Trust Offices (Supervision) Decree 2018 – time bomb for proxies granted under private law?

On the 26th day of June 2018, the Dutch Ministry of Finance (the “Ministry”) has announced a consultation for the ‘Trust Offices (Supervision) Decree 2018’ (the “Decree”). This Decree entails that anyone who represents a company based on a proxy falls within the scope of the Trust Offices (Supervision) Act 2018 (the “Act”). The Act currently applies to trust offices who are defined in article 1 of the Act, meaning that only those who grant trust services qualify.

The full text of the internet consultation can be find here: https://www.internetconsultatie.nl/btt.

The Decree expanses the range of Article 1 of the Act as follows:

In addition to Article 1, paragraph 1, a service is qualified as a trust service in case an authorized representative or any other legally valid representative may bind the legal entity or private company on the instructions of a natural person, legal entity or private company who does not belong to the same group as the authorized proxy holder or the designated representative”.

This means that in addition to the current trust offices as defined in article 1 of the Act, each proxy holder or designated representative who is granted with the power to bind a legal entity or private company outside its own group shall be qualified as a trust officer providing trust services. This means it is not allowed to perform the authority granted without a permit and the requirements ensuing from the Act must be complied with.

As an explanation for the proposed Decree, the Ministry starts by expressing that the difference between the situation where:

  1. a Dutch legal entity is incorporated with foreign directors and a power of attorney is granted to someone in the Netherlands (whether or not registered with the Dutch trade register); and
  2. a Dutch legal entity is incorporated in the Netherlands having Dutch trust officers as (co)directors,is non-existing.

In the opinion of the Ministry the integrity risks attached to the (legal) acts performed under such power of attorney are similar to the integrity risks attached to the already regulated (legal) acts performed by trust officers as directors of legal entities.

According to the Ministry of Finance the decisive criteria should not be the scope of the power of attorney granted, but whether or not the holder of the proxy is de facto in the position to bind the legal entity with respect to (legal) acts which are related to the continuation of a legal entity. This would therefore basically mean that almost all powers of attorney granted by Dutch legal entities fall within the scope of the Decree, as they will all more or less relate to the continuation of such entity.

What the Ministry probably wants to achieve is to limit the possibility to circumvent the current Act by granting very extensive powers of attorney instead of appointing trust officers as directors. With the measures currently under consultation it completely overreaches itself though.  

The internet consultation ends at the 30th day of July 2018. We will keep track of any developments in this respect.

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Martina Priekaar