9.2 Present legislation (Chapter 2)

Chapter 2 is a guide for a corporate lawyer who is engaged in change of legal form of legal entities. All aspects relating to present legislation are described. A summary is included in which all possible variant changes of legal form are included in a step plan.

The concept of change of legal form can be divided into four categories, which are: (i) change of legal form of a foundation, (ii) change of legal form into a foundation, (iii) change of legal form between related legal forms and (iv) specific legal forms.

The number of changes of legal form in the Netherlands between 1956 and 24 December 2008 was 3,789. That number is small. By way of comparison: in January 2007, 966,697 legal persons under private law were registered with the Trade Register in the Netherlands. The majority of changes of legal form are from and into a foundation.

Change of legal form requires two resolutions: a resolution to change the legal form and a resolution to amend the articles of association. A resolution to change legal form requires in principle a majority of nine-tenths of the votes cast. In my opinion the legislators should integrate both decisions.

Change of legal form comes into effect after execution of a notarial deed. There is a waiting period of one month for change of legal form of an association (vereniging), cooperative (cooperatie) or mutual insurance company (onderlinge waarborgmaatschappij) into another legal form. During that period all members have the opportunity to terminate their membership. There is no obligation for a member to remain a member after change of legal form or to become a shareholder after change of legal form into a limited liability company (naamloze vennootschap) or private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid).

A compensation procedure exists for shareholders in the event of a change of legal form of a capital company (NV or BV) into another legal form (not being an NV or BV). This procedure is based on the procedure relating to reducing share capital. Creditors are also now protected on the basis of this procedure. In addition, to the supervision by a civil law notary other supervision, by a court, the Ministry of Justice and auditor, may be supplementary dependent on the variant of change of legal form.

It appears under present law that change of legal form of an informal association (informele vereniging) is possible. In my opinion it is advisable that the law explicitly prescribes that the provisions on the change of legal form (Dutch Civil Code) are not applicable to informal associations because supervision by a civil law notary who is involved in relation to the change of legal form is not effective.