Initiation of a legal regulation of a social BV

Consultation on a legal framework for private limited companies (BVm) with a social purpose began on Tuesday. According to the draft bill, notarial representation is required to become a BVm. The aim of the framework is to recognize and improve the recognition of social enterprises.

According to the proposal, a BVm is a private limited company (BVm) that possesses certain characteristics guaranteed by the BVm Act. A BVm must prioritize its social purpose when allocating profits and making distributions. This is conditional on this not jeopardizing the sustainability and long-term interests of the company belonging to the BV.

Social goal
A BVm is obligated to pursue or promote a socially important objective through its activities, as defined in its articles of association. What constitutes a socially important objective is defined in the BVm Act. This includes, among other things, welfare, healthcare, and public housing. Furthermore, the articles of association of a BVm must stipulate that, in the event of dissolution, the liquidation balance will be allocated to another BVm or another legal entity pursuing a charitable or social objective.

(Recognition
The proposed legal framework will give social enterprises the option of applying for BVm status to gain better recognition in society. The Trade Register will indicate whether a BV is a BVm. Furthermore, a social enterprise belonging to a BV may use the addition "BVm" or "BVm" in its trade name if it meets the requirements of the framework. This will make the social enterprise more visible to clients, financiers, customers, and other stakeholders.

No new legal form
The BVm does not introduce a new, separate company as a legal entity or a variation thereof. The BVm, as the government previously outlined, remains a legal entity with a private limited company (BV) as its legal form. A BV with a social purpose must continue to comply with all the requirements in Book 2 of the Dutch Civil Code for being and acting as a BV. According to the proposal, a BV is a BVm if:

The directors of the private limited company (BV) have expressed their intention before a civil-law notary that the BVm Act unconditionally applies to the BV; the BV's articles of association comply with the requirements of the BVm Act at the time of the directors' expression of intention; and a civil-law notary has declared in a notarial deed that subparagraphs a and b have been met.

An authentic copy of this notarial deed must be filed with the Chamber of Commerce. Furthermore, the applicability of the BVm Act to a BV must be notified to the Chamber of Commerce for registration in the Trade Register.