In order to optimally achieve the goals of companies with a social object, a bill has been submitted that introduces a separate legal business form.
The aim of the social company (‘’BVm’’) is to better recognize social companies, so that social entrepreneurship is better organized and stimulated. The new legal form is relevant to entrepreneurs and organizations that work towards social goals. This could include issues related to healthcare, education, security and climate. Our earlier blog of September 1st, 2020 gives more detail about the requirements for a social company.
A separate BVm Act
The bill shows that the BVm will not be given a place in Book 2 of the Dutch Civil Code, but will be commit to in a separate BVm Act. However, this does not mean that there is a new legal entity. The BVm is a separate type of private limited company (‘’BV’’) which must comply with the same civil and tax rules as a regular BV. This also makes it clear that the BVm Act only applies to social BVs, and therefore not to other legal entities with a social object.
No absolute profit clamp
Furthermore, the bill shows that there is no absolute profit clamp. Companies are allowed to make a profit, but the social object will be placed above the making of profit at all times. The profit made will therefore have to be used as much as possible for the social object. In addition, the social results must be publicly recorded in annual reports or board reports. Another point of attention from the proposed BVm bill relates to the surplus upon dissolution of the BVm. The surplus must be allocated to another BVm or another legal entity with a social object.
Role for the civil-law notary
When acquiring the status of a BVm, a role is reserved for the civil-law notary. The directors of the company must declare before a civil-law notary that the BVm Act applies and amend their articles of association accordingly. It is then up to the civil-law notary to declare that the directors have indeed declared that the BVm Act applies and that the articles of association are in accordance with the provisions of this Act.
The bill went into internet consultation in the week of March 8. It is possible to respond to the consultation document until April 30, 2021.