After you have carefully established your business structure in the Netherlands, proper business governance and end-to-end supervision are needed to ensure well-structured daily operations.

During the establishment process of a business structure with legal personality (legal entity), the notary will draw the articles of association in the form of the deed of incorporation. The articles of association form the basis of the organization and contain the internal rules and agreements of the legal entity.

Articles of Association

The make-up of the articles of association differs per your chosen legal business structure:

For a bv or nv

• Name of the bv or nv;
• Registered office;
• Description of the activities;
• Purpose of the bv or nv;
• The value of the shares;
• Method of appointment of the directors;
• Powers of the various organisational units and directors;
• How meetings are organised;
• How shares are transferred.

For a Foundation

• Name of the foundation;
• Registered office address;
• Purpose of the foundation;
• Method of appointment and dismissal of directors;
• Where the money will go when the foundation is ended.

For an Association (with full legal capacity)

• Name of the association;
• Registered office address;
• Purpose of the association;
• Obligations of the members towards the association;
• Method of convening a General Meeting of Members;
• Allocation of the association’s equity when the association ends.

Other Legal Business Structures

Other legal business structures, such as the cooperative and the mutual insurance society, also have articles of association. Business structures that do not have a legal personality (such as the sole proprietorship and general partnership) do not have articles of association.

Internal Regulations

Aside from the articles of association, you can decide to draw up internal regulations, which are not public but private for internal use of the directors and employees. These documents often detail the day-to-day operations of the organization, for example, Financial Administration Agreements, Employee Handbooks, Policies, Procedures and much more.

Management

All legal entity consists of an administrative body. The board, in other words the management is responsible and act on behalf of the organization. The founder commonly determines the number of director(s) the board will consist of. In small company, there may only be 1 director.

In addition to management, you can also choose to have a supervisory board. The Supervisory Board supervises the management (the board) with a strong focus on the strategy of the organisation. A supervisory board is not mandatory. Is your company listed? As of 1 January 2022, at least 1 in 3 members of the supervisory board must be a woman.

You can have a supervisory board that is separate from management (dual governance model). You can also choose to have 1 body for both management and supervision (monistic management model).

Who Appoints and Dismisses the Board?

The appointment of the board differs per legal entity. In the articles of association, you record how directors are appointed and under what conditions. The same body that appoints the directors can also dismiss or temporarily suspend them.

• A foundation must record how directors are appointed in its articles of association.
• In a private (bv) and public (nv) limited company, the shareholders appoint the board.
• In cooperatives and associations, the members do this through the general meeting of members.

Changes in the Board

The notary after drawing up the deed of incorporation, which includes the articles of association, usually files the articles of association, digitally at the Netherlands Chamber of Commerce KVK, this is called deposit.

Any changes into the articles of association need to be submitted to the Netherlands Chamber of Commerce KVK. A resigning director needs to notify KVK within 8 days, furthermore, verify the administration changes and steps to follow when your board changes.

Rules of Good Governance

As a board or supervisory director, you are required to always act in the best interest of the organisation and all parties associated with it. You must fulfil your tasks as effectively as possible; when applicable, have proper performance management system in place for your team; ensure that all reporting internal and external are prepared efficiently. This is called good governance.

Source: business.gov.nl