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Dutch Company's Capital: kind of shares for the BV and NV 

Share capital at incorporation

The most used type of company in the Netherlands, a private limited liability company (BV), has no minimal capital requirement. As there shall be at least one share and it is required for this share to have a value, the capital shall be at least one euro cent. 

From a practical perspective it is handy to:

> have a capital that covers the initial expenses, so it is not necessary to immediately have a share premium or loan agreement prepared for funding. 

> have a capital of at least 100 shares for in case of any future restructuring.  

For a public limited liability company (NV), the minimum capital requirement is euro 45,000. Stamp duties are not levied on the capital of Dutch companies.

What is the moment the capital will be paid in?

The capital of the company can be paid before and after incorporation. Traditionally the capital was paid in before incorporation by means of a transfer to the notary’s third-party account. Nowadays the capital is most often paid in once the company has opened its bank account. The advantage of paying in after incorporation is that the capital will not be remain unused on the notary’s bank account waiting for the bank account to be opened. The capital shall be paid in directly from the bank account of each shareholder. It is advised to pay in the capital soon after incorporation, not doing so can result to liability issues. When a BV gets into financial problems, its shareholders can be required to pay up all their shares instantly. Also, there can tax implications for the participation exemption and fiscal unity.

The shares can be denominated in other currencies. This is only recommendable in case the main cash flows of the BV will also be in a currency other than euro. A capital denominated in euro can

What is share premium?

Additional share capital can be paid in on top of the nominal share value, named share premium. To contribute share premium to a Dutch company, a deed of a notary is not needed. A private deed between the shareholder and BV combined with a shareholder’s decision will be sufficient. A share premium repayment by a BV to its shareholder is possible when there are no profit reserves and no gains expected in the upcoming period of 36 months. Otherwise, there is a risk for the company of being levied with Dutch dividend tax. You are advised to have any repayments checked with a Dutch bookkeeping specialist or tax advisor.

As an alternative to share premium repayment, any share premium on the company’s balance sheet can be converted into share capital followed by a decrease of the nominal value of the BV or NV’s shares. Such reduction allows a repayment without dividend tax. Another option is to convert share premium into share capital and have the company buy back its own shares.

What types of shares can a Dutch BV issue?

Also, in regard the kind of shares there are not many limitations for a BV under Dutch law. Note that the situation is a more restricted for a NV. Referent shares, priority shares, tracking stocks and non-voting shares are all possible for a Dutch BV. Also, the characteristics of types of shares can be combined by means of the creation of letter shares.

Priority shares provide decision-making authorities with regard to one or more key elements for the business recorded in the articles. Priority shares have in general entitlement to any profit.

Preference shares are entitling to a fixed return that is not related to the operational result (instead the return is for example linked to market interest). The return on preference shares is paid out before the distribution on the ordinary shares.

Tracking stocks are shares that permit its owner to the profits made with specific activities or participations of the business.

Non-voting rights do not give any voting rights. Such shares allow a holder to benefit from gains and can be used as a tool to set up an effective estate planning program. Another application can be the participation of investors or employees in a company.

The stocks of a Dutch BV can be denominated in the foreign currency of your choice. This can be practical in case your business’ cash flows will be for a large part in foreign currency. It is possible to have an authorised capital recorded in the articles, though it is not required.

Can a Dutch BV buyback its own stocks?

A BV can purchase its own stocks from its shareholders. Next thereto, it can cancel its shares. Under the Dutch civil code a capital protection scheme applies for the buyback of shares. Such requirements also apply to dividend payments and share premium redemptions. The buyback of shares as such is not subject to any limitation, except that one stock with voting rights shall remain in possession of a shareholder. The directors of the BV are to perform two evaluations. A Dutch BV may not acquire buy back its shares if (1) the shareholders' equity and reserves do not permit, or (2) if the board members recognise that it should be reasonably foreseeable that the BV will not be able to continue paying its due debts after the buyback.

A BV can be registered at both a residential and business address in the Netherlands. The flexibility of a Dutch BV makes that it can be used under various circumstances. It for sure adds up to the fact that the majority of the entrepreneurs decides to use this type of entity.