What is company law in the Netherlands?
Is company law and corporate law the same in the Netherlands?
This question reaches us occasionally so it seems a good idea to address it in this short legal blog. The short answer is ‘no’. In practice, an attorney in the Netherlands refers to the same when she or he speaks about Dutch company law or corporate law.
That said, Dutch lawyers generally use the term company law -also: enterprise law- more broadly. Corporate law as a Dutch legal concept is more boxed in in the sense that it refers to a specific section of the Dutch Civil Code, i.e. Book 2. This is a specific part of Dutch commercial law ithat deals with the incorporation, structure and governance of legal entities that can operate an enterprise. The legal entities that are covered by Book 2 of the Dutch Civil Code are:
- the public limited liability company (in Dutch: naamloze vennootschap and abbreviated as N.V.);
- the private limited liability company (in Dutch: besloten vennootschap met beperkte aansprakelijkheid and abbreviated as B.V.);
- the foundation (in Dutch: stichting);
- the association with full or limited legal authority (in Dutch: vereniging met volledige of beperkte rechtsbevoegdheid);
- the cooperative assocation (in Dutch: coöperatie); and
- the mutual insurance company (in Dutch: onderlinge waarborgmaatschappij).
Other possibilities for enterprises in the Netherlands
Besides these legal entities, Dutch law comprises of several other types of non-incorporated enterprises that are covered by Dutch company law but not corporate law, i.e. these enterprises are not included in Book 2. These are the building association (Dutch acronym: VVE), the professional partnership (in Dutch: maatschap), the unlimited liability partnership (Dutch acronym: VOF) and the limited liability partnership (Dutch acronym: CV). The sole proprietorship in the Netherlands does not have specific company law rules. Notably, there are general rules that apply to all commercial enterprises such as the registration with the Dutch Chamber of Comerce and the obligation to have a bookkeeping.
A Dutch company lawyer will generally deal with all the legal entities that are mentioned in this blog. The most used company form in the Netherlands is the limited liability company B.V. In practice it has proven to be easy to incorporate and it is flexible for commercial and corporate governance purposes. The cost of incorporation is law and Dutch law does not stipulate a minimum capital requirement for this company. The B.V. also offers much better protection against personal liability for entrepreneurs (directors and shareholders) than a Dutch partnership and sole proprietorship.
Trade law in the Netherlands
For the sake of completeness regarding the distinction between corporate law and company law, Dutch trade law -also: business law- does not refer to the same as company / corporate law. Trade law does not deal with the legal entities as such but with commercial agreements that enterprises conclude between themselves as well as topics as transportation law and insurance law.