The term N.V. stands for Naamloze Vennootschap, a public limited liability company that issues shares to raise income. It operates similar to Inc. in the U.S. or PLCs in the U.K. You can find this structure predominantly in the Netherlands, Belgium, and Aruba, among other Dutch-influenced nations.
Key Takeaways
- What is an N.V.? An N.V. is a public limited liability company common in Dutch and Dutch-influenced countries.
- Issuing Shares: It issues shares to shareholders, granting them decision-making powers.
- Operational Requirements: Establishing an N.V. entails meeting requirements, including a startup capital threshold of €45,000.
- Global Presence: Besides the Netherlands, countries like Belgium and Aruba employ the N.V. structure.
- Anonymity and Liability: Shareholders remain anonymous, and directors are not personally liable.
- Versatile Setup: Requirements and rules vary by country.
How an N.V. Works
The procedures to establish and operate an N.V. mainly involve creating a public limited company framework through capitalization and registration, with distinctions based on the country. Here’s how it typically functions:
- Regulations and Compliance: Companies must adhere to national regulations about registration, taxation, and corporate structures.
- Issuing Stock: Stock is issued to involve individuals and entities who subsequently influence corporate decisions, including appointments to the Board of Directors (BoD).
- Anonymity: Naamloze Vennootschap literally means “nameless venture,” allowing shareholders to hide their identities.
In the Netherlands, a startup capital of €45,000 is mandatory. Notarial services must draft a notarial deed with the articles of association, registered at the Netherlands Chamber of Commerce in the Dutch Commercial Register.
Specific Compliance Requirements
- Corporate Taxes: N.V.s adhere to corporate tax rules. Taxes apply to directors’ salaries and dividends. Payroll taxes also apply to employees.
- No Personal Liabilities: Directors and shareholders only bear liability proportional to their shareholdings.
- Employee Registration: Companies must register as employers with Dutch authorities before hiring staff.
Setting up an N.V. also involves costs for accounting, registration, bookkeeping, and annual administrative functions.
Special Considerations
Before complete registration, directors are personally liable. Post-registration, N.V. shares may trade on stock exchanges if several conditions are met.
For a listing, a company must:
- Be operational for at least five years.
- Maintain equity above €5 million.
- Maintain share value over €5 million.
- Turn a profit in at least three of the previous five years.
A decision to cease N.V. operations requires shareholder voting, followed by settling debts and distributing dividends before shutdown.
N.V. Structures in Different Countries
Requirements for N.V.s can differ based on the country. For example:
- Belgium: A primary goal is raising capital. Only one founder is needed, but two shareholders must be registered.
- Aruba: Must obtain a business license and register with the Trade Registry at the Aruba Chamber. Shareholders don’t need Aruban residency.
- Indonesia: Known as Perseroan Terbatas (PT), they can be categorized further into open, closed, foreign, and public among other classifications.
N.V. vs. B.V.
N.V. stands alongside B.V. (besloten vennootschap) as alternative corporate structures. An N.V. benefits large enterprises with a higher capital threshold, while the more private B.V. suits smaller entities with minimal capital needs.
Benefits and Drawbacks of an N.V.
Advantages
- Tax Benefits: Apply to corporate tax rates and deductions.
- Anonymity: Provide security for shareholders’ identities.
- Stock Flexibility: Shares only need to be registered, not fully paid at the start.
- Limited Liability: Shields directors from personal liability.
Disadvantages
- High Capital Requirements: Significantly more startup capital than B.V.s.
- Stock Exchange Challenges: Stringent requirements for public trading.
- Acquisition Risk: Easily acquired due to registered but non-paid shares.
Pros
- Favorable tax deductions
- Anonymity for shareholders
- No initial cash outlay
- Directors do not face personal liabilities
Cons
- Higher capital compared to B.V.
- Stringent listing requirements
- Susceptible to acquisition
Real-Life Example: Exor N.V.
One of the prominent examples is Exor N.V., rooted in 1927 by Giovanni Agnelli, now holding a market cap of about $18.2 billion (Jan 2022). Exor makes diverse investments in sectors such as automobiles, agriculture, and sports, featuring brands like FIAT Chrysler, Ferrari, and Juventus.
Frequently Asked Questions
Differences Between N.V. and B.V.
N.V. refers to public entities requiring at least €45,000 in startup capital vs. €0.01 for private and generally smaller B.V. structures.
What Does N.V. Stand For?
Naamloze Vennootschap, a term that translates to ’nameless venture'
Characteristics of an N.V.
N.V.s are legal entities that issue shares to raise capital, allowing shareholder anonymity and offering limited liability to directors.
Related Terms: shareholders, public limited company, PLCs, corporate structures, startup capital, corporate tax.
References
- Business.gov.nl. “Public limited company (NV)”.
- I AM EXPAT. “NV - Public limited company”.
- Belgium.be. “Company formats”.
- LawyersBelgium.com. “Characteristics of a NV Company in Belgium”.
- DEACI. “Corporation (NV)”.
- Ministry of Investment/BKPM. “How to Establish a PT Company in Indonesia?”
- Business.gov.nl. “Private limited company (bv) in the Netherlands”.
- LawyersNetherlands.com. “Types of structures in the Netherlands”.
- Exor. “History”.
- Yahoo! Finance. “Exor N.V. (EXO.MI)”.
- Forbes. “EXOR”.
