Legal entities in Curacao.
When you start a business, you will have to choose a Legal Entity. In Curacao you can chose: N.V., B.V., C.V., V.O.F., Proprietorship, and Foundation.
The private limited liability company (besloten vennootschap, hereafter also “BV”) is a flexible and highly modern form of corporation. The CIFA (the Curaçao International Financial Services Association) has taken the initiative to have the rules for the BV drafted.
The BV is a company similar to the NV. The main differences with the NV. are:
- The BV has registered shares only;
- The Articles of Incorporation can determine that the shareholders can be held liable for the debts of the BV;
- The Articles of Incorporation of the BV can contain a different manner for dissolution of the company;
- If preferential rights should be attached to shares, such should be provided for in the Articles of Incorporation of the BV;
- Delivery of shares of an BV can only take place in the manner as provided for by law;
- There is no distinctive financial regime such as for the “large” NV;
- There is a more flexible regulation for convening shareholders meetings for the BV than for the NV;
- The Independent Supervisory Board is not regulated in the law;
- Only the BV has the possibility of company “managed by shareholders”.
Legal entities in Curacao – C.V.
The Commanditaire Vennootschap (“CV”) is a limited partnership in which there is a distinction drawn between the limited partners and the general or managing partners. The general or managing partners manage the affairs of the CV and represent it in dealings with third parties. They are jointly and severally liable for the debts of the CV. A limited partner however contributes to the partnership a certain amount of capital. His liability is limited to the amount of capital contributed.
A limited partner is prohibited from directly managing the affairs of the CV, however he can represent the general partners as their attorney-at-fact. If a limited partner is involved in the direct management of a CV he forfeits his right to the protection of limited liability and becomes jointly and severally liable for the debts of the partnership, together with the general or managing partners.
Legal entities in Curacao – V.O.F.
The Vennootschap Onder Firma (“VOF”) is a general partnership in which the individual partners are jointly and severally liable for the debts of the partnership.
Legal entities in Curacao – Proprietorship
A proprietorship (eenmanszaak in Dutch) is a form of business where there is no distinction between the business assets and personal assets. As the owner of a one man business, you will be personally liable for all obligations of the business. A marriage settlement is important and should be considered. A marriage settlement has to be effectuate through a notary act.
Legal entities in Curacao – Foundation
A foundation (or stichting in Dutch) is a legal entity in its own right with its own assets and liabilities. The legal concept of the stichting developed ages ago from capital being set aside for a special non-profit or charitable purpose and was originally used by religious and welfare groups. The stichting is still frequently used for religious and nonprofit organisations. Distributions to incorporator or to those, who constitute its bodies, are not allowed, and its distributions are furthermore restricted by law to distributions with an ideal or social purpose.
The foregoing does not mean that the use of a common foundation is restricted to charitable purposes. It can be and is extensively used in structures in which the foundation is the legal owner of assets of which others hold the economic ownership. Any distributions are then neither out of its own funds nor out of its own income and are thus permissible. Also, the restriction does not apply to liquidation distributions: it is permissible to state in the articles of incorporation that upon liquidation the assets shall be distributed to e.g. the incorporator. A stichting can for example act as custodian or trustee of assets, entrusted and transferred to it for the purpose of investing, administering and managing such assets on behalf of third parties. A stichting is therefore an ideal vehicle to realise an economic transfer, without transferring control of the assets.
The principal difference between a stichting and a corporation is that a stichting has neither members nor shareholders, nor a capital divided into shares. The board of a stichting, which manages its affairs, is therefore not subject to the overall control of shareholders or members. The initial managing board is appointed at the moment of incorporation. Thereafter vacancies are filled at the sole discretion of the sitting board or by another person or body specially nominated for that purpose.
The foundation may be formed for an unlimited duration, for a certain period of time, or until a specified event occurs. The foundation can be dissolved by resolution of the board, unless the articles of incorporation provide otherwise. It is for example possible that the incorporator has the authority to dissolve the foundation.