News Update Corporate M&A

Online incorporation of private limited liability company now possible

4 January 2024

On 1 January 2024, the Act on the Online incorporation of private limited liability companies (Wet Online oprichting besloten vennootschap, "DOBV"), entered into force, implementing the EU-Directive 2019/1151 in the Netherlands. The DOBV enables EU nationals and EU legal entities to establish a Dutch private limited liability company (besloten vennootschap met beperkte aansprakelijkheid or "BV") entirely online, without incorporators having to be physically present at the notary's office or physically sign any documents (with ink). The signing of the deed of incorporation takes place in a digitally secured environment in which a video connection with the notary is established. Moreover, the DOBV makes it possible to draw up the deed of incorporation and the articles of association exclusively in English.

Advantages

The main advantages of incorporating a BV digitally rather than physically are the following:

The deed of incorporation and articles of incorporation of a digitally incorporated BV are allowed to be drawn up in either Dutch or in English. For a physical incorporation, the deed of incorporation must be in Dutch and only an informal English translation can be made.
An amendment of the articles of association of a digitally incorporated BV is also allowed to be drawn up in Dutch or in English. A physically incorporated BV is required to draw up an amendment of its articles of association in Dutch only.
It is not necessary (or possible) for the incorporators of the company to physically appear before the notary and sign the deed of incorporation. Legalization of the signatures is also not required. It is sufficient that the incorporators are digitally identified and that the deed of incorporation is signed with a digital signature.
A power of attorney (if any) from the incorporators to an employee of the notary to sign the deed of incorporation on their behalf, can (and should) be granted digitally as well.

Procedure

The procedure for the digital incorporation of a BV is as follows:

The notary receives (KYC) information from the incorporators and coordinates the content of the deed of incorporation and articles of association with them. The notary will enquire, amongst other things, who will be the incorporators of the BV, who will be the managing directors of the BV and how many shares will be issued.
Once the notary has received all the necessary information and the incorporators have approved the deed of incorporation and articles of association, the incorporators will receive an invitation for an online meeting to sign the deed of incorporation.
At the beginning of the online meeting, the incorporators have to identify themselves through an electronic communication device and the notary verifies their identity using a valid identification document (see below under 'requirements').
During the online meeting, the notary explains the deed of incorporation and articles of association through a video connection.
To finalise the digital appointment, the deed of incorporation is digitally signed by the incorporators (see below under 'requirements') as well as by the notary.

Requirements

To digitally incorporate a BV, the following is needed:

A tablet or computer with access to the internet.
Electronic identification means with a high assurance level, as referred to in the Electronic Identities And Trust Services Regulation ("eIDAS Regulation'').
A qualified electronic signature (QES) as referred to in the eIDAS Regulation.
A smartphone on which the ReadID app has been installed.
A valid Dutch passport or Dutch identity card or a valid passport from another EU member state.

Re 2 and 3) In the Netherlands, 'itsme' is currently the only eIDAS means of identification which possesses the necessary high assurance level, along with the corresponding qualified electronic signature. To use 'itsme', a Dutch passport or identity card is required. Other means of identification available outside the Netherlands can be used as well, for example by EU nationals from other member states than the Netherlands. A complete overview of suitable means of identification can be found on the eID User Community website.

Re 4) The ReadID Ready mobile application is used to verify the identity of the incorporators. See the step plan and the instructional video. The mobile app reads the information on the chip in the identification document and shares this information with the notary. To enable this process, a valid Dutch identity document or a valid passport from another EU member state is required.

Limitations

The DOBV has some limitations. For example, the Act solely enables BVs to be digitally incorporated. Other types of legal entities cannot be incorporated digitally under the Act. Furthermore, the shares of a BV can only be paid up in cash and not in kind. Moreover, although any subsequent amendment of the articles of association can be done in Dutch or English, this amendment cannot be made digitally. An amendment of the articles of association must be made according to the customary physical procedure. Finally, for a digital incorporation by multiple incorporators, it is required that all incorporators sign digitally and it not possible that one or more of the incorporators grant a physical power of attorney to have the deed of incorporation signed digitally.

We would encourage the DOBV to be broadened, enabling other types of legal entities to be incorporated digitally and allowing shares to be paid up in cash as well as kind. For a more detailed explanation of the DOBV and for additional recommendations please refer to the advice by Hylda Boschma, Hanny Schutte-Veenstra and Paul de Vries for the Royal Association of Commercial Law (Koninklijke Vereeniging Handelsrecht).

In addition, there are some practical complications that sometimes make it necessary to physically sign certain documents. For example, registration at the Dutch Commercial Register of a natural person as managing director or supervisory director of a BV requires a data card to be signed by this person using ink. Also, a statement is required from the managing director or supervisory director of a BV that is to be digitally incorporated stating that this person has not been banned from acting as a director in any EU member state. Furthermore, the incorporation of a BV by a foreign legal entity requires a physically signed statement by a local notary or lawyer stating that the directors of this legal entity are authorized to represent the company. It should be noted that a notarial statement requires an apostille and that a statement by a lawyer must be accompanied by evidence of their admission to the local bar association.

Finally, under special circumstances, a notary may require the incorporation to take place physically rather than digitally, for instance in case of suspected identity fraud.

More information?

In case of any questions or requests for additional information regarding the above, please contact Paul de Vries, Kyoko Tollenaar, Philippe Stille or Thomas de Rave.

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