The digital incorporation of a Dutch private company with limited liability in short
15 september 2023
Entrepreneurs face a constantly changing playing field, with the digitalization of various processes playing a major role. In the field of digital technologies, ever smarter programs are being developed. Take for example ChatGPT, a program that can answer questions and generate texts or even codes at the touch of a button. The civil-law notary profession is also moving along: it will soon be possible in the Netherlands to incorporate a private company with limited liability (BV) digitally. What is to come and what the incorporation process will look like is explained below.
The act on digital incorporation of private companies with limited liability (DOBV) was disposed of as a hammer piece by the Dutch Senate (Eerste Kamer) on June 27, 2023, and thus passed. This makes the digital incorporation of a private company with limited liability in the Netherlands a reality. The origin of the DOBV bill lies in a European directive, which, among other things, enables the digital incorporation of BVs. A final implementation date is not yet known, but the DOBV Act is expected to enter into force on January 1, 2024.
As a result of the DOBV Act, both domestic and foreign (starting) entrepreneurs will soon be able to incorporate a BV by means of a digital notarial deed. This possibility entails that the incorporation process will look different. For digital incorporation, it is not necessary to appear in person before the civil-law notary. Instead, the civil-law notary identifies the founder in a digital environment managed by the Royal Dutch Association of Civil-law Notaries (Koninklijke Notariële Beroepsorganisatie or KNB). The signing of the deed of incorporation will also take place digitally. This allows for an easy and flexible incorporation.
The DOBV Act will facilitate the establishment of a private company with limited liability (BV). We hereby point out the following focus points:
- Digital identification requires an electronic identifier of a high level of reliability.
- For signing, the founder needs a qualified electronic signature. As yet, few people possess such a qualified electronic signature, mainly because such a signature can only be obtained from a provider approved by the European Union.
- At first, digital incorporation will only be possible if the payment on shares is made in cash. A payment in kind, such as a contribution of shares or of a bunisess enterprise, will therefore not yet be possible with digital incorporation.
- The digital deed of incorporation has the same legal effect and provides the same legal certainty as the paper version.
- It will be possible to execute the digital deed of incorporation and articles of association in English, whereas currently BVs can only be incorporated with a Dutch deed of incorporation including Dutch articles of association (possibly with an unofficial English translation).
- The KNB has prepared a template deed that can be used for digital incorporation. However, notaries are not obliged to use this template and can make adjustments to it or use their own texts.
Although the civil-law notary profession is moving with the times, the digital deed is currently still limited to the incorporation of a BV. However, it is conceivable that the legislator will extend this facility in the future, for example to digital mortgage deeds and transfer deeds of immovable property.
Moreover, the European Union is pushing for further digitalization: in 2025 the id-wallet will be introduced. In this digital wallet, users will be able to store and manage personal and company data and documents. This includes proof of identity, diplomas or deeds. This will allow institutions, such as banks, to be easily provided with required information. It is also highly probable that it will become possible to generate a qualified electronic signature from the id-wallet, required for digital incorporation.
Hermans & Schuttevaer Civil-law Notaries is at the forefront of digitalization and the use of various digital tools, providing a simpler and more flexible notarial process. For example, after identification of a client, we already facilitate the electronic signing of documents necessary for the execution of a notarial deed, such as a deed of incorporation of a BV. In a sense, the incorporation of a BV with us is therefore already largely digital.
Keep an eye on our website to stay up to date on the digital developments coming to the civil-law notary profession.
Curious? For more information on the digital incorporation of a private company with limited liability, please contact Bob, Jasper or Emma.