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AKD: ADVANTAGES OF THE NEW DUTCH COMPANY LEGISLATION
NETHERLANDS-based AKD partners Vincent Bettonville and Heimon Smits discuss the flexible new company legislation in Holland aimed at creating an attractive legislative and regulatory environment for international investors.
Although the effects of the euro crisis continue across Europe, the Netherlands continues to attract foreign investment.
The relatively small yet resourceful country has risen two places surpassing the US, the UK and Japan in the World Economic Forum Global Competitiveness Rankings 2012-2013 to become the fifth most attractive country in the world in which to do business, based on its efficiency, stability, education and infrastructure.
New pro-business legislation has served to up the jurisdictions investment potential. According to Vincent Bettonville and Heimon Smits, partners at AKD lawyers and civil law notaries, the Netherlands has always been famed for its cooperative tax structure, but we can now add the new Dutch legislation as a huge advantage for companies setting up in business here, taking over a Dutch business or using a Dutch holding company to acquire foreign businesses. Traditionally, the Dutch tax authorities are well-known for their cooperative approach in assisting companies to eliminate uncertainties and act in a fast and efficient manner.
FOREIGN INVESTMENTS UP BY 48%
Despite an uncertain economic climate, the volume of foreign investment in the Netherlands grew by 48% to a record 170, according to the 2012 Ernst & Young European Attractiveness Survey. M&A levels are expected to rise further, as strategic international investors aim to take advantage of attractive pricings.
Activity levels are set to receive a boost from new simplified Dutch company legislation notes Smits, making it possible, among other things, to structure the governance of the Dutch company more in line with the specific needs and requirements of the shareholder.
As partners at AKD, a top full-service Dutch law firm with a strong reputation across all core service areas including corporate, M&A, banking and finance, litigation, environment and transport work, Bettonville and Smits have experience advising on transatlantic deals and the acquisition of Dutch companies by foreign businesses. They have also both practised law in New York, giving them international insight.
New Dutch company law rules contained in the Private Company Law (Simplification and Flexibilisation) Act (also known as the Flex BV Act) came into force in October 2012. Dutch legislators have simplified many issues including the rules regarding share capital of a BV, creditors protection, voting rights and profit entitlement. The new Act also provides more flexibility in tailoring the articles of association of the BV.
Investors are set to face fewer legislative hurdles when the One-Tier Board Act becomes law on the 1st January 2013. The Act will allow for one tier boards in the Netherlands something which will resonate with the Americans and the English in particular says Smits. Until now the Dutch usually operated under the two-tier board system one management board, supervised by a supervisory board. The new law allows for one board with both executive and non executive members.
The new laws apply to both existing and new Dutch BVs. Currently Bettonville and Smits are advising clients on their position in accordance with the legislation, including restructuring where appropriate. One of the good things about the Flex BV is that it allows for agreements directly in the company statutes, rather than through the shareholders agreement says Bettonville. This is a huge advantage, meaning that if a provision in a statute is contravened it is simply null and void there is no basis for a legal fight.
For Bettonville and Smits, the work doesnt end when a deal closes. AKD partners remain personally involved with their clients before, during and after a transaction. Building deep and long-term client relationships is integral to the way AKD works.
With large departments specialising in every legal area, AKD operates as general counsel throughout the process, offering international clients a onestop legal solution. AKD is not just strong in M&A and finance transactions but also support clients in the follow-on phase, in areas ranging from labour and environmental issues to IP, transport and government affairs. In addition to a large group of international clients, AKD is strongly grounded in the Dutch business community with offices in Amsterdam, Rotterdam, Eindhoven and Breda. The success of this approach advising on the deal and continuing the relationship as general counsel is highlighted by the ongoing growth of the firm.