Company Registration requirements

A. Foundation (Stichting)

A foundation is formed by means of a notarial deed. The articles of association (AoA) shall be part of this deed an include at least the following information:

• Name of the foundation. Note that the word ‘stichting’ (foundation) shall be included
• The place in the Netherlands where the foundation has its seat
• The purpose of the foundation and how it aims to achieve its goals. Please note that the scope shall be carefully formulated, as it is not allowed to serve a purpose outside the foundation’s scope.
• The way how board members are appointed and dismissed
• Decision taking procedures
• What happens to any equity in case the foundation is dissolved

Following the above, the foundation shall be registered with the Dutch Commercial Chamber. Often this is done by the notary lawyer. The company registry of the Commercial Chamber will keep track of:

• The founder(s) of the foundation
• The board members
• Other people that are legally able to represent the foundation

Note that the deed and AoA shall be written in Dutch.

Other requirements

• Can be founded by one or more companies or natural persons, regardless its origin or nationality
• Does not have any capital requirements
• A foundation has a board, but does not have members nor shareholders. Board members can be employed by the foundation and receive compensation for this (note this is different than ‘salary’)
• A foundation cannot issue shares, it can issue securities
• A common way (as we know from some Dutch ICOs) is to book the token sale as ‘cash in’ in the annual report and as ‘debt’ on the balance sheet
• The foundation can hire employees
• The board has the duty to maintain financial records and keep an administration. Within 6 months from the end of each financial year, the board must prepare a balance sheet and a statement of revenues and expenditures of the foundation. An external audit is only necessary for medium or large entities. That is the case is two of these items apply; net sales exceeding €8.8 million; number of employees is above 50 and/or the assets exceed an amount of € 4.4 million.
• The foundation is a legal person. Therefore, the board members are not liable for the debts of the entity, except in case of negligence and/or mismanagement.
• A foundation can be used for commercial purposes. Note that any profits cannot be distributed to the founders or board members and shall be allocated to achieving the goal of the foundation.
• In case a foundation makes profit, it is subject to enterprise income tax (EIT) and VAT: o In case the profit is lower than €15,000 the foundation is exempted from EIT o In case the cumulative profit is lower than €75,000 in a certain year and its four preceding years o Profits up to €200,000 are taxed against 20% o Profits exceeding €200,000 are taxed against 25% o The recently formed coalition announced that the enterprise income tax will be lowered in the next few years. By 2021, the respective tariffs are 16% and 20%. o Dutch tax law offers various ways to lower the tax burden, such as investments, R&D activities and depreciation

B. Limited liability company (Besloten Vennootschap, B.V.)

Overall, the process of establishing a limited is comparable to that of a foundation. It is also formed by means of a notarial deed that includes the AoA.

• Can be founded by one or more legal or natural persons, regardless its origin or nationality
• Capital requirements as little as 1 cent
• A limited has a board and shareholders meeting; a supervisory board is optional
• The AoA describe describes the number of shares and its nominal value
• The AoA describe the way board members (and supervisors) are appointed and dismissed, as well as the scope of their competences
• The AoA describe how shareholders can transfer their shares
• The limited is a legal person. Therefore, the board members are not liable for the debts of the entity, except in case of negligence and/or mismanagement
• Besides the EIT as mentioned before, a limited is also subject to 5% dividend tax in case profits are being distributed to shareholders
• The board has the duty to maintain financial records and keep an administration. Within 5 months from the end of each financial year, the board must prepare a balance sheet and a statement of revenues and expenditures of the company. The shareholders meeting has to approve the annual report and afterwards the company shall file the report with the Commercial Chamber.