11 March 2021
Concise information about the 4 most common types of business in the Netherlands and how to set up a sole proprietorship, general partnership, private company or foundation.
The company form that is chosen determines the future stakeholders, roles and liability of the business. As such, it is good to understand the relative benefits of each under Dutch law.
In this article, we list the 4 most popular types of business and provide key information about each company form.
A sole proprietorship is founded by one person. To set up the company, that person registers the sole proprietorship with the Chamber of Commerce. The person who owns the sole proprietorship runs the company.
The role of the lawyer in a sole proprietorship is to make contracts with suppliers, clients, and general terms and conditions.
When it comes to liability towards third parties, a sole proprietorship has private liability with all equity.
In the event of private bankruptcy, in the case of a marriage under community of property, the property of the husband / wife of the person who owns the sole proprietorship is also included.
A general partnership is founded by two or more persons and / or BV’s. The partners run the company. To set up the business, the partners register the company with the Chamber of Commerce.
A lawyer for a general partnership establishes agreements between partners in a partnership contract, and makes contracts with suppliers, clients, and general terms and conditions.
With regard to liability towards third parties, the partners in a general partnership are jointly and severally liable for all debts of the general partnership. They are privately liable with their entire private assets.
In the case of bankruptcy, in addition to bankruptcy of the company, bankruptcy of the partners can also be filed, as they are jointly and severally liable for the debts of the company. If the partner is a private person, the property of the partner’s husband / wife is also included if they are married in community of property.
A private company is founded by one or more shareholders. To set up the company, a civil-law notary establishes the BV and draws up the articles of association, the deed of incorporation and the shareholders’ register. The board then runs the private company.
A lawyer for a private company records agreements between shareholders in a shareholders’ agreement, and makes contracts with suppliers, clients, and general terms and conditions.
Liability towards third parties; the private company is liable. The board is only liable if serious personal reproach can be made. That threshold is high.
In case of bankruptcy, the private company goes bankrupt (not the private person).
The bankruptcy trustee can hold the board liable in the event of improper management, for example in the case of a selection from the cash register and / or if the annual accounts have not been filed on time and / or there is no administration.
A foundation is founded by directors. To set up the company, a civil-law notary establishes the foundation and draws up the articles of association and deed of incorporation. The board then runs the foundation.
Depending on the purpose of the foundation, a lawyer may make contracts with suppliers and clients, as well as general terms and conditions.
Third party liability; the foundation is liable. The board is only liable if serious personal reproach can be made. That threshold is high.
In the event of bankruptcy, the foundation goes bankrupt.
The bankruptcy trustee can hold the board liable in the event of improper management, for example in the case of a pick from the cash register. If the foundation is subject to corporate income tax, it must also file the annual accounts in good time.
If you have any questions about a public limited company, limited partnership or association, please contact us. GMW lawyers has a team of experts in business, company and insolvency law.
