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Flexibility and Function of Private Company Statutes

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Abstract

This contribution focuses on two themes: the function of private company statutes and their flexibility. It is recognised initially that private company statutes serve economic activities and purposes. In this instrumental role, they contribute to economic welfare. In addition, they have the function to serve legal certainty and to protect the justified interests of persons involved in a private company. This function is designed to promote fairness. Together these functions result in two types of rules in a private company statute: rules serving welfare, which are usually non-mandatory rules, and rules serving fairness, which are usually mandatory. The private company, as the object of these rules, has the internal characteristics of a partnership and the external characteristics of a corporate body. In addition, shareholders are financially and personally deeply involved in the private company and have no easy exit. These characteristics should be determinative for a private company statute. The author puts forward some suggestions for adjustments to the current Dutch proposal for a private company statute.

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References

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  2. For example, M.J.G.C. Raaijmakers, Rechtspersonen tussen contract en instituut (Deventer, Kluwer 1987); L. Timmerman, ‘Is versoepeling van het Nederlandse n.v./b.v.-recht wenselijk?’, TWS (1992) pp. 163–168; H.J. de Kluiver, ‘Het vennootschapsrecht dient te worden versoepeld … en verscherpt’, TWS (1992) pp. 174–179.

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  4. Report of the Expert Group (De Kluiver Committee), ‘Vereenvoudiging en flexibilisering van het Nederlandse BV-recht’, in F.J.P. van den Ingh and R.G.J. Nowak, eds., Vereenvoudiging en flexibilisering BV-recht, Vol. I, De pre-parlementaire geschiedenis (Deventer, Kluwer 2006) pp. 181–182.

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  6. For some of these characteristics, see F.H. O’Neal and R.B. Thompson, O’Neal and Thompson’s Close Corporations and LLCs: Law and Practice, rev. 3rd edn., loose-leaf (Chicago, Clark Boardman Callaghan 2006 update) §1:9 (‘Normal attributes of close corporation’).

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  7. This proposal was made public in three parts by the Ministry of Justice. The proposal will be presented as a bill to Parliament with some adjustments. This contribution is based on the text of the proposal in three parts. These parts are published in Van den Ingh and Nowak, op. cit. n. 4, at pp. 3–167. For other suggestions to amend the proposal, see also the interesting work of T.P. van Duuren, H.J. Portengen, E.P.M. Vermeulen and B. Bier, De vereenvoudigde BV, Preadvies van de Vereeniging ‘Handelsrecht’ 2006 (Deventer, Kluwer 2006).

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  8. Otherwise: explanatory memorandum to the proposal, in Van den Ingh and Nowak, op. cit. n. 4, at p. 21.

  9. See also H.J. Portengen and E.P.M. Vermeulen in Van Duuren, et al., op. cit. n. 7, at pp. 99 and 173.

  10. Otherwise: explanatory memorandum to the proposal, in Van den Ingh and Nowak, op. cit. n. 4, at pp. 60–61.

  11. Ibid., at p. 19.

  12. Ibid., at p. 59 et seq.

  13. See ‘Notitie invoering aandelen zonder nominale waarde’, in Van den Ingh and Nowak, op. cit. n. 4, at p. 131 et seq.

  14. This suggestion was also made by the committee of experts that advised the Minister of Justice and the Deputy Minister of Economic Affairs on the new Dutch private company statute. See Report of the Expert Group (De Kluiver Committee), loc. cit. n. 4, at pp. 261–264.

  15. Ibid., at p. 259.

  16. For a different approach, see H.J. Portengen in Van Duuren, et al., op. cit. n. 7, at p. 69 et seq.

  17. See HR 17 May 1991, NJ 1991, 645 (Tonnema). There are possible exceptions to this rule, for example, the question whether a shareholder is bound by an arbitration clause in the articles of association without his consent.

  18. More information on the inquiry procedure can be found in M.W. Josephus Jitta, et al., The Companies and Business Court from a Comparative Law Perspective (Deventer, Kluwer 2004).

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  19. See also E.P.M. Vermeiden in Van Duuren, et al., op. cit. n. 7, at pp. 122 en 168.

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  1. Erasmus University Rotterdam, Netherlands

    Maarten J. Kroeze (Professor of Company Law)

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  1. Maarten J. Kroeze
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Kroeze, M.J. Flexibility and Function of Private Company Statutes. Eur Bus Org Law Rev 8, 121–129 (2007). https://doi.org/10.1017/S1566752907001218

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  • DOI: https://doi.org/10.1017/S1566752907001218

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