Category Archives: Dutch legal entity

A Foundation in the Netherlands

Dutch trust explained

A foundation (stichting) in the Netherlands is defined by law as “a legal person created by a legal act which has no members and whose purpose is to realize an objective stated in its statutes using capital allocated to such purpose”. The foundation is used  a lot for non profit organizations like school or hospitals, charities, sports organization and promotion purposes, relief organizations, as well a family foundation, as holding vehicle for shares or certificates of shares. The Dutch foundation is also uses as a vehicle for protection purposes against hostile take-over of public companies at the Dutch Stock Exchange. A Dutch business lawyer can explain the relevant aspects of the Dutch foundation.
Foundation Netherlands

Dutch Foundation

It is possible to pursue a purpose of private benefit. However, the purpose of the Dutch foundation cannot be to distribute the foundation’s profits to the founder or to members of its organs. The founders can be members of the board. Commercial activities are allowed if these are within the objectives of the foundation and are in general taxed. The regular company tax in the Netherlands will then be applicable.

Incorporation Dutch Foundation

Foundations are established by a Dutch Notary through a notarial deed by the containing the bylaws. The foundation will then be a legal entity and has  full legal capacity. The initial board of the foundation has to be specified in the deed. No governmental body is involved in establishing a foundation. Minimum capital is not required for the establishment or operation of a foundation. Regarding the purpose, there are no restrictions. The Dutch foundations can be established for public and private purposes. The only restriction is that the purpose cannot be to distribute the foundation’s profits to the founder or to members of its organs.

Company register in the Netherlands

Foundations are registered with the local Chamber of Commerce in the Netherlands. The deed of establishing of the foundation and the bylaws are kept at the register as well as the names and the addresses of the foundation itself, members of the board with powers of representation, representatives of the foundation and its founders. A Dutch attorney can investigate the foundation’s registration, the registered board members and it’s annual accounts.

Board of Dutch Trust

The board members represent the foundation towards third parties. The statutory provisions of the foundation could assign the right of representation to one or several board members and also to other persons who are not  board members. The board has the duty to maintain financial records and keep an administration. Within 6 months from the end of each financial year, the board must prepare a balance sheet and a statement of revenues and expenditures of the foundation. An external audit is only necessary for medium or large entities. That is the case is two of these items apply:; net sales exceeding € 8.8 million; average number of employees is above 50 and/or the assets exceed an amount of € 4.4 million. Each member of the board has an obligation towards the foundation to perform the duties assigned to him properly. For matters within the competence of one or more board members, each board member  is jointly and severally liable with respect to any shortcoming. Only if  the shortcoming is not attributable to a board member and he is able to proof that, then he may not be liable.

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Pre-judgment attachment under Dutch law

It is possible to attach assets of a debtor in the Netherlands before the Court procedure started. A Dutch attorney can prepare the attachment to seize assets available in Holland

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Attachment of Dutch Assets at short notice

This pre-judgment attachment (conservatoir beslag) is also effective and good pressure on the other party. Most often the attachment is used for recovery to pay claim and obtain to get security for this claim. All assets of the debtor are subject to attachment. Apart from the attachment for the collection of receivables (verhaalsbeslag) is it also possible to attach specific goods for the purpose of surrender (beslag tot afgifte) or attachment delivery of goods (beslag tot levering).It is also possible to make a third party attachment.

Garnishment of Dutch Bank Account

The funds in the bank of the debtor may be attached. So, goods held by a third party but to be delivered by the debtor may be attached. The third party, who is the target of the attachment, must declare within 4 weeks what he owes to the debtor.
To enforce intellectual property rights, it is also possible in case of alleged infringement of intellectual property rights, the attached assets for the purpose for preserving evidence (bewijsbeslag).

How to obtain a leaf for attachment in the Netherlands?

A Dutch lawyer can file the request to the competent court to obtain leaf for the attachment. The judge decided on the petition ex parte. Usually the defendant will not be heard by the judge. Only if the applicant request to sequestrate goods of the debtor, the judge will allow the debtor to respond to the filed request.

If the leaf for arrest for attachment is granted, usually is done under the condition the within 14 days from the date of the attachment the main proceedings of the underline claim are instituted.

Creating jurisdiction of the Dutch Court through attachment

In case the debtor is not domiciled in the Netherlands and the claimant can not obtain judgment in another country, which is enforceable in the Netherlands, then the attachment gives jurisdiction to the Dutch Court. For example: the Dutch Court can hear a case against a syrian oil company if an oil tanker of this company is attached in the Rotterdam harbor. The main proceedings are not attended then preliminary relieve proceedings may also qualify the main proceedings. This will be arbitration.

Legal Action to lift seized assets

The debtor who believes that the attachment is unjustified may start preliminary relief proceedings at short notice.

In all cases the attachment should be lifted if the debtor provides sufficient security in the form of a bank guarantee to a claim of the plaintive. The attachment will be lifted if the claim is without merit and if the attachment is considered this appropriate. An attachment will also be lifted if the formal requirements are not followed. However it is sufficient for the claimant to proof that the claim is not without merit and if a beginning of evidence is substantiated to the Court, it is very hard for the defendant to prevent or oppose the attachment. The pre-judgment attachment in the Netherlands is therefore very liberal compared to other countries. This attachment is used very often used by claimants.

Unlawful Garnishment under Dutch Law

If the claim of the claimant is not granted in the main proceedings, then the attachment was unlawful. The claimant is liable for all damages,  suffered by the party who was effected by the attachment. If the claim is only partially denied, then there is no liability for the claimant. If the claim is granted in the main proceedings, then pre-judgment of the attachment will be automatically be converted to an executory attachment. With the actual judgment of the claimant can then start execution of the arrested assets.

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Filed under Dutch Law Attachment of Assets, Dutch legal entity, Jurisdisction Dutch Courts