What is a public limited company?
A public limited company, or in Dutch a naamloze venootschap (nv), is a company with legal personality. The main difference between a bv and an nv is usually the size: an nv tends to be a larger company, with several directors.
The capital of a public limited is divided into shares, which are held by the shareholders. The ultimate power lies with these shareholders. They are allowed to make decisions about the company. They may also appoint and dismiss the board. Nvs are only allowed to issue registered shares, not bearer shares.
The directors are responsible for the daily management of the company. An nv often has a supervisory board, which monitors the management (two-tier board). In other cases, the supervisors are part of the board (one-tier board). NVs that trade on the stock market have to follow the Corporate Governance Code, which describes how the management and supervisory board of the company have to inform their shareholders.
Setting up an nv
You need a notary in order to set up an nv. The notary draws up the notarial deed containing the articles of association and registers your nv in the Dutch Business Register (Handelsregister) at the Netherlands Chamber of Commerce KVK.
All directors are also registered in the Business Register. Until the registration has been done, you are personally liable. In addition, you need to invest at least €45,000 as starting capital.
Public limited company in formation
You can start doing business with your nv before it has been established. However, it is then mandatory to register your company in the Business Register. A notary must declare to take care of the establishment. The nv will come forward as an ‘nv in formation’ (in Dutch: nv in oprichting or nv io) until it is established.
You must clearly convey to your business partners that all contracts in this phase are being established on behalf of the ‘nv in formation’. After its formation, the public limited company can only take over a contract if the other party agrees. Please note that you are personally liable as long as you act on behalf of the ‘nv in formation’.
If you want to set up an nv, you need a starting capital of €45,000.You also pay notary fees, KVK registration fees and accounting fees. The notary fees differ per notary. On average the costs range between €500 and €2,200. You pay a one-time registration fee at KVK.
In addition, there are costs for bookkeeping. Your nv must draw up annual accounts and file them with KVK after they have been approved by your board of directors and shareholders. The information you have to submit depends on the size of your company. The annual administration costs depend on the size and complexity of your company.
You pay corporate income tax (vpb) on the profit of the nv. You may use corporate income tax deductions, such as various forms of investment allowance. If the nv pays dividend to shareholders, it has to withhold dividend tax on this amount. The nv also pays VAT.
If you are a director of a public limited company, you pay income tax on your wages and dividend tax on your shares. Directors must be paid a market conform salary, with in principle a minimum annual salary of €48,000 (this amount applies as of 1 January 2022). Read more about the exact rules and conditions here (in Dutch).
As of 1 January 2022, the first bracket for corporate income tax (vennootschapsbelasting, vpb) has been adjusted. As a result, a larger part of your profit falls under the low corporate income tax rate. Read more.
An nv is a legal entity. This means that directors are not liable for debts. However, there are exceptions to this rule. For example, directors are liable in the event of maladministration, or if the private limited company is not yet registered with the Business Register. If you are a shareholder, you are only liable up to the amount of your shares.
Directors may either jointly or individually sign contracts or perform certain legal acts on behalf of the company. This is stated in the articles of association.
Directors can also give someone else power of attorney. This person may then also act on behalf of the company. It is not mandatory to register this person with the Business Register, however, it can be useful. For example, it is a way to inform your business partners about who is allowed to act on behalf of the company.
An nv can hire personnel. You have to pay payroll taxes and social contributions for your employees. If you are hiring employees for the first time, you must register as an employer with the Dutch Tax and Customs Authorities. You must also report this to KVK.
Insurances and pension
As a director you are employed by the nv and covered by social insurance. There are exceptions, namely if you:
- have 50% or more of the votes at the shareholders’ meeting (possibly together with your spouse);
- and your immediate family members own two thirds or more of the shares;
- cannot be fired against your will.
If you are not covered by social insurance, you can take out insurance yourself. Read more about insurances and pension for self-employed professionals/DGAs.
Ending an nv
A formal decision from the general meeting of shareholders is required in order to end an nv. The nv then needs to pay off debts and dividend before it ceases to exist.
An nv can buy or sell shares on the stock exchange. To do so, you must meet a number of conditions. For example, your company must be in existence for more than 5 years, the equity must be at least equal to 5 million euros and the total value of the shares must be more than 5 million euros. Your company must also have been profitable for at least 3 years in the past 5 years.
Getting a Legal Entity Identifier (LEI)
Every company that owns shares and wants to trade on the stock exchange, must have a LEI or Legal Entity Identifier. This unique number is used by the financial authorities to track global transactions and ensure they are above board. You can purchase a LEI from the Netherlands Chamber of Commerce KVK if you are registered in the Business Register.