August 20, 2021
In the Netherlands, for the establishment of a Dutch BV it is required to go to a civil-law notary and sign a notarial deed of incorporation. This is about to change. Soon it will be possible to form a Dutch BV online. For the digitalization of the notarial profession and the modernization of Dutch company law in general, the possibility to set up a Dutch BV online is an important step.
Under the directive 2019/1151 of the European Parliament and of the Council of June 20, 2019 (the “Directive“) member states are obliged to provide the possibility for the digital incorporation of limited liability companies. Enabling the digital incorporation of a company makes it easier to set up a capital company and the associated costs, time, and administrative burdens are reduced.
The Directive emphasizes that the effective functioning, modernization, and administrative streamlining of a competitive market requires that the start-up of an economic activity should be more easily, rapidly, and more effective. It is expected to have positive economic consequences. However, the Directive at the same time acknowledges that it is essential to offer protection against crime, fraud, and abuse.
On June 15, 2021, the Minister for Legal Protection has submitted a bill to implement the Directive. The preliminary draft enables the online incorporation of a Dutch BV. It will also remain possible to set up a Dutch BV by means of the traditional notarial paper incorporation deed, which is currently the only option. The internet consultation regarding the bill is now closed.
The Directive will be implemented in Book 2 of the Dutch Civil Code (Burgerlijk Wetboek) and the Civil-Law Notaries Act (Wet op het notarisambt). In order to limit the digital incorporation to simple situations, the digital incorporation is only possible for Dutch BVs if the shares are paid-up in cash. For the online incorporation a digital deed of incorporation is used. To enable the remote execution of the digital deed of incorporation a new title is added to the Civil-Law Notaries Act. This title provides the possibility for the digital execution of the incorporation deed, pursuant to which it will no longer be necessary to physically be represented or present at the notary’s office to execute the notarial paper deed of incorporation. The digital identification of the persons appearing before the notary will happen using a life video connection. For this purpose, the Royal Notarial Professional Organization (Koninklijke NotariÃ«le Beroepsorganisatie, the “KNB“) has provided an online central execution platform that has implemented the digital incorporation process including a digital identifier at the highest security level pursuant to the eIDAS regulation (the “Digital Incorporation System“). This way the gatekeeper role of the notary is maintained. The final execution by the parties takes place by means of an electronic signature through the online platform.
The intention was that each EU member state had implemented the Directive by August 1, 2021. The Dutch Ministry of Justice and Security has asked for postponement to complete the legislation process in a careful manner. Extension to implement the Directive was obtained. The Netherlands must now implement the Directive as soon as possible but in any event before August 1, 2022.
The first version of the Digital Incorporation System is already finalized and is therefore ready to use when the Directive is implemented. The KNB is currently working on a platform for notaries to become acquainted with the Digital Incorporation System. There will also be an opportunity to give feedback on the system. Based on this, the KNB will improve the Digital Incorporation System for the final version.
With the introduction of the law (and as a result of the Directive), it will soon be possible to set up a Dutch BV digitally at the notary in the Netherlands.
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