Preliminary advice on the coming digital possibilities for incorporating private limited liability companies
8 November 2022
The Dutch Commercial Law Association recently published its 2022 Preliminary Advice Reports on digital companies and digital commercial law. Paul de Vries, together with Hylda Boschma and Hanny Schutte-Veenstra, wrote a preliminary advice on the digital possibilities that will be introduced soon for incorporating private limited liability companies.Their preliminary advice covers the scope of the proposed rules and the restrictions that accompany them. The bill provides for digital possibilities for one or more EU nationals to incorporate a private limited liability company, with the shares being paid up in cash. The authors raise a series of critical questions about these restrictions, noting that several other Member States offer much more generous possibilities for incorporating companies in digital form.
The preliminary advice also presents arguments for further digitalising notarial deeds, subject to sufficient safeguards. Another aspect that the preliminary advice discusses is the option of drafting articles of association in English, rather than Dutch, as long as the conditions are met. Although legal practitioners will presumably welcome this possibility, the same cannot be said for the restrictions that apply.
The second part of the preliminary advice analyses the various stages of the digital incorporation process. The process has several built-in safeguards to help ensure the reliability of the digital incorporation, including the use of the most secure format for electronic signatures (QES) and functions for establishing a person’s identity. Among other purposes, these safeguards are intended to minimise the risk of identity fraud. Other interesting issues that the preliminary advice addresses include the topical challenges associated with digitalisation in company law and commercial law.
This preliminary advice and various others will be reviewed during the annual meeting of the Dutch Commercial Law Association on 9 November. Christoph van der Elst and Anne Lafarre will explain their preliminary advice on blockchain and hashing technologies, which already play a major role in the various blockchain systems. Bitcoin is obviously the most famous example, but far from the only one. Gerard van Solinge will talk about the concept of a virtual company. Manon Cremers, Lieke Stroeve and Sandra Rietveld will lead a discussion about the preferred way of conducting general meetings in digital format. Frank Stevens will talk about the rapidly growing phenomenon of “smart contracts”, which will undoubtedly also become a feature of the M&A practice.