Permanent Supervision Of Legal Entities

With effect from 1 July 2011, the present system of preventive supervision and the related requirement of a declaration of no objection will be abolished. In practice this means that it will no longer be necessary to obtain what is known as a "declaration of no objection" from the Ministry of Security and Justice when incorporating a private limited liability company (BV), public limited liability company (NV) or European Company (SE) or amending its articles of association, or in the event of a conversion into one of these three corporate forms. This will substantially reduce the period of time necessary to complete these operations. On the same date, however, a new system of permanent supervision of legal entities will take effect.

This memo briefly examines the new system of permanent supervision and the entities covered by the new system.

Permanent supervision

On 9 June 2010 the upper house of the Dutch parliament approved the "Bill amending, among other things, Book 2 of the Dutch Civil Code and the Companies (Documentation) Act". Besides abolishing the present system of preventive supervision and the related requirement of a declaration of no objection, the amendments provide for the introduction of a new system of permanent supervision of legal entities. The amendments also extend the scope of the supervision: the new system covers not only BVs, NVs and SEs but also other legal entities, as well as the Dutch branches of foreign legal entities. Because the new system is so complex, it could not be introduced before 1 July 2011.

The new system of supervision is a form of scrutiny that applies throughout the life of a legal entity, the aim being to prevent and combat the misuse of such entities and their businesses. To this end, the authorities will draw up a number of risk profiles. If a legal entity fits one of these profiles, this means that there is a heightened risk of misuse for illicit purposes and is called a risk alert. The risk profiles will be based on data that make it possible to identify misuse of, for example, a financial nature.

The data to be compared with the risk profiles will be obtained by the authorities from both closed and public sources in the Netherlands. The main source will be the system of national registers such as the trade register and the municipal personal records database. In addition, the Ministry of Security and Justice will obtain data from the tax authorities, the Judicial Information Service, the...

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