The regulation for professional partnerships (maatschap), general partnerships (V.O.F.) and limited partnerships (C.V.) has been due for renewal for some years now. The current legislation, spread over two law books and dating from the 19th century, does not sufficiently meet the needs of the users of the legal forms. By providing in one, new and modern legal framework for partnerships, the new law should facilitate entrepreneurs and professionals in starting, continuing and terminating their activities.

On October 10 2022, a new internet consultation was opened on the bill Modernization of partnerships (hereinafter: the proposal). For a further explanation of the contents of the proposal of 2019, I refer to our previous blog of July 10th, 2019.

The updated version concerns a civil law regulation, tax measures and implementation provisions, including transitional law. The most important changes compared to the current legislation will be discussed in this blog.

From three to two legal forms
First of all, the proposal provides two legal forms: the partnership and the limited partnership (C.V.). The professional partnership (maatschap) and the general partnership (V.O.F.) in their old form will disappear and turn into the partnership. The distinction between the exercise of a profession or business is not applicable anymore in the new legislative. By modernizing and simplifying the legal forms, they are more in line with current practice. Based on the transitional law, existing professional partnerships (maatschap) and general partnerships (V.O.F.) can continue their legal identity.

According to the preliminary draft, the partnership was directly associated with being a legal entity when the partnership agreement was entered, an important change compared to the current law. In various responses and in the SME-assessment (MKB), attention was drawn to the consequences of this choice. In this proposal, being a legal entity is linked to acting under a common name, so it is clearer to third parties that a separate entity is acting as such.

Public and silent partnership
The preliminary draft provided an arrangement that referred to a partnership that could be both public and silent. After a reconsideration, a distinction has been made between a public partnership being a legal entity, and a silent partnership without being a legal entity. To act on behalf of the company, the partners must agree to each other’s actions, unless they have arranged otherwise. So therefore every public partnership will be a legal entity. In addition, partners must register the public partnership in the Trade Register. The explanation clarified that this concerns a specific legal entity deviating from Book 2 of the Dutch Civil Code (B.V./N.V.), with its own interpretation and character.

Clarity for partners and creditors
Being a legal entity also brings clarity for partners and creditors. By this it is easier for them to see in registers (such as the Land Registry) what the company owns. As now, the regulation also provides clarity about who may act on behalf of the company. In addition, the fictitious separated capital on the companies will disappear. Creditors can now approach to the company itself. Only if the company is unable to pay the claim, then the partners are jointly and severally liable.

Partnership agreement; be sure of the correct and appropriate content! 
In order to enter into a partnership agreement and being a legal entity by a public partnership, the intervention of a notary is not required. In that case, we would like to emphasize the importance of good advice from an expert. A common cause of unnecessary legal problems for entrepreneurs is that agreements are not or not correctly written down. By good advice, you will be sure of the correct and appropriate content of the partnership agreement. A notarial intervention is required when converting a public partnership into a – Book 2 – legal person. In addition, a notarial intervention is also required in the event of delivery of registered property or of registered shares.

Finally, according to the proposal, partners can enter and exit the partnership more easily. Withdrawal will no longer lead to the dissolution of the entire partnership, so complicated clauses can be left out.

Entrepeneur, seek good legal advice!
From our legal point of view, and in the interest of the entrepreneur, it is important that a partnership agreement is appropriate and clear. Despite the fact that a notarial intervention is not mandatory when entering into a partnership agreement, we always recommend you to seek good legal advice.

The modernization of partnerships is slowly taking more shape and we see a positive progress compared to the current legislation. Its entry into force is subject to the approval by the House of Representatives and the Senate. Anyways, we hope it is almost time to say goodbye to the current, outdated legislation and will keep you informed about the development.