History

Until 1986, the Netherlands Antilles consisted of Curaçao, Aruba, Sint Maarten, Bonaire, Saba and Sint Eustatius which six islands together formed an autonomous part of the Kingdom of the Netherlands. Aruba assumed a separate status within the Kingdom of the Netherlands in 1986. The Netherlands Antilles, from then on, consisted of Curaçao, Sint Maarten, Bonaire, Saba and Sint Eustatius.

Under a constitutional reform agreed between the governments of the Netherlands, the Netherlands Antilles and Aruba, the Netherlands Antilles has ceased to exist as a separate country and jurisdiction effective as of 10 October 2010. On that date, Curaçao and Sint Maarten have become separate countries within the Kingdom of the Netherlands, just like Aruba, each having its own government. Bonaire, Sint Eustatius and Saba (together now called the “BES Islands”) have become part of the Netherlands with the status of separate public bodies (openbare lichamen) to some extent comparable to municipalities. Since 10 October 2010, the Kingdom of the Netherlands consists of the Netherlands (including the BES Islands), Curaçao, Aruba and Sint Maarten.

The term “Netherlands Antilles” can still be used when referring to Curaçao, Aruba, Sint Maarten, Bonaire, Saba and/or Sint Eustatius.

Applicable Laws

The laws in Curaçao, Sint Maarten and the BES Islands, as a result of the constitutional reform, have not changed materially. The BES Islands form part of the Dutch jurisdiction but are subject to different laws than the laws applicable in the European part of the Netherlands. Also Aruba law is identical in most respects.

STvB acts as legal counsel for all matters concerning the laws of all four jurisdictions applicable on the various islands formerly constituting the Netherlands Antilles.

Each of the islands has a civil law system that originates directly from Dutch law and, consequently, has its roots in the French Civil Code and, more remote, Roman law.

Also the judicial system originates from the Dutch system.  Until 10 October 2010, the Netherlands Antilles had a court system consisting of Court of First Instance seated in each of the island territories and a Court of Appeals seated in Curaçao also handling appeals from Aruba courts. Appeals from the Court of Appeals were possible with the Supreme Court of the Netherlands seated in The Hague.

The effects of the latest constitutional reform on the court system are addressed in the Kingdom Act Combined Court of Justice. This Act regulates the organization of the court system for Curaçao, Aruba, Sint Maarten and the BES Islands. The Combined Court of Justice is charged with jurisprudence in civil, criminal and administrative law in each of the former island territories of the Netherlands Antilles including Aruba. The Combined Court of Justice has therefore jurisdiction in Curaçao, Aruba and Sint Maarten and, as a foreign court, also in the BES Islands.

The Combined Court of Justice consists of a Court in First Instance for each of the three countries (Curaçao, Aruba and Sint Maarten) and for the BES Islands together, as well as one Court of Appeals that can seat on each of the islands. Appeal from judgments of the Court of Appeals is possible with the Supreme Court of the Netherlands, seated in The Hague.

By introducing Book 2 Civil Code in 2004, the legislator undertook an effort to bring the corporate law (that dated from 1928) up to date. The 2004 law is as flexible as possible in order to accommodate the practical and legal needs of those who use legal entities in Curaçao, Sint Maarten or the BES Islands.

An important feature of the new legislation is the flexibility that is given when drawing up the articles of incorporation of a legal entity.

Other important features of the new legislation are:

• the articles of association no longer necessarily have to be drawn up in Dutch (the original deed may be drawn up in English);
• the terms “authorized, issued and paid up capital” no longer exist (there is only mention of one or more registered - or (in respect of N.V.’s only) bearer - shares). In Book 2 the new term “nominal capital” is introduced which means the sum of the par value of all issued shares;
• shares may or may not have voting rights, and voting rights are no longer connected to possible par value (shares may or may not have par value). If shares have a par value, such par value per class or series of shares may be expressed in different currencies;
• the possibility to claim that a transaction was beyond the scope of the purpose of the company (ultra vires) may be excluded in the articles of incorporation and if it is not excluded only the company may invoke nullity on that basis and any such claim must be filed within six months of the transaction concerned;
• for issuance of shares, in addition to a resolution to issue, a deed between the company and the shareholder is required (only registered shares can be issued);
• no longer 20 % of the authorized capital needs to remain outstanding (as long as (i) one share with full voting rights participating in the profits or (ii) one share with full voting rights and another shares participating in the profits is outstanding);
• the procedure for capital reduction has been changed and there no longer is a two months waiting period;
• holders of registered shares are entitled by law to receive a share certificate (this entitlement cannot be deviated from in the articles of incorporation);
• in respect of the N.V. there is a preemptive right for existing shareholders when shares are issued, unless the articles of incorporation provide differently;
• for a transfer of shares a deed of transfer is required (the mere acknowledgement by the company of the meeting of the mind between the parties in relation to the transfer no longer is sufficient);
• in principle there is an unlimited possibility to block share transfers (with the exception of a sell out);
• the law provides for detailed requirements on the information to be mentioned in the shareholders register;
• shareholders agreements to which all shareholders and the company are a party have corporate effect;
• the minimum term for convening a general meeting is twelve days (under the old law this was five days);
• unless it concerns a so-called large company, the extended term within which the financial statements must be presented to the general meeting, if this is not done within eight months (or for large companies within six months) after the end of the preceding financial year, is limited to six months (this was unlimited);
• the general meeting no longer necessarily has to take place in the Netherlands Antilles, unless it concerns the general meeting of a large company;
• the board structure can provide either for executive and non-executive managing directors conform the UK/US model, or (but not at the same time) provide for supervision by a board of supervisory directors;
• managing directors or supervisory directors can be appointed by the general meeting of shareholders but the articles may also provide otherwise. It is therefore possible to have certain directors appointed by certain shareholders or even to have the board appoint managing directors;
• specific functions or duties can be assigned to specific managing directors allowing for example for a limited task of the local managing director. A limited function may assist managing directors when rebutting allegations of mismanagement;
• limitations of managing directors in the power to manage the company will equally limit the power to represent the company by such managing directors;
• the power to represent the company in the event of a conflicting interest has been enlarged in the sense that unless the articles of incorporation provide differently, only in relation to transactions with or legal proceedings against a managing director, the company is represented by the board of supervisory directors or another person appointed for that purpose by the general meeting;
• the law provides for the possibility of an independent board of supervisory directors for the N.V., in which only persons can take place that do not participate in the company or have other rights in relation thereto; to this independent board specific provisions are applicable;
• a distinction is made between a normal N.V. and a large N.V. whereby for the latter N.V. additional provisions apply in relation to holding of general meetings, financial statements, auditors control, etc.;
• the law provides for a closely held limited liability company in the form of a shareholder managed company where the tasks of the managing board are performed by the shareholder;
• for all legal entities, the liquidation procedure has been simplified.

Repair legislation and evaluation
Effective 1 January 2005 some of the provisions of Book 2 Civil Code, the Introduction Ordinance and the Ordinance regulating Transitory law have been amended pursuant to the National Ordinance of 24 December 2004 holding such amendments in order to address certain concerns that had arisen in the legal practice (P.B. 2004, no. 98). In addition to this so-called repair legislation an evaluation of Book 2 is being carried out by a committee formed for that purpose by Decree, which evaluation is expected to lead to further amendments.

Seat transfer
Since Book 2 Civil Code is in effect, the Ordinance on Seat Transfer Third Countries ceased to be effective. The legislator under the repair legislation has provided that the provisions of the Ordinance on Seat Transfer Third Countries will remain in force for limited liability companies of which the articles of association on 1 March 2004 allowed for a transfer the statutory seat of the company pursuant to the provisions of the Ordinance on Seat Transfer Third Countries. An alternative under the new law for a seat transfer is the conversion.

Post 2004 amendments of articles of association
The introduction in 2004 of the new law has triggered the amendment of the articles of association of most former Netherlands Antilles legal entities. In respect of N.V.’s more in particular provisions relating to issue, transfer and repurchase of shares, holding of general meetings, references to articles of the old Commercial Code and provisions on seat transfer were changed.
In addition, the flexibility granted under the 2004 law allowed changes and new provisions in the articles of incorporation that benefited its participants. One of the advantages of the 2004 law, is that the original governing text of the articles can now be written in English so you do not have to work from an English translation of a governing Dutch text. Also specific provisions on share capital, blocking clauses, appointment of directors, general meetings or even inclusion of references to shareholders agreements or management regulations in the articles are now permitted.
As a result of the constitutional reform, eventually, the articles of association and other constitutive documents of legal entities incorporated under the laws of the former Netherlands Antilles, will have to be brought in line with the new status of the legal entity concerned and the laws applicable in the jurisdiction where the legal entity is seated. References to the “Netherlands Antilles” will have to be replaced and the seat of the entity will have to be reflected. Finally, changes in the law, if any, will need to be reflected to the extent required.