The laws of Aruba provide that, subject to restrictions laid down by any statutory provision or a corporation’s articles of association, the board of directors of a company shall be competent to represent the company, i.e. a limited liability company (NV, AVV or VBA). In the event of the company having several managing directors, any managing director shall be competent, insofar as not otherwise provided by the articles of association (or sometimes bylaws). The articles of association may also grant other officers, to be designated by or pursuant to the articles, representative authority, whether or not together with the managing directors.

Transactions with third parties that violate either the law or any limitations on the transactional powers of the board of directors of a company are not enforceable against the company if the limitations are properly disclosed at the trade register. Therefore, if one wants certainty as to whether a director of an NV, AVV or VBA acts within his authority, one should also inspect the trade register (and all documents filed by a company with the trade register) in order to determine whether any limitations apply to the management’s authority. All documents filed by a company with the trade register of the Aruba Chamber of Commerce are available for public inspection, including but not limited to, the articles of association.

Karel Frielink
Attorney (Lawyer) / Partner

(6 February 2010)

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The European Court of Justice, in its decision dated 23 December 2009 (Case C‑45/08; Spector Photo Group NV and Chris Van Raemdonck versus Commissie voor het Bank-, Financie- en Assurantiewezen (CBFA)), has clarified the elements of insider dealing following a request from the Court of Appeal of Brussels.

The European Court of Justice was to interpret the expression ‘use of inside information’ in Article 2(1) of EU Directive 2003/6 (the Market Abuse Directive or MAD). That provision provides that the Member States are to prohibit any person referred to in the second subparagraph thereof (a ‘primary insider’) who ‘possesses inside information from using that information by acquiring or disposing of, … for his own account or for the account of a third party, either directly or indirectly, the financial instruments to which that information relates’ or from trying to enter into such a transaction on the market. More precisely, the question is whether it is sufficient, for a transaction to be classed as prohibited insider dealing, that a primary insider in possession of inside information trades on the market in financial instruments to which that information relates or whether it is necessary, in addition, to establish that that person has ‘used’ that information ‘with full knowledge’.

The purpose of the Market Abuse Directive is to protect the integrity of the financial markets and to enhance investor confidence, which is based, in particular, on the assurance that investors will be placed on an equal footing and protected from the misuse of inside information. According to the Court, the MAD defines insider dealing objectively without the intention behind such dealing being referred to explicitly in its definition.

The Court concluded that the prohibition on insider dealing applies where a primary insider who is in possession of inside information takes unfair advantage of the benefit gained from that information by entering into a market transaction in accordance with that information. It is not necessary also to establish that the insider has “used” the information “with full knowledge”.

Karel Frielink
Attorney (Lawyer) / Partner

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According to PLC Cross Border (Which lawyer?), Spigthoff Attorneys & Tax Advisers is one of two firms dominating the Netherlands Antilles market for international work, both on- and offshore.

Spigthoff ranks high in corporate / M&A and dispute resolution.

Martijn Welten, who specializes in corporate law, mergers & acquisitions and corporate litigation, is (highly) recommended in the areas of dispute resolution and corporate/M&A.

Karel Frielink is considered a leading professional in the area of high net-worth private clients. Karel is highly recommended in the areas of corporate and M&A, and is ‘endorsed for his corporate and securities expertise which covers the transactional and contentious arenas‘. He specializes in banking, finance, securities and corporate law. Karel is the author of what is considered to be the leading legal text book on Netherlands Antilles and Aruba corporate law (‘Rechtspersonen en personenvennootschappen naar Nederlands Antilliaans en Arubaans recht’; 2nd edition 2006; 340 pages). He is also a lecturer on Corporate Law at the University of the Netherlands Antilles, President of the Curacao Bar Association and a member of the Board of Directors of the Curacao Chamber of Commerce.

The recommendations are based on independent research among corporate counsel and private practitioners.

(25 January 2010)

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Many financing arrangements are of a cross-border nature. For instance, a loan agreement governed by English law with the loan secured by a right of pledge governed by the laws of Aruba. This raises all kinds of questions.

Any foreign right, for instance a claim, in which an Aruban pledge is created, must be sufficiently identifiable (‘met voldoende bepaaldheid omschreven’) within in the meaning of section 3:84(2) of the Civil Code of Aruba.

Also, if one wishes to create a right of pledge in a foreign right, such a right must be a registered claim (‘een tegen één of meer bepaalde personen uit te oefenen recht dat niet aan toonder of order luidt’).

The following serves as an explanation of the example given. As a pledge (governed by Aruban law) merely serves to secure a claim (governed by English law), the contents of the pledge is determined by the secured claim. A pledge may secure both existing and future claims, as long as such claims are sufficiently specific or determinable. Generally speaking, a claim is sufficiently determinable if the claim arises from a contract granting a credit facility and the amount of the claim is, for instance, not arbitrary.

Karel Frielink
Attorney (Lawyer) / Partner

(23 January 2010)

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On January 1, 2009 the new Aruba Ordinance on companies with limited liability (vennootschap met beperkte aansprakelijkheid; VBA) became effective.

A drag-along right is a right that enables a majority shareholder to force a minority shareholder to join in the sale of his shares in a company (VBA). Generally, the majority shareholder doing the dragging must give the minority shareholder the same price, terms, and conditions that apply to him. The question with regards to Aruban law is whether the articles of association of a VBA may contain drag-along provisions.

Article 25(1) of the Ordinance reads basically as follows: the articles of a VBA may provide that, in cases to be precisely described in the articles, the shareholder must offer and transfer his shares to interested parties according to the terms provided in the articles or, for instance, determined pursuant to the articles by independent experts. This provision in the Aruba Ordinance will be triggered if the articles of association provide for a drag-along right. However, this provision will not be triggered if an ordinary shareholders’ agreement provides for a drag-along provision.

However, a shareholders’ agreement may contain a drag-along provision. Suppose the articles of association make reference to a shareholders’ agreement. Would that trigger the statutory provision? No, although the mere fact that the shareholders’ agreement contains a drag-along provision, does not mean that such a provision is in conflict with Article 25(1) of the Ordinance. This is also in line with the general principle of “freedom”, which governs the Ordinance. The main object of the Aruban legislator was flexibility and maximum freedom of organization and presentation. Accordingly, the Ordinance contains few mandatory provisions, such as provisions relating to the interests of creditors and minority shareholders.

Karel Frielink
Attorney (Lawyer) / Partner

(16 January 2010)

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On March 1, 2004 the act on corporate law (Book 2 Netherlands Antilles Civil Code) became effective. The Act governs NVs (‘public limited liability company’) and BVs (‘private limited liability company’). The main object of the legislator was to provide flexibility and maximum freedom for organization and presentation. Accordingly, the Act contains few mandatory provisions, such as provisions relating to the interests of creditors and minority shareholders.

Concepts like registered, subscribed and contributed capital do not appear in the Act. As a result  no minimum capital is required unless such a requirement is included in the articles of association. There may be voting shares, non-voting shares and shares with restricted voting rights. Shares may have a par value. If shares have a par value, this may differ per category of shares. The par value may also be expressed in one or more foreign currencies.

A separation may be made between the legal ownership (including voting power) and the beneficial ownership (e.g. dividends). The legal owner is called the shareholder. In principle, the beneficial owner has no rights vis à vis the NV but only vis à vis the shareholder. Generally, dividends will be distributed by the NV to the shareholder (the legal owner of the shares) and the shareholder is under an obligation to transfer the same to the beneficial owner.

In many cases, such separation is called certification (‘certificering’) and the structure is as follows: A foundation (‘stichting administratiekantoor’) issues depository receipts, i.e. instruments representing certain shares in an NV of BV held by the foundation. The receipts refer to the sort and type of shares, but are not identical to the underlying shares. The rights conferred on receipt holders are determined by the provisions according to which the receipts are issued (‘administratievoorwaarden’).

In most cases, the trust conditions stipulate that distributions by the NV or BV to the foundation as shareholder flow to the receipt holder, and grant the foundation the exclusive voting rights on the shares held by it. In the absence of a foundation structure, a private person who holds shares in an NV or BV can issue depository receipts, and instead of using the more or less ‘formal’ trust conditions and depository receipts, the parties may lay down their understanding in an agreement.

Karel Frielink
Attorney (Lawyer) / Partner

(9 January 2010)

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A Netherlands Antilles company (NV or BV) may have assets, both local and foreign. Not seldom such a company wants to sell all or a portion of its assets. If foreign assets or a foreign buyer is involved, foreign counsel always asks questions about the laws of the Netherlands Antilles. Several of those questions will be dealt with here. Let’s assume that a Netherlands Antilles company wants to sell its shares in a Dutch BV.

The Netherlands Antilles NV or BV may sell some or all of its shares in the Dutch BV. It is customary that board minutes or resolutions are prepared to approve and authorize such transactions. The transfer of shares in a Dutch BV requires a Dutch notarial deed. The actual transfer of the title to the shares itself needs to be in accordance with Dutch law. However, it is not necessary that the sale and purchase agreement be governed by Netherlands Antilles or Dutch law. Nor is it necessary to settle any disputes in the Netherlands Antilles. The parties are free to choose another forum.

The transfer of registered shares in a Netherlands Antilles NV or BV only requires a private deed. Under the laws of the Netherlands Antilles, the transfer of registered shares in an NV or BV is effected either by serving a deed of transfer upon the company, or by written acknowledgement of the transfer by the company (which may only be done as an annotation on the share certificate, if share certificates have been issued).

The shareholders of a Netherlands Antilles company may voluntarily decide to dissolve a company which requires a shareholders’ resolution in accordance with the articles of association. The sale of all or a substantial portion of the company’s assets may preclude the company from continuing the business it has been conducting. There is no statutory provision in the Netherlands Antilles covering this specific event, but the view held for many years by legal commentators (like myself) is that it should be considered a matter that falls outside the realm of a management board’s powers and that it is an action that is equivalent to the dissolution of the company, which requires a shareholders’ resolution.

It is not required that a share purchase agreement or a share transfer deed be filed, recorded or enrolled with the Netherlands Antilles courts or any government authority of the Netherlands Antilles or that any Netherlands Antilles stamp, registration, documentary or similar tax is paid in respect of the entry into any such agreement. However prior to submitting such an agreement as evidence in a court of the Netherlands Antilles, it may be required that it first be stamped with a tax stamp of ANG 5.00 per page and registered with the Registrar of Documents of the Netherlands Antilles at ANG 10.00 per document.

Karel Frielink
Attorney (Lawyer) / Partner

(2 January 2010)

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I wish you good health and heartfelt happiness. Let’s hope 2010 will be a better year, especially for the poor, the oppressed and the sick among us. May we all defend and honor human rights.

And now for something completely different. In a couple of months we will be celebrating the 5th anniversary of this weblog. Please feel free to make suggestions as to how we might celebrate this together.

Karel Frielink
Attorney (Lawyer) / Partner

(1 January 2010)

Click here for pictures of Spigthoff’s New Years Party 2010

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Good poetry begins with
the lightest touch,
a breeze arriving from nowhere,
a whispered healing arrival,
a word in your ear,
a settling into things,
then like a hand in the dark
it arrests the whole body,
steeling you for revelation.
(David Whyte)

Let’s talk about winds. Nobel winds. Nobel winds and breezes. Sometimes law even has something to say about the wind, for instance, when you consider building or buying a wind farm at a certain site. A windstorm may have legal consequences too. There are legal aspects involved when you want to connect the output of your wind turbine to a utility grid. Implementing the Kyoto Protocol, which deals with wind energy and air pollution, has legal implications too, in addition to the fact that it in itself is an international legal agreement.

Alexander Mohr is a charismatic, multi-cultural professor. He is an emeritus professor of Corporate Law at the University of Amsterdam and former Deputy Judge in the Enterprise Chamber of the Court of Appeal in Amsterdam, the Netherlands. He lives half the year in his house in Amsterdam and the other half in his house in Tanti, Argentina. He lectures and lectured in the Netherlands Antilles, Surinam, Indonesia, China and Russia: he went to those countries ‘on the wings of air’. Alexander is an adviser on company law legislation in Indonesia, Russia, Ukraine and Armenia as well as a member of the Governmental Commission on Book 2 of the Civil Code of the Netherlands Antilles. Finally, Alexander Mohr is a partner at Spigthoff Attorneys and Tax Advisers in Amsterdam and Curacao.

Alexander Mohr has a fascination for complex legal matters and also with wind. Wind as a natural phenomenon, which has, in his opinion, been overlooked in literature. He is interested not so much in the “kind of wind that sinks ships or brings down trees, or the wind that penetrates, or bites, or propels driving rain, hail or snow … but the common everyday natural phenomenon that is felt as a more or less cursory and seemingly arbitrary displacement of air.”

In his opinion, we read too little about the wind, the breeze described above. Alexander read and reread books written by 105 gifted winners of the Nobel prize for literature, many of whom were previously unknown to him. And thus created an anthology in which the wind is mentioned by all one hundred and five Nobel prize winners. As Alexander wrote in the preface: “Here are some nine dozen pearls of literature, strung together on a – well-nigh imperceptible – thread of wind: a wealth of drama, depravity, lyricism, imagination, romance, humor and other expressions of the spirit”.

Have we been waiting for this book? No. Is it a useful book? Not really… or maybe it is. Should one purchase a copy? Yes, without any doubt. It is the only book that describes exactly how this phenomenon is treated by the greatest contemporary writers of our times. We all experience the wind on a daily basis, but very few of us have ever tried to describe it. However, understanding the wind may help you to sail through life. It may add to the quality of your existence if you try to see and understand the invisible aspects of your journey.

The book: Nobel winds & breezes, edited by Alexander L. Mohr, published by A.L. Mohr Publishers, Amsterdam, The Netherlands, 2009, 638 pages; ISBN: 978-90-9024344-3.

Karel Frielink
Attorney (Lawyer) / Partner

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There are certain similarities between the Dutch and the Antillean BV, in fact they are fundamentally the same type of entity. The main object of the Antillean legislator was, however, flexibility and maximum freedom of organization and presentation. Accordingly, the Antillean Act contains few mandatory provisions, such as provisions relating to the interests of creditors and minority shareholders.

An Antillean BV may be established in a form that resembles what a foreign shareholder encounters in his own legal system: the BV can, for example, be organized like a Dutch BV or NV, a Delaware corporation, a BVI company or a German GmbH. The chameleonic possibilities of the BV contribute to its attractiveness. It should be noted, however, that a BV cannot issue bearer shares and that an NV can, in turn, only issue registered shares, which may subsequently, however, be converted into bearer shares.

The transfer of shares in a Dutch BV requires a notarial deed; the transfer of shares in an Antillean BV only a private deed. The articles of association of a Dutch BV must contain one of the transfer restrictions imposed by law, i.e. approval by a designated corporate body or the obligation to first offer the shares to co-shareholders. The articles of association of an Antillean BV may contain such or similar provisions.

There are other differences as well. For instance, in the Netherlands Antilles, concepts like registered, subscribed and contributed capital do not occur in the Act. No minimum capital is therefore required, unless such a requirement is included in the articles of association. Thus unlike in the Netherlands, in the Netherlands Antilles it is not a requirement to have a bank statement showing the payment on the shares to be issued upon incorporation.

In the Netherlands Antilles, there may be voting shares, non-voting shares and shares with restricted voting rights. Shares can have a par value which may differ per category of shares. The par value may also be expressed in one or more foreign currencies.

The main general rule is that the General Meeting of Shareholders of an Antillean BV will decide on distribution or withholding of profit and making other distributions from the equity, and that every shareholder has a right to an equal amount. However, the articles of association may provide otherwise.

Furthermore, the Antillean Act also stipulates that the articles of association of the BV can provide for distribution, completely or partially, controlled by a body specifically appointed for that purpose, for example the Supervisory Board. The Board of the BV can be organized as one-tier board or as two-tier board.

The above is just a brief summary of the similarities and differences. As far as the Antillean BV is concerned, freedom of organization with regard to the articles of association is the key concept, while the Dutch corporate code contains more mandatory provisions.

Karel Frielink
Attorney (Lawyer) / Partner

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