Reinier advises national and international companies
reinier.russell@russell.nl +31 20 301 55 55For a conversion of a legal entity into a different legal form you need a resolution, an amendment to the articles of association and a deed of conversion. Then, the changes have to be registered with the Chamber of Commerce. There are additional requirements for a conversion of an association into a company, and vice versa.
A conversion of a legal entity may contribute to realize the following:
Under Dutch law, a legal entity can be converted into another legal form. The following steps are required in a conversion:
Additional rules apply to a conversion of an NV or BV into an association, cooperation, mutual guarantee company, or foundation. One of these is that a shareholder of the NV or BV will become participant of the new legal entity, unless the shareholder disagrees with the conversion. In that case, the disagreeing shareholder can apply for compensation for the loss of his/her shares.
In a conversion of a foundation, cooperation or mutual guarantee company into an NV or BV, each member becomes a shareholder, unless the membership has been terminated before the conversion was initiated. A member will be granted a period of one month to terminate membership after the intention to conversion was announced.
Sometimes, a judicial authorization is required. This applies to conversions into an foundation. If an NV or BV is converted into an association, a judicial authorization is required too. Such an authorization may be denied if the interests of the shareholders that disagreed with the conversion were not sufficiently taken into account.
In conversions of foundations into different legal forms, the original definition of the foundation’s purpose must be taken into account. That definition determines how the assets are to be spent. However, a director might want to spend the assets after a conversion differently than originally intended. To achieve that aim, the director will have to include a provision in the articles of association of the new legal entity. Such a provision has to contain explicitly that judicial authorization is required to spend the assets for a purpose other than the foundation’s purpose before the conversion. By this provision, the regime applying to the amendment of a foundation’s purpose will also be applicable to the new legal entity.
Would you like to make amendments to a legal entity or convert it into a different legal form, or do you need legal advice on a conversion? Do you have any other questions concerning the management of your company? Please contact us:
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