Public limited company (NV)

What is an NV?

A public limited company is known in Dutch as  a naamloze venootschap or NV. This is a company with legal personality. This means that it has rights and obligations. An NV must pay taxes and comply with the law. If there are debts, the NV must pay them. The owners’ private assets are usually safe from creditors.

What is the structure of an NV?

An NV has shareholders and a board of directors. A public limited company also often has a supervisory board (raad van commissarissen), which monitors the management.

Shareholders

An NV's money is divided into shares. The shareholders are the owners. They own (part of) the shares, which are pieces of the company. If you start a public limited company on your own, you are the only shareholder.

An NV’s shares can be freely traded. Anyone can buy and sell them. If you do not want that to be possible then a private limited company (BV) might be a more suitable legal structure for your business.

Board of directors

The NV is managed by a board of directors. The assets are divided into shares which are held by shareholders. The ultimate power lies with these shareholders, and they may make decisions about the company. Shareholders come together at a general meeting of shareholders (algemene vergadering van aandeelhouders, AVA). This meeting must take place at least once per year. Shareholders can appoint and dismiss board members at this meeting. 

Supervisory board

An NV often also has a supervisory board  which monitors the management. This process is called a two-tier board. You can also opt for supervisors who are part of the board of directors (one-tier board). 

Structuur-NV

Having a supervisory board is mandatory for a Structuur-NV. The English name for this is a ‘Dutch public limited company subject to the structural regime’. You have a Structuur-NV if:

1. you have more than 100 employees.
2. you have a subscribed capital of more than €16 million for more than 3 years. The subscribed capital is the total amount for which you sold the shares.

Setting up an NV

You need a civil-law notary to set up an NV in the Netherlands. This can also be done digitally. The civil-law notary draws up the deed of incorporation which contains the NV’s articles of association. These are the rules the directors and shareholders must comply with.

Topics in the deed of incorporation include:

• the purpose of the NV
• the activities of the NV
• what directors may and may not do
• the number and types of shares

Ultimate beneficial owners (UBOs)

When you set up an NV, you must also register ultimate beneficial owners (UBOs) in KVK's UBO register. A UBO is someone who owns or controls an organisation. A public limited company can have one or more UBOs. If you start an NV on your own, then you are the UBO. If your NV is listed on the stock exchange, you do not need to register any UBOs.

Costs of setting up an NV

There are various costs when setting up an NV:

• Civil-law notary fees: usually between €400 and €2,200. The cost depends on the notary and how complicated the formation of the NV is.
• KVK registration fee: the civil-law notary registers the public limited company in the Business Register. You pay a registration fee for this.
• A mandatory start-up capital of at least €45,000.

In addition, there are costs for bookkeeping. Your NV must draw up annual accounts and file them with KVK. Which 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.

NV in formation 

You may already want to make arrangements for your NV before the civil-law notary has drawn up a deed of incorporation. For example, if you want to rent or buy business premises. You can register your company with KVK as a naamloze venootschap in oprichting. In English, this is called a public limited company in formation. You need a statement from the notary to do this.

You are personally liable for all agreements you make on behalf of the NV in formation. And you must make it clear to your business partners that the NV is still in formation.

Once the NV has been incorporated, you must ensure it takes over the contracts you have concluded as the NV in formation. If you do not do this, you will be liable for obligations associated with the contracts.

Liability and debts

Sometimes things do not go as well as expected. The question is then: who is liable? In the case of a legal structure with legal personality, the NV is liable. Are there debts and you can no longer pay them off? Then the NV as a legal entity goes bankrupt.

You may lose the money you invested in the company. But creditors are not entitled to your private assets, such as your savings, car, or house.

Exceptions to personal liability

Your private assets are usually safe if something goes wrong with your NV, but there are exceptions. If you deliberately mismanaged the NV, for example. Did you fail to report payment problems to the Tax Administration on time? Or did you enter contracts when you knew you could not meet the terms in them? That is considered mismanagement.

Also, if you take out a loan for the NV, you are often personally liable. If the NV cannot pay off the loan, the bank may be entitled to your private money.

Taxes

As a director, you must earn at least the customary wage  in your NV. You pay income tax on your salary.

Profit

As a legal entity, the NV pays tax on its profits. The tax on profit is called corporate income tax (vennootschapsbelasting, VPB).
There are 2 rates of VPB:

• 19% on profits up to €200,000
• 5.8% on profits above €200,000

Money that remains after you have paid the VPB can be added to the reserves or equity of the NV.

Dividend

The meeting of shareholders can also decide to make a profit distribution. All shareholders then receive a dividend. The NV withholds a 15% dividend tax.
Do you have a substantial interest (aanmerkelijk belang, in Dutch)? Then you pay a 24.5% dividend tax on the first €67,000. On everything above €67,000, the dividend tax is 33%. You may offset the dividend tax withheld by the NV in your income tax return.

Administration

Every company must keep records. The part of your administration that deals with money matters is your bookkeeping. With this information, you prepare annual accounts. Preparing such annual accounts is mandatory for a public limited company. It is an overview of the costs and income of the NV. You use the annual accounts for your tax returns.

Every year, you must file your financial statements with KVK. These statements are public.

Staff

An NV can employ personnel. The NV is the employer and pays payroll tax and social security contributions. Are you hiring an employee for the first time? Then register as an employer with the Netherlands Tax Administration. Also inform KVK how many people work at your NV.
Are you a director and do you have more than 50% of the shares? Then you are not entitled to employee insurance contributions (WW, WIA, ZW).

Selling shares on the stock exchange

An NV can buy or sell shares on the stock exchange. The advantage is that it is easier to raise money by issuing shares. There are conditions to be listed on the stock exchange. For example:

• The NV must have existed for at least 5 years
• The equity must be at least €5 million 
• The total value of the shares must be more than €5 million
• The company must have made a profit for at least 3 of the past 5 years.

Ending an NV

If you want to end your NV you must dissolve it. This can only be done with a formal decision during the general meeting of shareholders. Only when all debts and payments have been paid (liquidation) does the NV cease to exist.

Keep in mind that closing your NV may have other consequences. For example, for permits from the municipality, financing, insurance, pension funds, or bank accounts. Consult the website of the relevant organisation to check which steps you must follow if you end your business. 

Is an NV suitable for you?

A public limited company is especially suitable for large companies. For smaller companies, a private limited company (BV) is often a better alternative. This is because this legal structure has fewer rules and costs. Setting up an NV is more expensive than other legal forms and you  must deal with more administration and higher taxes than, for example, with a sole proprietorship or BV.  

These may be reasons to set up an NV:

Large investments

You want to attract large investments. With a public limited company, anyone can buy the shares, for example on the stock exchange. This makes it easier to attract big investors. With this money, you can grow your business. Keep in mind that shareholders have a say in the company.

Limiting risks

You want to run little risk privately. You are not privately liable if your NV accumulates debts or receives a claim for damages. This is especially beneficial for a big company that handles large amounts of money.

Operating internationally

Do you want to do business internationally? Then the NV can be useful because this legal form is internationally known. The public limited company may have a different name in some countries, but the structure is the same.