PRIVATE OR PUBLIC LIABILITY COMPANY (BV VS. NV)
Private or Public Liability Company (BV vs. NV)
The Netherlands is ranked as one of the most favourable locations for corporate ventures in all of Europe. That being said, while the Netherlands does provide unique advantages for a business to thrive, it is vital to find the right type of company to suit your needs. In this article, we will make a distinction between a private limited liability- and public liability company Netherlands, also known, in Dutch, as BV and NV. We will also discuss what is best suited for your individual business.
Private Liability Company (BV)
A private liability company differs from a public liability company in the way that a private company does not have their stock available for public purchase on the stock exchange. However, a private Dutch company is still considered a legal entity separate from its shareholders and has its own identity in the eyes of the law for litigation or taxation purposes. Additionally, private liability companies must also register in the Dutch Trade Register in order to engage in commercial activity.
Public Liability Company (NV)
There are many steps to forming a public liability company, but with the right guidance, these actions are quick and simple. Furthermore, as a public liability company, a portion of your shares will be available for purchase on the stock exchange. Be diligent how many shares are available on the international stock exchange, as, although rare, some companies have been bought out by random members of the public.
Characteristics of the Dutch NV
- A minimum share capital of EUR 45,000 has to be deposited before the company may be publically listed
- A Dutch NV needs to be formed by notary deed, similar to the Dutch BV
- Limited in liability if all formation responsibilities are fulfilled
- May be publically listed and shares publically traded
- Lead by a board of directors
- May require a committee of commissars to supervise the board of directors
- Specific accounting requirements apply to publically traded companies
- Shareholders are not listed in the Dutch company register
The Dutch Trade Register
Both the Dutch BV and the Dutch NV need to be registered in the Trade Registry in the Netherlands, registering your business is mandatory for almost all legal business practices. The Dutch Trade Register serves to provide a legal framework that enables a corporation to act as its own entity in terms of liability and taxation. Moreover, the Dutch Trade Register provides an authenticity for companies when dealing with customers and interacting with other businesses. The business register includes the following information:
- Legal name
- Phone number
- Fax (if applicable)
- E-mail contact
- URL (if applicable)
- Description of business, including service, product, the number of current employees, branches, etc.
- A liable correspondent of business
What is best for me?
First, we should make one thing clear: there is no clear answer to the above question. As a business evolves throughout its lifecycle, it’s priorities change, and its benefactors to either public or private may alter. Thankfully, if this occurs, a private company may change its listing to a public listing and start selling on the stock exchange. This exchange is known aptly as ‘going public.’
Nevertheless, private companies are usually suited for companies who would rather gain strategic investors in exchange for greater portions of equity, or those who simply do not meet the 45,000-minimum euro requirement. Moreover, public companies are able to gather large amounts of revenue fairly quickly in exchange for their stock.
If you would like to receive more information on starting a company in the Netherlands, please contact our experienced business advisors.