paragraph, NedRv [Dutch abbreviation for: Neth. Civil Procedure Code].
Article 10
In the Netherlands, the so-called “directives system” applies for representation. However, for the Dutch NV and BV this directives system has been worked out differently from that for the Dutch association and foundation. As resolved at the introduction of the LBV, the directives system will not be introduced in the Netherlands Antilles. On the other hand there is no reason to have the representation regulation for the foundation and association read differently from that for the NV and BV. The joining of the various regulations in article 10 leads to simplification. The occasion has been seized to adapt the formulation on some points. The first paragraph takes the (internally stipulated) authority to represent as a starting-point. Primarily involved here is the representative authority as the same can be abstracted from the management authority. This representative authority can be limited only by law or in the articles of incorporation (with the shareholdermanaged company of article 239 also by the shareholders’ agreement, see article 241). A limitation in the law can be found in article 11 first paragraph that in the cases of conflicts of interests stated there declares the supervisory board authorized to represent the company. Additional limitations may be included in the articles of incorporation. Limitations of the representative authority of individual managing directors are often found in this form that for all or certain categories of legal acts the cooperation of two or more managing directors is required. The second paragraph places beyond doubt that limitations to the management authority have their effect on the representative authority. For limiting the representative authority that in principle belongs to every managing director by means of a board resolution, one could think for instance of a resolution not to enter into a contemplated transaction. The third paragraph regulates the external working of limitations as referred to in the first and second paragraphs. A connection is thereby made with what would follow from analogous application of the proxy provisions in Book 3. The explicit declaration of analogous application of article 61, second and third paragraphs Book 3, does not exclude the analogous application of other provisions of the proxy title. The regulation amounts to bona fide third parties being protected. Insofar as concerning limitations that need not appear from the trade register, the criterion is that third parties do not or need not know the limitation. If concerning a limitation that must appear from the trade register, then the check applies that third parties are unacquainted with such limitation. This last-mentioned check leaves a bit more space for good faith, which means that it offers a bit more protection to third parties. The law for that matter does not speak of “third party” but – as in article 3:61 NedW [Neth. -?-] – of “opposite party”, that is to say the party with whom the managing director has acted. On applying the third paragraph it may furthermore be considered that according to legal precedents of the Supreme Court, under certain circumstances also the actions of the representative himself may contribute towards the good faith of the opposite party. Thus already HR November 27 1992, NJ 1993, 287 (Felix/Aruba). In the literature it is observed, however, that there is a question of an additional risk-element. For the rest, only the legal entity can plead the absence of representative authority. The opposite party wishing to withdraw from the legal act on that ground, can only rely on the fourth paragraph. This fourth paragraph has been inspired by the thought that it is generally difficult for the opposite party to verify whether a condition for the representative authority to take effect – consider here an approval requirement according to the articles of incorporation – has been met, even if he knows or ought to know of the existence thereof. The final sentence of the fourth paragraph has been inspired by article 71 Book 3. The concept resembles the confirmation referred to there. An important difference is that the “confirmation” in this case is given by a managing director, possibly the very managing director who has acted. The authority of the managing director called upon is otherwise limited to the (predominantly) factual question as to whether or not the condition has been fulfilled. A decision on the purely juridical question as to whether the managing director who is acting is authorized to represent, does not lie with him. The managing director is granted a reasonable period of time to make the declaration asked for. If there are no particulars, that period of time may be very short. Sometimes the period will be longer, however, for instance when a body competent to give the approval has not reasonably had the opportunity to consider the matter. The opposite party wishing to invoke this provision, would be wise to set a specific period of time to the managing director called upon by him. Naturally that period of time may then be subject to extension. The managing director called upon will be required to expresses himself explicitly. A written declaration is not a requirement but an implicit or “tacit” declaration will not suffice to prevent the opposite party from withdrawing from the transaction. On the other hand, if the opposite party does not receive a satisfactory declaration within the reasonable period of time, as possibly extended, such opposite party shall have to “promptly” reject the legal act as being invalid, if he wishes to be released from same. In conclusion, it may be remarked that the provision can also be applied when concerning a legal act performed explicitly subject to approval or to the fulfillment of some other condition.
Article 11
Regulations for representation in the case of conflicts of interests are spread in the Netherlands over various titles. Bringing these together in one harmonized regulation in article 11 promotes the organization of the material. In the system of the regulation, limitations issuing from article 11 in principle have external operation. Bona fide third parties, however, are protected. Cf. HR September 11 1998, NJ 1999, 171 (Mediasafe II). The main rule of the first paragraph has a limited purport. It is only for in case the legal entity enters into a legal act with a managing director or is involved in legal proceedings versus a managing director that the provision gives a specific representation regulation. Next to these cases, however, there are many more situations in which one could speak of a conflict of interests. Thereby consider also a conflict of interests between the legal entity on the one hand, a member, shareholder or supervisory director on the other hand. Legal conceptions in many countries, including the Netherlands and the United States, moreover entail that in this respect there is often a greater need for regulations regarding decision-making than for representation possibly ensuing therefrom. Meanwhile it would not seem recommendable to include for this in the law a regulation comprising more aspects. The diversity of the cases presenting themselves is too great for this. An additional regulation of the decision-making process and representation is therefore left to the legal entity. Any further regulation may be included in the articles of incorporation or in rules laid down pursuant to the articles. The first paragraph may thereby be deviated from, also in this sense that the first paragraph is set aside in its entirety. The third paragraph has been derived from the Dutch law of associations and corporate law. The wording shows that the general meeting always has the authority to take ad hoc action with respect to the representative authority. It is conceivable that the general meeting designates a special representative for a certain category of cases or for a certain period of time. If a regulation of general purport is involved, however, a regulation under the articles of incorporation is preferred. Third parties who in good faith relied on the regulation under the articles of incorporation are at any rate protected. The fourth paragraph is intended to give more substance to the third one. Noncompliance with the obligation described there in principle can result in the managing directors or supervisory directors concerned being blamed for improper performance of duties. According to HR May 3 2002, NJ 2002, 393, rendered in an Antillean case against the background of the regulation running more or less parallel on this point in the prevailing act, the board resolution for entering into the legal act may be nullified in case of non-compliance with the duty to report. It is not entirely clear how this decision must be interpreted and what the meaning thereof may be. On this point the development of case law must be awaited. For listed companies at any rate an exception is made in the fourth paragraph. A duty to report in those cases will often meet with objections of the nature of organization and policy. The fifth paragraph aims at preventing the party involved as a shareholder or member from bending the decision-making process in the general meeting to his will.
Article 12
This provision has been derived from articles 46 and 44, fourth paragraph, LBV.
Article 13
Article 13 has been derived from article 38 LBV.
Article 14
This provision has been derived from article 39 LBV.
Article 15
This provision has been derived from articles 2:10 and 2:10a NedBW. The text of the second paragraph has been geared to that of the first paragraph of articles 94, 116 and 216. The eightmonth term stated in the second paragraph connects with that stated in article 15a Book 3. That term is found back in articles 94 (cooperative society and mutual insurance association), 116 (limited liability company) and 216 (private limited company). For the large company of article 119, a six-month term applies (article 120), with which then connects the two-month term stated in article 122 second paragraph, during which may remain pending the depositing of the annual accounts for inspection. Meanwhile the term for preparing the annual accounts at all commercial legal entities may be extended by the general meeting by up to six months owing to special circumstances. If necessary, the extension may take place afterwards. Also having regard to the application of article 16 second paragraph, however, care must be exercised with this. The general meeting at any rate must justify the question whether “special circumstances” are involved, as required by law. The second sentence of the first paragraph has been added because article 14 offers more space for task division than is often deemed possible under Dutch law. It must be prevented that this should lead to some managing directors not having access to the administration. Also having regard to the provision of article 16 second sentence, that would be an unfortunate result.
Article 16
Some comments have already been made on this provision under 4 of the general part of this explanatory statement. At this time a regulation has been opted for that in broad outline corresponds with articles 2:138 and 2:248 NedBW. An important advantage of this solution is that experience has been gleaned with that regulation in the Netherlands since 1987. This experience and the case law developed in connection therewith can now be profited from. One must consider here, however, that the regulation has some differences compared with the Dutch one. The differences – for a large part they involve an easing of the rules, leading to managing directors being liable less quickly – are explained below.
The first paragraph materially corresponds with the first paragraph of article 2:138 NedBW. Only and exclusively for the sake of clarity, the word “deficit” is readily introduced, and it also appears in the sixth and seventh paragraphs. Furthermore, in this first paragraph, as in the entire article, no mention is made of improper performance of duties but of improper management. This lastmentioned expression is preferred for various reasons. One consideration is that the liability of article 16 in principle is a liability as against the creditors, not as against the company. The expression “performance of duties” bears more on the relation to the company. Hence it is also used in article 14. A second reason is that the Dutch terminology, in which it is determinant that “the board of management manifestly performed its duty improperly” has given cause for the thought that in the case of a management composed of more members than one, manifestly improper performance of duties by one of the managing directors is not covered by article 2:138. Although grammatical and systematic arguments can be raised for this thought, the provision is generally not understood like that. Legal history does not point in that direction either. However that may be, the text chosen in article 16 makes it clear that this concerns “improper management” regardless of the managing director – or person put on a par therewith, see the ninth paragraph – who is to blame for this.
In the second paragraph some changes have been introduced as compared with the Dutch regulation. In the first place, for the legal presumptions of that paragraph to come into force, next to contravention of the duty to conduct an administration it is not contravention of the duty to publish that is set as criterion, but contravention of the obligation to draw up the annual accounts in time. The reason is that a duty to publish, at any rate an obligation to make available for inspection, in the present proposal only applies for the large company of article 123. It would not be correct if with respect to the presumptions of the second paragraph a heavier regulation would apply for this company. That would also turn out peculiar when applying article 139 juncto 144 (company with independent supervisory board). In the second place, the thought also prevailing in the Netherlands but badly formulated in the Dutch text has been clarified that in case of a contravention of the administrative duties the presumption is that the board of management also for the rest has performed its task improperly. Abandoned, however, is the rule expressed in the Dutch text with the words “has improperly performed his task”, that this presumption would be irrefutable. In the practice it has appeared that this setup makes the system very complicated. Thus according to HR May 20 1988, NJ 1989, 676 the irrefutableness of the presumption entails that in case of contravention of the duty to conduct an administration or to publish it must simply be assumed as a fact that each of the managing directors has improperly performed his task also for the rest and this seems to imply that none of the managing directors can any longer invoke the exculpation regulation of 2:138 third paragraph NedBW. This result is not very reasonable. Also in other respects the Dutch systems leads to confusing thoughts. For, next to the irrefutable presumption of improper performance of duty in a case as referred to in the Dutch text, there is also a question of the refutable presumption that improper performance of duty has been an important cause of the bankruptcy. It is not readily clear, however, how a managing director can refute this presumption when the trustee need not explain what constitutes such legally determined improper performance of duty, also for the rest. Now the Supreme Court, it is true, on the heels of legal history did find a reasonable solution to this dilemma (see recent HR November 23 2001, NJ 2002, 95), but the construction of the irrefutable presumption – in fact a fiction – remains unsatisfactory. In the opinion of the undersigned, it is also superfluous. The second paragraph of article 16 therefore also deviates on this point from the Dutch text. It is made clear that also the presumption of improper management – hence not only the presumption that improper management is an important cause of the bankruptcy – is refutable. It is expected that this change will make the provision less burdensome and easier to apply.
The third paragraph contains an exculpation regulation that differs from the Dutch one to the extent that explicit reference is made to the position of the managing director concerned and the period during which he has been in office. A similar turn is found in article 14 fourth paragraph. In the Netherlands, it is often doubted that reference to the position can provide grounds for exculpation. To answer the question what tasks are to pertain to the position of a managing director, one must look to the second and third paragraphs of article 14. In the fourth paragraph a rule is given that does not apply in the Netherlands. So also here there is a question of the rules being eased. Considered was the managing director who, based on the current division of the tasks, does not bear special responsibility for the administration or for drawing up the annual accounts and who, despite vigorous and frequent insistence, did not succeed in bringing the situation into conformity with the law. Furthermore was considered the case where a managing director, who formally was indeed responsible, despite vigorous and frequent insistence, did not obtain the disposal of the necessary data. In these kinds of cases – think of the socalled offshore companies – it is not reasonable to burden the managing director with the presumption of the second paragraph. It must be clear for that matter that this situation cannot continue indeterminately. There will come a point of time – a general rule cannot be given for this – when the managing director must resign as such lest the second paragraph start operating against him.
In the fifth paragraph the power of mitigation of the judge has been formulated more amply than in the fourth paragraph of article 2:138 NedBW. At the formulation of the seventh paragraph, the case was considered where a creditor of the legal entity itself is to blame for the bankruptcy. One can consider for instance a lender who contrary to good faith has abruptly terminated the credit. For a further explanation to this provision reference is made to the discourse given by P. van Schilfgaarde in “Bottlenecks in company legislation”, Monographs proceeding from the Institute for Company Law no. 24, (1995) p.1 et seq. Paragraphs 8, 9 and 12 materially correspond with paragraphs 6 to 8, inclusive of article 2:138 NedBW. With the ninth paragraph it must be considered that the proposed Antillean legislation leaves more space for limiting the task of a managing director than is generally assumed for the Dutch law. Against this background it is of importance specially for the Antillean law that the expression “as if he were a managing director” in this sentence is understood to mean that this involves the determining, or the contributing to the determination, of the policy by a managing director in the “ordinary” cases, not the contribution to the policy of the formal managing director at the legal entity in question. Also the party who, by giving instructions, be this with authority to do so or not, enforces a certain policy with certain regularity, shall be deemed a policydetermining party in terms of the ninth paragraph. One may think of a concern officer, an exceptionally dominant shareholder or supervisory director, but also of a person entirely removed from the organization of the legal entity or the group to which same belongs, who exercises a dominant influence on the board of management or a managing director. At the end of the first sentence of the ninth paragraph the acting of a founder is discussed. This passage is based on the last sentence of article 2:93 paragraph 4 NedBW. The second sentence of the ninth paragraph gives a somewhat broader exemption than the corresponding provision in the seventh paragraph of article 2:138 NedBW. This also covers for instance the interim managing director or supervisory director appointed in accordance with article 255 third paragraph under c. The eleventh paragraph has been derived from article 5 of the Dutch Corporations Conflict of Laws Act. Provisions in the spirit of paragraphs 9 and 10 of article 2:138 NedBW have not been included. The usefulness of the said paragraph 9 may be doubted. Paragraph 10 of the Dutch regulation leads to unnecessary and not very productive government interference.
The regulation contained in this article is applicable in the Netherlands also in respect of the foundation and the association that is subject to the levying of corporation tax. In this manner an attempt has been made to include the “commercial” association and foundation in the regulation. In the present draft the same goal is attained by the provision of the tenth paragraph. The reference to the concept of “enterprise” in the trade register ordinance in the opinion of the undersigned is to be preferred to the reference to a fiscal regulation.
Article 17
This provision has been derived from article 2:11 NedBW. The second paragraph entails that the managing director of the legal entity, who is liable as a managing director, for purposes of his exculpation can invoke the provisions in effect for this in articles 14 and 16. Although the Dutch provision does not state so explicitly, it is plausible that it must be understood in a similar sense. An important difference remains that the proposed Antillean regulation has broader exculpation possibilities.
Article 18
Article 18 has been derived from article 40 LBV. The provision – with some additions and clarifications – has been transferred to the first title because a similar system has already been occurring often with the association (and the foundation) now. The term “daily management” has been replaced by “executive management”. This connects with the American terms “executive board” or “executive committee” and the terms derived therefrom, “executive director” and “executive officer”. Otherwise than as still (erroneously) stated in the explanation to article 40 LBV, it is not prescribed that at least one member of the general management must form part of the executive management. From the sixth paragraph it appears that on this point there is freedom within the bounds stated there. The members of the executive management, not being members of the general management, have another function to such extent that they do not belong to the body that ultimately decides on all management affairs and is considered the body that must conform to the norm expressed in article 8 third paragraph. Thus the ninth paragraph, in which the step-by-step hierarchy between the general management, the executive management and individual members of the executive management has been phrased. This paragraph has obligatory force. Also most of the other paragraphs of article 18 contain mandatory rules of law. Thus in the fourth paragraph it is mandatory that the appointment of executive managing directors and the determination of their salary as such shall be effected by the general management. A deviating regulation would mean that the general management would not be capable of bearing its management responsibility and the attendant liability. Connecting with this thought are also the provisions in paragraphs five, seven and eight. The tenth paragraph is specially of importance to the liability provisions, such as articles 14 and 16. The deviating position of the members of the general management not being executive managing directors, the members of the general management being executive managing directors and finally the members of the executive management not being members of the general management, does mean that the liability margins and the exculpation possibilities are different every time. Thus general managing directors in principle will be capable of being liable also for lack of supervision. On the other hand it must apply for executive managing directors that for purposes of their exculpation they must be able to a certain extent to plead instructions received from the general management or from the executive management, if there is a question of this. The tenth paragraph for that matter is also of importance to other provisions, including article 8 fifth paragraph, that exclude the existence of an employment relation between the legal entity and a managing director. Finally, attention may be given to the fact that the regulation of article 18 does not rule out that an important part of the executive tasks is commissioned to a “board of management” consisting of persons being in the service of the legal entity. Specially with associations and foundations this can be the case.
Article 19
Also the regulation of the supervisory board has been transferred to the first title. A special regulation is given in article 139 for the limited liability company. Reference is made to that in the eighth paragraph. Most provisions materially correspond with regulations also prevailing at present. However, special attention must be given to the second and third sentences of the seventh paragraph. According to the second sentence it applies also for the supervisory board that, on performing its tasks, it must conform to the interest of the legal entity and, to the extent that there is a question of that, the enterprise connected with it. The question is, however, whether this rule is to have the same force under all circumstances. In the practice there is a need for supervisory directors who, without losing sight of the other interests to be taken into consideration, specially see to it that certain interests are borne in mind. Consider supervisory directors who are appointed or nominated by a parent company or the authorities, or by one of the partners in a joint venture relation. In the opinion of the undersigned, it is not very realistic to exclude such a setup. In this connection see also H.J.M.N. Honée, Supervisory Directors, Ambassadors from No Man’s Land, oration Rotterdam, 1996 and NV 1996, p. 276 et seq. The third sentence of the seventh paragraph aims at expressing this thought. The wording fits in with the view defended in the literature that the interest of the legal entity is not a constant but must be determined time and again by weighing all interests coming into consideration, both those at short term and those at long term. The third sentence now discussed does not apply to the independent supervisory director of article 140. See the explanation given there. The thought expressed there does not apply either if the articles so provide. Additional rules may be prescribed in regulations. With respect to article 16 being declared analogously applicable in the seventh paragraph, the following is observed still. Specially the analogous application of article 16 second paragraph can give rise to doubt. According to HR June 28 1996, NJ 1997, 58 (Bodam Jachtservice) the corresponding provision in the Dutch law must be explained as follows. If the board of management has not complied with its obligations under article 10 or 394 NedBW and if the supervisory board has not exercised adequate supervision on that point, then the supervisory board has not properly performed its task. Also with respect to the supervisory board the double presumption of the second paragraph of article 2:138 NedBW takes effect. This judgement may be considered directional also for the Antillean law.
Articles 20 to 22 inclusive
These provisions for a part have been derived from article 9 LBV, and for another part from the Dutch regulation in Book 2. A simplification is proposed on one point only. In the third paragraph of article 21 under d. a rule is given that does not appear in the Dutch law. It brings to expression that a shareholders’ agreement, to which all the shareholders and also the company are a party, has operation under corporate law. In this regard see also article 240 first paragraph. The rule leaves intact the contractual operation of the shareholders’ agreement.
Article 23
This provision has been derived from article 2:24d NedBW. In the wording it is expressed that also a provision prescribed by the articles of incorporation must be reckoned with.
Article 24
For a part this provision has been derived from article 6 LBV, for the rest from articles 2:20 and 2:21 NedBW.
Article 25
The regulation proposed in article 25 is based on article 2:19a NedBW. An important difference is that in the proposal it is not the Chamber of Commerce that dissolves but the judge. Also on some other points the regulation has been structured somewhat differently.
Article 26
In article 26 a solution is proposed for the critical phase that commences with the filing of a request for dissolution. Reference is made to the third paragraph of article 255, where in connection with the retirement regulation for the limited liability and the private limited company a detailed regulation is given for making provisional arrangements. The example of article 2:22 NedBW, in which a different solution is laid down, is not followed. In the second paragraph it is not “can” that is mentioned, but “may”. The meaning of this is that bona fide third parties (acquirers of bearer documents) are protected according to the rules of ordinary law [in Dutch: “gemene recht”
– Jus Commune].
Articles 27 – 34
This regulation has been largely derived from articles 51 up to and including 58 LBV.
Article 35
This regulation comprises a generally formulated version, modified as per item, of article 2:302 NedBW.
Article 36
The first paragraph has been derived from article 7 LBV. The second paragraph has been based on article 44, first paragraph, WvKNA. Also for legal entities other than the limited liability company this is a recommendable provision.
Article 37
This provision has been derived from article 67 LBV. The wording has been clarified on some points.
Title 2 The Foundation
General
In this title the Dutch regulation has been followed to a great extent. Deviations among others are the result of the wish to regulate also the private fund foundation (Official Gazette 1998, no. 209) in this title.
Article 50
As also follows from article 1, title 1, a private fund foundation is considered a separate legal form, next to the ordinary foundation. One consequence of this is that an ordinary foundation cannot be changed into a private fund foundation by an amendment to the articles of incorporation, and a private fund foundation cannot be changed into an ordinary foundation by an amendment to the articles. For this, conversion according to the rules of articles 300 et seq. shall be required. As appears from the first paragraph, the ordinary foundation and the private fund foundation nevertheless closely resemble one another. The striking differences can be found in paragraphs three to six inclusive. The seventh paragraph simplifies the wording of the legal provisions.
Article 51
The first paragraph has been derived from the fourth paragraph of article 2:286 NedBW. The second from article 2:293 NedBW.
Articles 52 – 53
These provisions have been derived from articles 2:288 and 2:294 NedBW.
Article 54
Article 54 aims at offering a solution to cases where the policy pursued by the bodies of a foundation give rise to doubt. In the regulation, traces can be recognized on the one hand of article 2:297 NedBW and on the other hand the inquiry regulation of article 132 et seq. WvKNA and articles 2:344 et seq. NedBW. It may be noted that it is precisely here, and not specifically for the commercial legal entities, that a – simplified – inquiry regulation is proposed. The reason is that in the legal structure of the foundation, otherwise than with all other legal entities regulated in Book 2, no elements capable of guaranteeing a certain democratic control by the parties directly interested have been built in. And so it has appeared in the practice that it is precisely with the foundation that the need may exist for an inquiry ordered by the court into the policy and course of affairs, and this apart from the question as to whether the foundation has commercial or noncommercial objectives. The practice in the Netherlands Antilles moreover has taught that the right of inquiry, as regulated in articles 132 et seq. WvKNA, is scarcely exercised. In the first paragraph a right to information is given to every interested party and not only, as in article 297 NedBW, to the public prosecution department. Interested parties at any rate can be considered those who are designated beneficiaries in the foundation’s articles of incorporation. In the absence of a sufficiently specific provision, those parties who actually profit by the activities of the foundation or who reasonably expect to profit thereby are the interested parties. Also the foundation’s financiers, parties granting subsidies, if any, and members of the bodies of the foundation may be considered interested parties. Of course this list is not limitative. If required, the final decision lies with the judge. The fact that the management committee of the foundation does not or does not properly comply with the duty to provide information constitutes independent grounds for a request as referred to in the second paragraph. The party considering any such request would generally be wise to start with a request for information. The second paragraph does not tate this as a condition, however. The request may also be made separately from the request for r the obtaining of information when there are well-founded reasons to doubt a correct policy. he interested party referred to in the second paragraph may be a party other than the one who as made a request for information in accordance with the first paragraph. If either condition has een met, the judge may appoint an examiner. But there is no obligation to do so: the judge has iscretionary powers in this respect. The last sentence of the second paragraph provides that the udge may furnish the examiner with guidelines for the way in which he carries out his examination. ere one may consider among others guidelines as regards the manner in which he gathers nd records the statements of officers and other persons, whether or not to admit lawyers and others hen questioning persons, the extent to which a right to hear the other side must be reckoned ith, the manner in which the examiner documents his findings, the keeping of a daily activities eport, etc. It is conceivable that, according as experience is gleaned with the regulation, a judicial uthority lays down the main outlines in an instruction or protocol. The third paragraph is elf-explanatory. The orders to be given by the judge may be of a varying nature. Among others hey may relate to allowing access to premises, files and bank accounts, making data and records vailable, being available and causing persons to be available for giving information or rendering eclarations. The orders may be given at the initial decision or afterwards. A suit by the examiner o elicit an order is not prescribed. No obligation exists to hear the management committee or thers in respect of a (further) order. On the other hand, the examiner does not dispose of special means of coercion as described in article 2:352 second paragraph NedBW. An unwilling attitude f the management committee, however, naturally can give cause for presumptions to be expressed n the examiner’s report. The examiner moreover has a forceful indirect means of coercion n the authority he possesses to request the judge to take measures as referred to in article 55 third paragraph. This authority for that matter shall also belong to the initial applicant (fourth aragraph, second sentence). Generally the examiner will have no need for a formal hearing of itnesses or experts. If he would be confronted with contradictory statements in respect of essential uestions, this may be a different story. For these kinds of cases the fourth paragraph opens he possibility of such a hearing by the judge. Of an entirely different order is the possibility pened in the second sentence where, having heard the examiner, arrangements are made as referred o in article 255 at the request of the examiner or the initial applicant. The usual procedural rovisions apply for lodging requests as referred to in the fourth paragraph. For the nature of the rrangements possibly to be made and the further legal consequences, please see the explanation o article 255. The fifth paragraph gives rules for the cancellation, extension or modification of he arrangement or the ceasing thereof. The system entails that the validity of the arrangement ay remain intact when a request in accordance with article 55 is made in time and, on the same eing granted in full or in part, a dismissed officer has been replaced. The sixth paragraph regulates he lodging of the report with the office of the clerk of the court. The report is not public. he intention of the second sentence is to ensure that the contents of the report do not take the management committee by surprise. The seventh paragraph is self-explanatory. A request as referred o in the second sentence of the eighth paragraph may be made by any interested party. he judge may also decide in this respect in virtue of his office. The decision may be rendered in xecutory form. The ninth paragraph gives a special regulation for the private fund foundation. In rinciple there is no ample circle of interested parties involved in this legal entity. It can be left o the ublic prosecution department to take action, if required – whether or not at the instigation f others. The matter will often stop with a request for information. The big stick of a looming nquiry by an examiner remains available, however, but then without the possibility of arrangements eing made as referred to in article 255. For the private fund foundation that would seem to severe a measure. The provisions under a. and b. in the first paragraph of article 55, however, ay serve as an indirect means of coercion.
Article 56
The first paragraph has been derived from article 299 NedBW. The second paragraph aims at romoting the connection with article 55.
Article 57
This provision has been largely derived from article 301 NedBW.
Title 3 The association
General
The Dutch example has essentially been followed. Obvious differences are explained below.
Article 70
This provision is literally identical to article 2:26 NedBW.
Article 71
Compare article 2:27 NedBW. Parts of that provision have been transferred to articles 4 and 5 in the first title.
Article 72
Otherwise than in the Dutch regulation, it is provided here that only rules laid down in writing may constitute “articles of incorporation”. There ought to be as little uncertainty on this point as possible. The question as to what rules are to constitute articles of incorporation is important among others in connection with articles 86 and 87. For the rest the provision materially corresponds with article 2:52 NedBW.
Article 73
This provision is identical to article 30 NedBW.
Article 74
Contrary to the Dutch regulation, article 74 expressly allows a distinction to be made between ordinary members and other kinds of members such as “extraordinary” members. From the second paragraph it follows that the articles of incorporation must establish in what respects the position of such other members deviates from that of the ordinary members, if the designation of non-ordinary member is to have any effect.
Articles 75 to 89 inclusive
Save for some details these provisions correspond with articles 2:33 to 43 inclusive, 46 and 48 NedBW. The regulations of articles 2:44, 45 and 47 – in modified form – have been transferred to title 1 (general provisions). The first and second paragraphs of article 79 apply both for termination by the association and for termination by a member. The third and fourth paragraphs only for termination by a member. In the third paragraph of article 79, next to the resolution also the amendment to the articles of incorporation is mentioned. One can consider for instance an amendment to the articles whereby a provision as referred to in article 92 is introduced. In that case there is also a question of a resolution to amend the articles, it is true, though the obligations of the members are not encumbered by that resolution but by the amendment to the articles subsequent thereto. From article 91 it follows that article 79 is also applicable in respect of the cooperative society.
Title 4 The cooperative society and the mutual insurance association
General
The Dutch regulation has virtually been taken over in its entirety, with a few technical adaptations and save as stated below. Not included are articles 2:63a to 63j, inclusive, NedBW, that concern the so-called “statutory two-tier cooperative society” [in Dutch: “structuurcoöperatie”]. The Netherlands Antilles do not provide for statutory two-tier entities.
Article 90
In the system of Book 2 the cooperative society and the mutual insurance association are separate legal forms, and hence no “association”. It seems correct that this is reflected in the text of article 90. In the fifth paragraph has not been taken up the rule appearing in article 2:54 second paragraph NedBW that the letters “W.A.”, “B.A.” or “U.A.” must be added at the end of the name. The usefulness of this rule, that does not appear in the Ordinance now prevailing, regulating the cooperative society, is doubtful. It is not quite consistent with the rule in effect for all legal entities that the articles of incorporation may be stated in a foreign language and the rule in article 90 fifth paragraph, connected therewith, that a term equivalent to the word “cooperative”, “mutual” or “reciprocal” may also be used in the name. Evidently the need to use a designation of this purport is felt less here than in the Netherlands because in article 92 the main rule with respect to the liability of members and former members has been turned round.
Articles 92 and 93
Otherwise than in the Dutch law, the main rule is that the members and former members are not liable. Cf. article 3, second paragraph and – for full clarity again – article 93 second paragraph. However, the articles of incorporation may provide otherwise. This turning round of the main rule has been inspired by the empirical fact that in the practice the liability of members and former members is virtually always excluded.
Article 96
Article 96 is literally identical to article 2:60 NedBW. The freedom to retire is provided in this article, also for the cooperative society. Specially with the cooperative society, however, the need may be felt to subject the retirement to certain conditions. This need may be based on the need for raw materials or credit at long term. It can also be based on other causes, provided that thereby the interest of the business conducted always remain in the forefront. The condition may be that moneys deposited remain available to the business, that a certain sum be deposited or that a certain retirement maximum per period not be exceeded. Also other conditions are conceivable. A condition rendering illusory the right to retire as provided to such extent shall be null and void. In the end the judge determines where to draw the line.
Title 5 The limited liability company
General
Some remarks have been made on the arrangement of this title under item 5 of the general part of this explanatory statement. As set forth there, many provisions have been derived from the LBV. For the explanation to those provisions reference is made to the Explanatory Statement to the LBV (Parliament documents Session 1998-1999-2224, no. 3).
Article 100
The first paragraph states that the limited liability company recognizes also bearer shares. Please be mindful, however, of article 104 second paragraph, where it is provided that bearer shares cannot be issued as such.
Article 101
Article 101 has been derived from article 3 LBV. Also for the limited liability company the equity capital at incorporation may not be negative. A third paragraph has been added – and this is also the case with the private limited company in article 201. In this third paragraph the possibility is reckoned with that shares are issued with a nominal value. In accordance with article 13 first paragraph third sentence LBV, it is provided in article 107 (207) first paragraph third sentence that, at the issue of shares with a nominal value, the value of the consideration (payment of call on a share) shall be at least the nominal amount of the share. The thought behind this provision, which has not been explained with the LBV, is that the amount of the nominal value may not be an absolutely arbitrary quantity. Third parties must be able to trust that at least such amount or a value equivalent thereto has been paid up on the shares. It would appear advisable to the undersigned to pursue this thought at the further arrangement of the capital protection system. Hereby it is considered that for all existing NVs it applies that they recognize only shares with a nominal value and that in respect of these NVs capital protection rules currently apply that are attuned to the nominal value of the shares. The elaboration of all this has led to the addition of a third paragraph in articles 101 and 201. The term “nominal capital” has thereby been introduced. A further elaboration is found in articles 102 (202) third paragraph, 115 (215) second paragraph and 118 (218) sixth paragraph. The regulation amounts to this that at the issue of shares with a nominal value the nominal capital functions as bottom limit of the capital available for distribution. The rule of article 101 fourth paragraph does not apply when shares in a company are acquired pursuant to a merger or conversion. In the event of a merger there can be a question of a newly formed company, but the acquisition takes place by law pursuant to article 311 second paragraph, not by “taking” a share. In the case of conversion into a company there is no question of formation. In most cases moreover the acquisition takes place by law. This is only different in case of the conversion of a foundation (or private fund foundation) into a company. For that case the last sentence of article 301 second paragraph gives a provision that connects with the fourth paragraph of article 101.
Article 102
This provision has been derived from article 4 LBV. The indication “registered office” has been replaced by “island territory where the company has its registered office” in order better to attune the text to that of articles 51 and 71. Inasmuch as the island territory by definition is an island territory of the Netherlands Antilles, the provision that the registered office must be located in the Netherlands Antilles can be dispensed with. A new third paragraph has been inserted. The purport thereof has been briefly discussed at article 101.
Article 103
The first paragraph has been derived from article 11 LBV. Otherwise than as stated in the explanation to article 30 LBV, in the practice there appears to be a need for sub-shares. Also having regard to that explanation, however, some doubt arose as to whether the LBV allows the existence of sub-shares. In the opinion of the undersigned, the LBV does not impede the issue of subshares. In order to put an end to the uncertainty the matter is regulated here (and in article 203). An elaboration is thereby given that connects with the views in the practice and the existing NVlegislation.
Article 104
The first paragraph of article 104 is substantively similar to the first paragraph of article 12 LBV. A final sentence has been added. The orderly management of the company requires that the deeds of issue be kept.
The first paragraph mentions registered shares only. With this is connected the provision of the second paragraph that bearer shares cannot be issued as such. If the company wishes to open the possibility for bearer shares to be outstanding, then it must act in accordance with the further contents of the second paragraph. The provision is meant to guarantee a minimum of “traceability” – internationally this is rather frequently stressed. From the second paragraph of article 107 it follows that the obligation to pay additional calls on shares can be conditional or not immediately due and demandable. There is a question then of a duty to pay additional calls in terms of article 107 fourth paragraph. The existence of such a duty to pay additional calls is not quite consistent with the concept of the bearer certificate. The third paragraph of article 104 therefore prohibits the issue of a bearer certificate in such a case.
Article 105
It is conceivable that a limited liability company issues bearer shares despite the prohibition of article 104 second paragraph. The acquirer will then have worthless documents in his hands. To what extent the company will be bound still to provide the acquirer with registered shares will depend on the legal relationship between the company and the acquirer. For the subsequent bona fide acquirer of a bearer share, this is different. He cannot be met with the objection that the share has not been validly issued. Nor can he be met with the objection that the duty to pay a call or an additional call – as then having rested on the holder of the initially issued registered share – has not been complied with.
The following paragraphs regulate the conversion of bearer shares into registered shares. A provision as referred to in the second paragraph may come in handy when traceability requirements must be met. It can also prove its usefulness at the preparation or execution of an amendment to the articles of incorporation, a conversion, merger or division whereby bearer shares will be cancelled. The reference to article 301 fifth paragraph means that the issue of the bearer certificate and entry in the shareholders’ register must take place before the shareholder can exercise his rights as a registered shareholder. In the case of conversion, this provision has independent meaning. The third paragraph gives the bearer shareholder the right to convert his shares into registered shares. The company is obliged to comply with this request, provided the bearer certificates are surrendered to the company. The fourth paragraph aims at providing a solution for in case a bearer certificate has been lost or is missing. Also in such a case the company may not refuse the request for conversion just like that. The company can demand, however, that be shown to its satisfaction that the bearer certificate has indeed been lost or is missing. Pursuant to the final sentence of the fourth paragraph, the risk of the company or third parties suffering any loss shall be for the account of the party wishing to be considered a registered shareholder. Article 108 regulates the issue of registered share certificates to the registered shareholder.
Article 106
The LBV provides in article 112 second paragraph that certain or all shareholders shall have a preferential right at the issue of shares if the articles of incorporation contain a regulation to the effect. Thus also article 206. For the limited liability company that also recognizes bearer shares this has been included as a main rule in article 106. There is no need for a complicated rule, derived from the EEC-law as laid down in the Netherlands in article 2:96a NedBW.
Article 107
Article 13 LBV is a precursor to this provision. On applying that provision, the question arose as to whether the words “without delay” in the first sentence mean that it would not be possible to provide at the issue that the consideration shall be ultimately due and payable. The explanation to the LBV does not give a definite answer on this point. In the opinion of the undersigned there is no objection to such a regulation, provided the requirements with respect to the equity capital are met. The question then arises as to the relation between the first and the second paragraph of article 13 LBV. Consideration of all this led to the provisions being rearranged, which in turn led to a certain simplification. The restriction of the duty to pay additional calls up to at least nine times the original amount, as appearing in article 13 second paragraph LBV, has been cancelled. This restriction, which was based on the “ten per cent”-rule of article 40 WvKNA and the corresponding Dutch provisions, on reflection makes little sense in the altered arrangement. With regard to the terms “duty to pay additional calls” the following is remarked. In the classical system still valid for the limited liability company, this expression has a certain significance that has to do with the nominal value of the shares. In the system now devised, the expression gets a somewhat different meaning. In order to avoid confusion on this point, the expression is defined in the fourth paragraph of article 107 (207).
Article 108
Article 108 has been derived from article 14 LBV.
Article 109
Article 109 has been derived from article 15 LBV. An addition is the provision that also the establishment or assignment of a usufruct on the shares and the creation of a pledge, as also a transfer of the voting right connected therewith, shall be recorded.
Article 110
Article 110 first paragraph has been inserted in connection with the provision of article 3:83 third paragraph that took effect in 2001. For the rest the provision has been mainly derived from article 16 LBV. The constitutive requirements for the transfer of registered shares have remained the same: a deed of conveyance signed by parties and either the serving of such deed on the company or the acknowledgement of the transfer by the company. The system has been amplified to such extent that according to article 110 second paragraph the acknowledgement need not be made by a signed entry on the deed of transfer. Acknowledgement can also take place by means of a written statement of the company addressed to the acquirer. This amplification offers a solution for in case the company wishes to acknowledge the transfer but the deed of conveyance is not readily available. The first sentence of the fourth paragraph gives a rule that materially corresponds with the rule in the second sentence of the second paragraph of article 16 LBV. In the practice it is sometimes considered problematic that certificates issued once for registered shares remain in circulation also following the transfer of the share. In connection with this, the possibility is opened in the continuation of the fourth paragraph for the articles of incorporation to provide a regulation to prevent this. The last two sentences of that regulation run parallel to the fourth paragraph of article 105 that relates to bearer shares. The sixth paragraph contains a special arrangement for in case the shares in the limited liability company are listed on a stock exchange. In such a case the system commonly applied by such exchange can be followed.
Article 111
Article 111 substantively corresponds with article 17 LBV. Otherwise than in the Dutch law, no rules are given for the wording of the blocking regulation. Contrary to the Dutch law, it is also possible for a blocking regulation to exclude the transfer or render the same “highly problematic”. For these last-mentioned cases, meanwhile article 254 first paragraph under b. applies. Under the provisions that restrict the transferability, also the provisions fall that render impossible the transfer to persons not having a certain quality. For the rest see the quality requirements, article 254 first paragraph under a. The obligation to transfer the shares to the company or a fellow shareholder may be attached to non-compliance with a quality requirement. In such a case article 257 shall apply, but this provision has a general formulation. In the Dutch law these questions are regulated in articles 2:87a, 87b, 195a and 195b NedBW, which are structured somewhat differently.
Article 112
This provision largely corresponds with article 18 LBV.
Article 113
This provision largely corresponds with article 19 LBV. In the fourth paragraph the possibility of undisclosed pledge is opened.
Article 114
Article 114 materially corresponds with article 21 LBV.
Article 115
Article 115 first paragraph has been derived from article 22 first paragraph LBV. The second paragraph of article 22 LBV has not been taken over. A provision in that spirit, thus was the conclusion on reflection, does not fit in the system. A new second paragraph has been added. The thought on which that second paragraph is based was explained at article 101.
Article 116
Article 116 substantively corresponds with paragraphs 2 to 6, inclusive of article 23 LBV. The initial term of six months for drawing up the annual accounts has been extended to eight months in order to connect with article 15a Book 3 meanwhile introduced. For this see also the explanation to article 15. The term “determination” was replaced by “adoption” to connect with the American term: “approval”. This modification has material significance in terminology only insofar as it also makes it clear that the general meeting cannot independently determine annual accounts that deviate from the annual accounts drawn up by the management. From the second sentence of the third paragraph it follows that this is different only if the articles of incorporation open a possibility for this. It is not very clear how one must judge in this matter under prevailing law. The sixth paragraph has been added as a result of a remark of the Advisory Council. The Council has pointed out that the present article 76 WvKNA prescribes for special cases a duty to publish that cannot be found back in the original draft. In the sixth paragraph now added, a right to inspect is granted to all the shareholders and every holder of bearer debt instruments. A right to inspect has been opted for to connect with article 122 first paragraph that, specially for the “large company”, grants a right to inspect to any interested party. The holders of bearer certificates have no right to inspect. The right to inspect may be exercised on their behalf by the trust office. Book 2 need not effect any arrangement for the categories stated in article 76 sub c. and d. WvKNA. In that respect the rules of the exchange where the documents are traded, or the rules concerning the banking and insurance business, must be relied on.
Article 117
Article 117 is materially similar to article 24 LBV. The expert referred to in this article need not have the qualification described in article 121 first paragraph. The question as to whether he is “expert” in terms of article 117 in principle is to be decided by the body that is competent to appoint him.
Article 118
Paragraphs 1 up to and including 5 of this provision are virtually similar to article 25 LBV. A sixth paragraph has been added. The purport thereof is explained at article 101.
Article 119
Articles 119 to 126 inclusive give a special regulation for the annual accounts at the company that complies with the criteria stated in the second paragraph of article 119. In the heading of division 4, in which this regulation has been included, the company that meets these criteria is designated the “large company”. Some observations have been made on this regulation in the general part of this explanation under 5. As set forth there, it seems advisable to introduce a tighter annual accounts regime for the limited liability company that complies with criteria pointing to a certain social importance. The criteria referred to in the second paragraph were chosen against the background of that thought. Determinant every time is the point of time of, or the period round, the balance sheet date of the financial year. If a company at that point of time complies with the criteria, then the first important consequence is that the annual accounts be drawn up according to the IASB-norms. At the question as to whether the criteria of the second paragraph under b. and c. have been complied with, those IASB-norms must already be reckoned with. This provision aims at promoting legal security. A contemplated attendant consequence is that a company that possibly approaches the criteria, will now have to gear itself to the new norms, which can be conducive to a smooth transition of the regime. The third paragraph opens the possibility of voluntary application of the regulation. For purposes of surveyability it has been prescribed that when articles 116 and 117 are disregarded, articles 120 to 122 inclusive (formation costs, audit and publication) must be declared applicable in their entirety, whether or not together with articles 123 and 124 (group annual accounts). Naturally this will not rule out that a company that adheres to articles 116 and 117, prepares its annual accounts in accordance with IASB-norms and also for the rest follows a practice that conforms to the provisions of articles 120 et seq., provided it thereby does not act in contravention of article 116 or 117. If articles 120 to 122 inclusive are declared applicable in the articles of incorporation, whether or not together with articles 123 and 124, then also articles 125 (liability in case of misleading annual accounts) and 126 (demand by interested parties for compliance) shall apply. The fourth paragraph opens the possibility for the amounts referred to in the second paragraph to be adjusted by National Decree if the price developments give cause for this. A very strict standard for the adjustment is not given herewith. There is space for rounding off and discretion. The reference to price developments does mean that there must be a reasonable relation between the adjustment and that development.
Article 120
Compared to the more simple regulation of article 116, the main differences are the following. The initial term for drawing up the annual accounts is not eight but six months. Next to the annual accounts, also an annual report must be drawn up. These documents must be made available at the company’s office for inspection by all the shareholders within the term of six months. The end of the first paragraph contains a rule concerning the language in which the documents are stated, which is lacking in article 116. The second paragraph contains a rule with regard to the annual accounts of the subsidiaries, which is lacking in article 116. The main difference is found in paragraph 3: the annual accounts of the “large company” are drawn up according to IASBnorms. In the second sentence of the third paragraph the possibility is opened for other internationally accepted norms to be applied. There may be cause for this for instance if the company is closely related to another domestic or foreign company that does so, or if the company already did so before it started complying with the criteria of article 119 second paragraph. With other internationally accepted norms one can think for instance of GAAP-norms or of the norms of the European Directives in the field of the accounting and reporting rules. The concept of “subsidiary” used in article 120 is not defined. In principle one must proceed from the meaning that this concept has in the norm system applied.
Article 121
With the large company that must prepare annual accounts according to IASB-norms, an audit is mandatory. Article 121 regulates this material. The contents of this article have largely been derived from article 2:393 NedBW.
Article 122
Article 122 lays down rules for the final piece of the regulation in effect for the large company: the obligation to publish the annual accounts. In principle, publication takes place by depositing the adopted annual accounts at the company’s offices for inspection by interested parties. If the annual accounts have not been adopted in time, then the annual accounts as drawn up shall be made available for inspection. This making available for inspection is announced at the office of the trade register. The law does not state who may be considered an interested party. The practice and the judicature will have to find their way here. As interested parties come into consideration at any rate: creditors who can reasonably doubt the due payment of their claim, employees and their representatives who can reasonably doubt the continuity of the enterprise, persons who seriously consider to effect a transaction of some magnitude with the company, etc. If the company on good grounds doubts the interest of the party asking permission to inspect, it may refuse such inspection. Should the party concerned persist in his wish to inspect, he will have to apply to the court. The fourth paragraph has been included to give the company the possibility to protect itself against people who are too obtrusive, who project themselves as interested parties and as such ask permission to inspect. Of a chartered accountant or similar expert it may be expected that he will earnestly verify whether his principal can be considered an interested party in terms of article 122. It may also be expected of him that, to the extent necessary, he will inform his principal of the significance of his observations and that, to the extent possible, he will prevent incorrect conclusions that are harmful to the company, from being drawn. Of the authorized accountant or similar expert finally it may be expected that if necessary he will consult with the experts within the company’s management, or the company’s accountant. The discretion that is expected of the authorized accountant or similar expert does not reach so far as to require him to observe secrecy with respect to the findings at his audit. The linking of the accountant or similar expert is not meant to promote secrecy. That would also be contrary to the starting-point that the annual accountsbe available for inspection by interested parties and the rule that such parties may obtain a copy of the documents submitted for inspection. Simpler than the procedure of paragraphs 1 to 5 inclusive is the course of affairs whereby the annual accounts are deposited at the office of the trade register for inspection by everyone. The sixth paragraph of article 122 provides this option. It may be expected that same will be used in the practice.
Articles 123-124
Articles 123 and 124 together contain a simplified version of article 2:403 NedBW. The main difference with that provision is that the liability in several of the legal entity or company having laid down the declaration of liability, shall always apply for a fixed period of two years from the end of the financial year in respect whereof the exemption applies. A regulation as described in article 2:404 NedBW is superfluous in this arrangement.
Article 125
Article 125 is comparable to article 2:139 NedBW. One difference is that the rule also applies for loss suffered through the tardy preparation or publication of the annual accounts. For the rest please note that article 125 applies only for the company of article 119 and – see there – article 219. According to the third paragraph, for the purpose of the regulation the person who has determined, or has contributed to the determination of, the contents of the annual accounts, be this in whole or in part, as if he were a managing director, shall be put on a par with a managing director. This rule may be regarded as an elaboration of article 138. Article 125 does not rule out that also with a company not falling under article 119 or 219, liability shall become operative by reason of the misleading character of the annual accounts – whether or not published. For this, however, one would have to fall back on the rules of ordinary law [in Dutch: “gemene recht” – Jus Commune].
Article 126
The first paragraph provides a regulation in the spirit of article 2:393 seventh paragraph and article 2:394 seventh paragraph NedBW. Paragraphs two to six inclusive contain a simplified version of articles 999-1002 NedRv [Neth. Civil Procedure Code]. The ordinary judge is competent. Appeal and cassation are possible.
Article 127
The first paragraph is materially similar to the first paragraph of article 26 LBV. The second paragraph provides a legal basis for the shareholders’ agreement occurring often in the practice. In this connection see also article 21 third paragraph under d. and article 240 first paragraph.
Article 128
Article 128 is literally similar to article 27 LBV.
Article 129
Article 129 has been derived from article 28 LBV. With the limited liability company also bearer shares are possible, which implies that the relation between the shareholders and the company can be much looser than with the private limited company. For this reason in article 129 – other than in article 28 LBV and article 229 – the authority to elicit a general meeting has been linked to a minimum of at least ten per cent of the votes to be cast. In this connection furthermore the term during which the management or the supervisory board can reserve the initiative to itself has been set at fourteen days. In article 28 LBV and article 227 this is seven days.
Article 130
Article 130 largely corresponds with article 29 LBV, that has materially been taken up in article 230. Bearer shares being outstanding has been reckoned with. In that connection the minimum term of notice has been set at twelve days in the second paragraph. A company as referred to in article 119 has a certain social importance in the Netherlands Antilles. In that connection a mandatory provision is laid down for this company in the second sentence of the fourth paragraph to the effect that the meeting shall be held in the Netherlands Antilles.
Article 131
Article 131 first paragraph materially corresponds with article 30 LBV. The words “every person entitled to vote” has been added because sometimes the voting right can be exercised by a nonshareholder. This can be the case with a pledge and usufruct. As for the addresses of the parties entitled to vote, generally the relative data entered in the shareholders’ register may be proceeded on. The articles of incorporation can provide this explicitly. Compare article 2:113 third paragraph NedBW. The second paragraph has been based on articles 117 fourth paragraph and 227 third paragraph Book 2 NedBW. The reason why the first sentence of those provisions has not been taken up has been set forth above in the reaction to the opinion of the Advisory Council. As for the final sentence of the second paragraph, one can consider for instance bond holders or (certain categories of) holders of depositary receipts for shares. It may be noted here that the Antillean legislation does not know the Dutch concept of depositary receipts for shares “issued with the cooperation of the company”. The final sentence of the second paragraph for that matter does not rule out that the general meeting decide ad hoc that certain persons have access to the meeting and can address the same.
Article 132
Article 132 has mainly been derived from article 31 LBV. In the first paragraph explicit mention is made of the possibility to state voting right restrictions on a bearer share certificate. The final sentence aims at preventing the creation of “loose” voting rights. The second paragraph contains a simplified version of article 118 seventh paragraph juncto article 24a Book 2 NedBW. The second sentence of this second paragraph contains a description that to a large extent covers the Dutch concept of “subsidiary”, a concept that for that matter is not defined in the Antillean legislation.In conformity with the starting-point of article 132 that the company is given a great measure of freedom to regulate the voting right on shares, the provision – otherwise than in the Netherlands – that no vote may be cast on a share that is held by a subsidiary as stated, is of directory law. The provision may be set aside in the articles of incorporation, in whole or in part. It may also be tightened up or extended. The need for this freedom exists also because the degree to which and the manner in which a company can acquire and exert control in another legal entity – foreign legal entities included – has many variations. Consider for instance the version taken as a criterion in article 253, that concentrates on being able to appoint the majority of the managing directors or supervisory directors. This version, which is functional in article 253, would be too specific in the present article 132. Having regard to all this, the second sentence of the second paragraph now being discussed does not aim for a fully conclusive regulation either. Insofar as there is any doubt on that the judge will have to decide, if required. whether the criteria of that second sentence have been met. The third paragraph has reckoned with the system not unusual with listed companies in the U.S.A. – and now also introduced in the Netherlands – whereby a “record date” is determinant for the right to cast a vote. A regulation as referred to in article 89b WvKNA remains possible for that matter. In the fourth paragraph it has been made clear that this provision concerns a right to prior consultation not only at the deliberations in the general meeting but also when adopting resolutions of the general meeting as a body. This means among others that also when adopting resolutions of the general meeting in accordance with article 135 the right to prior consultation shall apply. Thus for the Dutch law implicitly HR March 10 1995, NJ 1995, 595 (Janssen Pers), although the text of article 2:117 fourth paragraph NedBW points in another direction. Other than the Dutch provision, also this fourth paragraph of article 132 for that matter contains directory law.
Article 133
Article 133 has been derived from article 32 LBV. In paragraphs 3 to 5 inclusive, the term “record” has been replaced by the more common “minutes”.
Article 134
Article 134 has been largely derived from article 33 LBV. At the drafting of the second paragraph, among others the case was considered that all shareholders voluntarily or involuntarily assume a quality to which the articles of incorporation attach the consequence that they lose their voting right. As appears from article 254 first paragraph under a., such a provision in the articles in principle is allowed. In the explanation to article 33 LBV it has been explained why it is necessary to grant the minority shareholder a special right to nullify a resolution to amend the articles if his rights are thereby unreasonably affected. The third paragraph of article 33 LBV relating thereto has been replaced by a more generally formulated regulation in the fourth paragraph of article 134.
Article 135
Article 135 has been derived from article 35 LBV. As unnecessarily burdensome has been cancelled the requirement that all persons entitled to vote are invited to cast a vote. It suffices that they appear to have cast a vote.
Article 136
Article 136 has been derived from article 44 LBV. The first paragraph contains a drafting change that has no material significance. In the second paragraph more space is given for a deviating regulation in the articles of incorporation in respect of the appointment of managing directors than is the case in article 44 second paragraph LBV. The contents of the fourth paragraph of article 44 LBV has been transferred to the second paragraph of article 12.
Article 137
Article 137 has been derived from article 45 LBV.
Article 138
Article 138 has been derived from article 49 LBV. The word “acts” in the first paragraph of article 49 LBV has been replaced by “determines or contributes to the determination of the company’s policy” in order to connect with the terminology of article 16 ninth paragraph. A person meeting the criterion of article 138 a fortiori falls under article 16 ninth paragraph, and therewith under article 16 in its entirety. Meanwhile it appears from the text of article 138 that also save for the case of bankruptcy referred to in article 16 he can be deemed a managing director. As set forth in the explanation to article 16, also the person who, by giving instructions, enforces a certain policy can be considered a policy-determining party in terms of the ninth paragraph of that article. That applies here as well. The provision in the second paragraph of article 49 LBV, which had the same purport, can therefore be dropped.
Article 139
On articles 139 et seq. some observations have been made under no. 5 of the general part of this explanation. As set forth there, the regulation given in these articles, opening the possibility to place the company under the supervision of an “independent” supervisory board, is a facility available to the limited liability company. “Independent” in this connection means: independent of certain shareholders or interest groups and to a certain extent independent of the general meeting as such. The company wishing to avail itself of this regulation must provide in its articles of incorporation that there shall be a supervisory board that shall be independent in terms of article 139, Book 2. Articles 140 to 143 inclusive shall then apply by law.
Article 140
It is prescribed that the supervisory board shall consist of at least three individuals. If the number of supervisory directors should drop below that minimum for any reason whatsoever, the number of members must be supplemented. Pursuant to article 141 first paragraph, this can only take place by the appointment of one or more new supervisory directors by the general meeting. In the first paragraph of article 140 the duty is imposed on the management and the supervisory board to take the necessary initiatives to that effect. Should the general meeting default, then there is little that can be done about this. In theory it is conceivable that the shareholders can be compelled through a judicial decision to proceed to the appointment of a supervisory director, but it isnot likely that any such procedure will lead to a satisfactory result. The general meeting will always be able to release itself of its obligations by amending the articles of incorporation in such a manner that articles 140 to 143 inclusive shall no longer apply. If the general meeting does not do so, then it is still conceivable that article 24 first paragraph under a. is applied. The third sentence of article 140 first paragraph aims at promoting the independence of the supervisory directors. Contravention of this prohibition can produce a weighty reason in terms of article 142 second paragraph. The second sentence of the second paragraph corresponds with the second sentence of article 19 seventh paragraph. For the independent supervisory board, however, it is not the relativizing third sentence of that seventh paragraph that applies. In place thereof will apply the third sentence of the second paragraph which aims at accentuating the independence of the supervisory board. With regard to that third sentence, also the following observation is made. As set forth in the explanation to article 19, the norm laid down in the second sentence that the board must be guided by the interest of the company and the enterprise connected with it, entails that all interests connected therewith shall always be weighed up. The weighing up of interests will entail that sometimes one interest is harmed at the expense of another. The third sentence of the second paragraph imposes on the supervisory board the express duty to see to it that this does not take place unnecessarily or disproportionately. The third paragraph, in deviation from the fourth paragraph of article 19, gives the supervisory board the power, that is not subject to restriction, to suspend a managing director. The second sentence of the third paragraph is identical to the second sentence of article 19 fourth paragraph. The fourth paragraph imposes on the supervisory board the duty to lay down board regulations. Application of the second sentence leads to a limitation of the representative authority in terms of article 10 second paragraph. The fifth and sixth paragraphs are similar to the fifth and sixth paragraphs of article 19. The seventh paragraph is similar to the first sentence of article 19 seventh paragraph.
Article 141
In respect of the appointment of an ordinary supervisory board, pursuant to article 19 eighth paragraph, article 136 shall apply analogously. For that supervisory director therefore it applies that the articles of incorporation may deviate from the main rule that the general meeting shall appoint supervisory directors. As appears from the first paragraph of article 141, such deviation is not allowed with respect to an independent supervisory director. Not allowed therefore is a provision that an independent supervisory director is appointed by a certain shareholder or group of shareholders. The independent supervisory director is appointed for at least three and at most six years, it being understood that the term of appointment shall always terminate at the end of the next following general meeting. In that meeting a successor may be appointed, thus ensuring continuity. The second paragraph limits the possibility to restrict the authority to appoint by the general meeting. Thus a binding nomination is not allowed unless originating from the supervisory board itself. Also any quorum requirement shall have limited tenability only. Finally also the rules referred to in the third paragraph of article 141 are intended to confirm the independence of the supervisory directors.
Article 142
The starting-point of article 141 first paragraph is that supervisory directors are designated for a certain period of time. However, there may be circumstances making is advisable that a supervisory director no longer function as such. A provision that a supervisory director can be suspended or dismissed outright by another body would prejudice his independence. This is why the first paragraph provides that a motion of a body to suspend or dismiss and a decision of the supervisory board itself shall always be required. In this manner a balance is found between on the one hand the interest of the independence, and on the other hand the possible urgency to terminate the further functioning of a supervisory director as such. It is conceivable that the relations within the company are so tense that the first paragraph will not offer a solution. For such a case the second paragraph opens the possibility to call in the judge. However, for a request to the judge to have a chance to succeed, there must be a question of improper management or other weighty reasons. With “other weighty reasons” one could think for instance of a situation where a supervisory director commits offences or is otherwise guilty of misconduct beyond the sphere of the company. If it is truly necessary to call in the judge, then the relation between the various bodies and their members will often be so tense that the company will be difficult to manage and threatens to suffer losses. With a view to this, the last sentence of the second paragraph provides that, pending the investigation to determine the validity of the request, the judge can make arrangements as referred to in the third paragraph of article 255. The provision in the third paragraph corresponds with the final sentence of article 140 third paragraph.
Article 143
Article 11 that gives an arrangement for the cases of conflicting interests, applies also for the company with an independent supervisory board. Article 11, however, is largely of directory law. Article 43 contains mandatory provisions that ensure that in the cases referred to there the supervisory board at any rate shall be called in.
Article 144
With the concept of the independent supervisory board it fits that the annual accounts shall meet the stricter criteria of articles 120 et seq. Also the second paragraph has been geared to the independent position intended for the supervisory board.
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