Criticisms on the Legislative proposal of modernising partnerships

10 July 2019

Criticisms on the Legislative proposal of modernising partnerships
” The current legislation of partnerships law must be modernized”. This statement is the opening of the advice of the Royal notarial Association (KNB) and the combined Commission company law (GCV) on the legislative proposal of modernising partnerships. This legislative proposal is given in consultation on February 21st, 2019. In a nutshell, the proposed law provides any private company to obtain legal personality. In order to obtain legal personality, it is not required to pass the notary nor register the company in the commercial register of the Chamber of Commerce. For a further explanation of the contents of the Legislative proposal, I refer to our previous blog of March 22nd, 2019. Although the KNB and the GCV recognize the need for modernisation of the law, they still have some comments regarding it.
The KNB encounters especially on the lack of notarial safeguards on the partnerships. According to the new rules of the Legislative proposal there is no longer a notarial deed required. Because of the lack of a notarial deed, the legal certainty and legal protection can not be guarenteed, according to the KNB. This will also make it more difficult to prevent fraud and abuse. The same is true in the cases of dissolution and liquidation of the partnership, a merger or Division and also the conversion of the partnership in another legal form.
In the Legislative proposal the choice for registration in the commercial register of the Chamber of Commerce is left to the partnership. In case the partnership is not registered it can not obtain any registered property nor can occur as heir. The opinion of the GCV is that every company is required to register in the commercial register. Registration in the commercial register proves the exintence of the company and the method of representation of the company. In addition, a certificate of registration in the trade register is often needed in practice, for example when opening a bank account. Thereby it is, according to the GCV, not often to be expected that a company isn’t registered. Mandatory registration is therefore a logical step.