78
Legal Focus
OCTOBER 2013
Corporate Structuring
This month we revisit a topic that we explored last year – corporate structuring – to see how the practice area has developed over the last 12 months and if there have been any major changes to occur or any significant challenges to arise. To this end, we speak to Tim B. Schreuders from HEUSSEN B.V., a Dutch law firm based in Amsterdam. Tim is a partner in the corporate law practice and one of the firm’s founders.
What are the main challenges to arise within cross-border corporate structuring projects?
When cross-border corporate structuring projects are being implemented many different executives and professionals in often many different jurisdictions will be involved. Decision-makers, project managers, internal and external legal and tax counsel, accountants and persons working at the treasury department all have their different but important roles to play. In order to achieve the objectives that have been set, it is important that all necessary steps are taken in a timely manner and in the correct order. One of the main challenges that arise in practically all cross-border corporate structuring projects is to make certain that all legal, tax and regulatory formalities under the laws of all jurisdictions that are involved in the project are duly performed. This includes obtaining all governmental and internal approvals for each of the contemplated steps. An important factor that must be taken into account is the language factor. Although in corporate structuring projects the relevant documentation and all communication, both orally and in writing, will typically be in English, the English language will in many cases not be the native language of the persons involved in the project. This can sometimes lead to confusion or misunderstanding on the part of some of the persons involved. Another challenge that often arises particularly in case of projects that involve companies and advisers on different continents is the time difference. This should be considered particularly when certain steps need to occur in a specific order and the implementation needs to occur in different time zones.
How has the M&a market performed within this practice area over the last 12 months?
In many M&A transactions, particularly in cross-border transactions, corporate structuring is an important part of the overall project. It will often be necessary to set-up an acquisition structure in order to be able to structure the proposed acquisition in a tax efficient manner and to integrate the newly acquired entities in the buyer’s group post-completion. In the past 12 months, the M&A related corporate structuring work appears to have been fairly stable and has not further decreased compared to previous years.
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over the last year the recovery from the financial crisis has been more pronounced, is this something you have witnessed within your work?
In the corporate structuring practice area we have not seen any real signs of recovery from the financial crisis. The number of corporate structuring projects related to acquisitions (pre- and post-deal corporate reorganizations) appears to be quite stable and we have not experienced an increase in such projects. The same goes for corporate structuring projects that are primarily tax driven and for corporate structuring projects that are undertaken to reduce costs.
Have there been any recent legislative changes that have affected corporate structuring?
On 1 October 2012 the new Act on the simplification and flexibilization of the rules applicable to Dutch BVs (private companies with limited liability) entered into force. The new Act is part of a broader package of rules and legislation aimed at modernizing Dutch company law, which also includes the introduction of a “one-tier board” in Dutch corporate law on 1 January 2013. The new rules make the BV a far more flexible legal entity and even more attractive for use in the cross-border corporate structuring practice. The new BV rules include the following: • The statutory minimum capital has been abolished.
• The par value per share may be denominated in a currency other than euro.
• It is possible for a BV to have shares without voting rights and shares without profit rights attached. It is, however, not possible for a BV to have shares that have neither voting rights nor profit rights.
• In case of contributions in kind, an auditor’s certificate concerning the value of the assets to be contributed is no longer required.
• The financial assistance prohibition, prohibiting a BV from providing assistance to a third party by way of providing security and restricting the granting of loans for the purpose of acquiring shares in the BV’s issued capital, has been abolished.
• Distributions to shareholders may be made without any requirement for a minimum amount of equity to remain within the company, except for the reserves which must be maintained by law or under the articles.
• The rules on convening and holding shareholders’ meetings have become more flexible.
• It is possible to deviate in the articles from the basic statutory rule that the number of votes that a shareholder may cast is proportional to the par value of the shares that the shareholder holds.
As the Dutch BV is the legal entity most commonly used in the Netherlands as an international holding company, the new rules make it possible to implement corporate structuring projects in a more efficient and cost-effective manner.
How do you see this practice area progressing over the next year?
As long as there are international group structures through which internationally active enterprises structure their cross-border business activities, there will always be reasons (operational, tax, legal or practical) to restructure and reorganize such existing group structures from time to time. I believe that we will not see any significant increase or decrease in corporate structuring projects that are primarily tax or cost driven. The corporate structuring practice area as a whole will increase once the M&A related activity will pick up but I do not expect that this will happen in the next year. LM
contact: tim B. Schreuders Lawyer HEUSSEn de Entree 139-141 nL-1101 HE amsterdam the netherlands
telephone: +31-20-312 28 00 direct dial: +31-20-312 28 18 Facsimile: +31-20-312 28 01
tim.schreuders@
heussen-law.nl www.heussen-law.nl
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