Planning to set up a company? Then the first thing you need to do is choose a business form. In the Netherlands there are all kinds of business forms including: eenmanszaak, VOF, but also the BV (private limited company) and NV (public limited company). Although the BV and NV look alike, they are different. In this article, we will discuss what a BV, NV and holding is, what their differences and similarities are and what is best suited for your business.
A ‘Besloten Vennootschap’ (BV) is the Dutch version of a private limited company. This is a business structure with legal personality. It is the most commonly used legal form for doing business in the Netherlands. You can start a BV on your own, or you can choose to start the BV together with partners. The number of limited liability companies has increased in recent years. The advantage is that the BV is liable for any debts, rather than you individually.
What is a holding?
A holding company is a company in which you place the shares of your operating company and which mainly derives profit from dividends paid out. A holding company has the advantage of internal loans and spreading risk in investments.
always seek the assistance of experts if you are considering a holding company.
A public limited company, or Naamloze Vennootschap (NV), is a company with legal personality. The NV sells shares to the public in order to generate income. The shareholders may participate in decision-making processes of the company. A major advantage of an NV over a BV are that the shares are freely transferable.
There are some differences between the BV and the NV. The main differences have to do with the shares. Both legal forms work with shares, but only in the NV these are freely transferable. For example, you can exchange shares for free in the stock exchange. In a BV however, shares are registered under the name of the shareholder. The transfer of the shares of a BV always goes through the notary.
Another major difference is about the starting capital. For the starting of a NV, you need € 45.000, while you only need of € 0.01 for starting a BV. Years ago, this difference was much smaller. Since 2012, the law changed, so the previously required € 18.000 converted to € 0.01.
There are many aspects in which the BV and NV are similar:
Both the BV and NV are legal entities;
In both, the founder is not personally liable;
In both, the capital is divided into shares.
We explain the similarities of liability and establishment below.
The BV and the NV are both legal entities. This means that only the BV or NV is liable when debts arise. The founder, shareholder, and director are not liable. This does exclude mismanagement.
The formation of the BV and NV are also very similar. As we mentioned earlier, you do not need a high starting capital to establish a BV. In order to establish a BV, you need to go to the notary. The notary takes care of the registration of your BV in the Chamber of Commerce (Kamer van Koophandel, KVK). All directors are registered in the Trade Register.
As with a BV, you must also go to the notary for the establishment of an NV. The notary draws up the notarial deed. He also takes care of the registration in the Chamber of Commerce. All directors are registered in the Commercial Register. Until this is done, you are personally liable. Furthermore, you must deposit at least € 45.000 as starting capital in the company.
The business register includes the following information (both BV and NV):
Legal name;
Address;
Phone number;
E-mail;
URL of your website;
Business description;
A liable correspondent of business.
Both the BV and the NV have the option of hiring personnel. Keep in mind that you have to pay payroll taxes and social contributions for your employees. Are you hiring personnel for the first time? Then you must register as an employer with the Dutch Tax and Customs Authorities. You must also report this to the Chamber of Commerce (KvK).
There is not one right answer to this question. Every business evolves in its own way. If priorities change, the benefactors to public or private may alter. Luckily, when this happens, you can change your company’s listing to a public listing and start selling on the stock exchange. Usually, private companies are suited best for companies who do not have the € 45.000 starting capital available. On the other hand, public companies are able to gather bigger amounts of revenue quickly, in exchange for their stock.
There are several reasons why you may want to discontinue your business. For example, poor management, unexpected growth, lack of capital or poor location. To end a Dutch BV or NV, you need a formal decision from the general meeting of shareholders. The BV of NV then needs to pay off any debts and dividend.
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