New legislation

The applicable law regarding the public limited liability company (N.V.) is in the process of being amended and is intended to make the N.V. more flexible and modern, comparable to the N.V. in Curacao, St. Maarten and the BES Islands. The new law is expected to be effective in the course of the year 2020. The below reflects the current laws and regulations.

Incorporation

The public limited liability company (N.V.) is incorporated by at least two (legal) persons by executing a notarial deed before a civil law notary in Aruba. This notarial deed of incorporation constitutes the statutes and regulations governing the N.V. and the conduct of affairs, generally referred to as the articles of association. The deed of incorporation has to be executed in the Dutch language. A draft of the deed of incorporation has to be submitted to the Minister of Justice together with the request for a certificate of no objection. Once the Minister has granted such certificate and the notary has duly executed the deed of incorporation, the N.V. legally exists.

Registration

Once incorporated, the managing director(s) of the N.V. is (are) obliged to register the N.V. with the Chamber of Commerce. Details to be filed include the object of the N.V., its share capital and the identity of the managing directors, supervisory directors (if any) and possible attorneys-in-fact acting under (general) powers of attorney.

Share Capital

According to Aruban law the authorized share capital of the N.V. must be at least AWG 50,000 (approximately USD 27,932.96). The incorporators must participate in the authorized share capital for at least one fifth of the issued share capital, which must remain issued and outstanding at all times. At least 10% of the issued share capital must be paid up. Consequently at the time of incorporation the issued share capital must be at least AWG 10,000 (approximately USD 5,586.59) and the paid up capital must be at least AWG 1,000 (approximately USD 558.65).

The shares of the N.V. should have a nominal value, which is determined in its articles of association. Contributions of capital in excess of the nominal capital are treated as share premium (“agio”).

Shares

As of 1 February 2012 the N.V. can only have registered shares. The N.V. will exchange bearer shares issued prior to 1 February 2012 to registered shares, unless the N.V. has reasonable doubt that the bearer is not the rightful holder of the share or if the bearer does not cooperate with the shareholder registration requirements under Aruba law. The shareholder still holding bearer shares after 1 February 2015 cannot exercise his shareholders rights, but shareholders may still convert into registered shares after such date.

The board of managing directors must keep an updated shareholders register (the “Register”). Unless the articles of association determine that there are different types of shares, all shares are regarded to have equal rights and obligations attached to them. No shares can be issued without voting rights. Certification of registered shares, constituting division between legal and economic/beneficial ownership of the shares, is possible. Besides normal shares, preference and priority shares may be issued.

As of 1 February 2012 (and for existing N.V’s as of 1 February 2013) the Register must be filled with the Chamber of Commerce. The Register will be made available for inspection by the Chamber of Commerce to appointed authorities upon request of such appointed authorities. The authorities and the Chamber of Commerce may not make the Register public without the permission of the company.

Management

The N.V. is managed by one or more managing directors (bestuurders). At incorporation the managing directors are appointed for the first time. After the incorporation the general meeting of shareholders is authorized to appoint and dismiss managing directors. Managing directors can be natural persons or legal entities. The board of managing directors represents the N.V., defines business policy and manages its affairs. All managing directors are individually authorized to represent the N.V. In many cases the articles of association determine that this is even the case in matters of conflicting interest. Limitations to the authorization to represent the N.V. can be made in the articles of association and can be invoked against third parties if properly registered with the Chamber of Commerce. The board of managing directors is responsible for the making of the annual accounts and publishing of the annual report.

If provided for in the articles of association, an N.V. may have a supervisory board of directors (Raad van Commissarissen) to oversee the management of the N.V. and to advise and supervise the managing directors. The supervisory board is appointed by the general meeting of shareholders. The articles of association may stipulate that a maximum of a third of the total members of the supervisory board by appointed by others.

Shareholders meeting

In principle, the general meeting of shareholders of a N.V. has, amongst others, the following powers:

• To amend the articles of association;
• To appoint, suspend or dismiss the managing directors;
• To appoint, suspend or dismiss the supervisory board;
• To appoint an external auditor;
• To approve the financial statements;
• To declare dividends and other capital distributions;
• To dissolve the company;
• To resolve to file for a bankruptcy or suspension of payments; and
• All other powers that have not been assigned by law or in the articles of association to another corporate body.

A general meeting of shareholders should be held at least once a year. Unless otherwise determined by the articles of association, the meeting should be held within nine months after the end of the financial year of the N.V. At the general meeting, the financial statements and explanatory notes thereto should be submitted by the board of managing directors to the shareholders for approval.

Unless otherwise determined in the articles of association the announcement to attend the annual meeting should be made in an Aruban newspaper. Every shareholder is entitled to attend the shareholders meeting. Attendance by proxy is permitted. The meeting should be held in Aruba. If the articles of association so determine, the meeting may be held elsewhere, in which case valid resolutions can only be made if the whole issued share capital is represented. Unless the articles of association determines otherwise, a simple majority of votes present and represented at meetings can validly adopt resolutions with no quorum requirements.

Valid resolutions can also be adopted outside a meeting, also held outside of Aruba, provided that the votes are cast in writing and all persons entitled to attend a meeting agree with the decision making process outside of a meeting. Unless the articles of association or Regulations determines otherwise, the same rules for adopting resolutions in a meeting applies to adopting resolutions outside a meeting.

Financial year

The financial year of a N.V. may be a calendar year or any other twelve-month period to be specified in its articles of association.

After the end of each financial year, the board of managing directors has to draw up financial statements within eight months after the lapse of the financial year. The general meeting of shareholders may extend this term in “special circumstances”. The law does not qualify what would be considered to be a “special circumstance”. The financial statements consist of at least a balance sheet, a profit and loss account, and an explanatory note to these statements. The statements have to be signed by all managing directors and supervisory directors (if any). Often the articles of association stipulate that in the event one or more managing directors do not sign the statements, the reason(s) therefore must be stated.

The N.V. must file the financial statement with the Chamber of Commerce within eight days after it has been approved by the shareholders, or within eight days after it should have been approved. The financial statements will be made available by the Chamber of Commerce to appointed authorities for inspection upon request of such appointed authorities. The authorities and the Chamber of Commerce may not make the financial statements public without the permission of the company.

Profits and distributions

The net profits of a N.V. are at the disposal of the shareholders who can either declare a dividend or reserve the profits. If the articles of association so provide, interim dividends may be declared from current year profits. Dividends and other capital distributions cannot be made if the equity capital is or becomes negative as a result of such distributions. If the N.V. wishes to make a dividend distribution which would result in the equity capital becoming negative, then the capital reduction procedure as determined by law should be followed.

Incorporation

The incorporation of a V.B.A. is effected by a notarial deed of incorporation before an Aruban civil law notary (the “Deed of Incorporation”). The Deed of Incorporation can be in any language that the civil law notary understands. The V.B.A. is incorporated by one or more persons. There is no legal requirement for the incorporator(s) to participate in the issued capital at incorporation. The by-laws of the V.B.A. can be set out in the articles of association or in separate regulations (“Regulations”). Therefore, the articles of association can be very concise.

A certificate of no objection (the “Certificate”) is required for the incorporation of the V.B.A. The Certificate is issued by the Minister of Justice (the “Minister”). To acquire the Certificate a draft of the Deed of Incorporation must be submitted to the Minister (which is actually granted by the High Commissioner on behalf of the Minister). The Minister will issue the Certificate, unless the intention or history of the person(s) who will determine the management of the V.B.A. presents a risk that the V.B.A. will be used for illicit purposes or that its activity will harm its creditors.

Registration

The civil law notary must send the required documents (including the Deed of Incorporation) to the Trade Register of the Aruba Chamber of Commerce and Industry (the “Chamber of Commerce”) for the registration of the V.B.A. in the Commercial Register and publish the incorporation in the Official Gazette of Aruba.

Share Capital

For the V.B.A. there are no legal requirements as to a maximum authorized and a minimum paid up capital. The V.B.A. may however state a maximum authorized capital in its articles of association. The shares in a V.B.A .do not have a nominal value, unless otherwise stated in the articles of association. In the articles of association, it can be determined that some or all of the shares shall have a nominal value. Certain business activities

articles of associationThe V.B.A. (and as per 1 February 2012, also the N.V. and A.V.V.) can only have registered shares. The board of managing directors must keep a regularly updated shareholders register (the “Register”). Unless the articles of association or the Regulations determine that there are different types of shares, all shares are regarded to have equal rights and obligations attached to them. At least one share with full voting and dividend rights, or one share with full voting rights and one with dividend rights must be issued to another party than the VBA itself. The articles of association can provide that the share capital of the VBA is in a foreign currency.

As of 1 February 2012 (and for existing V.B.A.’s as of 1 February 2013) the Register must be filed with the Chamber of Commerce. The Register is not available to the general public but will be made available for inspection by the Chamber of Commerce to appointed authorities upon request of such appointed authorities. Such authorities and the Chamber of Commerce may not make the Register public without the permission of the V.B.A..

Management

The V.B.A. is managed by one or more managing directors (bestuurders). At incorporation the managing directors are appointed for the first time. After the incorporation the general meeting of shareholders is in general authorized to appoint, and if the articles of associationassociation or the Regulations so determine, elect the managing directors. If stipulated in the articles of association or the Regulations, the appointment of one or more managing directors is done by specified shareholders or general meeting of shareholders. The articles of association or the Regulations may also determine that the appointment of managing directors takes place by means of a binding Managing directors are dismissed by the corporate body entrusted with the appointment of the managing directors. The authority to dismiss may be granted to another corporate body.

Managing directors can be natural persons or legal entities. The V.B.A. must in principle at all times be represented by a legal representative (wettelijke vertegenwoordiger), which must be an Aruban N.V. with a license from the Central Bank of Aruba to operate as a trust service provider. The legal representative of the V.B.A. is not a managing director, although he has the authority to report to, register and file at the commercial register, submit tax returns, issue share certificates, request a business license and to maintain contacts with the Aruban authorities. The requirement to have a legal representative does not apply if the V.B.A. has (a) one or more natural person(s) as managing directors who is/are resident(s) of Aruba or (b) a legal entity as managing director which has at least one direct or indirect natural person as managing director who is a resident of Aruba.

The board of managing directors represents the V.B.A., defines business policy and manages its affairs. All managing directors are individually authorized to represent the V.B.A., unless the articles of association provide otherwise. Limitations or exceptions to the authority to represent the V.B.A. in the articles of association can be invoked against third parties who were unaware of such limitation/exception if the articles of association including such limitation/exception waere properly registered with the Chamber of Commerce at the time that the legal act (rechtshandeling) took place. The aforementioned limitations/exceptions to the authority to represent the V.B.A can not be made in the Regulations.

If provided for in the articles of association or Regulations, a V.B.A. may have one or more members of the board of directors charged with the management (provided the number is lesser tghan half of the management board) and the remaining members of the board of directors charged with the supervision of the management (“one-tier board”). The articles of association or Regulations may also provide for a supervisory board of directors (Raad van Commissarissen) (“two-tier board”) to oversee the management of the V.B.A. and to advise and supervise the managing directors, unless the VBA has opted for a one tier board. In principle the supervisory board of directors consists of natural persons. The supervisory board of directors is entitled to suspend managing directors and if provided in the articles of association to dismiss managing directors. Unless the articles of association provide otherwise, the members of the supervisory board are appointed by the general meeting of shareholders. The legal provisions regarding the appointment, suspension and dismissal of supervisory directors are the same as for managing directors, except that for supervisory dicrectors the articles of association may provide that the authority to appoint one or more supervisory directors to a maximum of 1/3 of the total board of supervisory directors, is granted to others.

Shareholders meeting

The general meeting of shareholders of a V.B.A. has, amongst others, the following powers:

to amend the articles of association and the Regulations;

• to appoint, suspend or dismiss the managing directors;
• to appoint, suspend or dismiss the supervisory board;
• to approve the financial statements;
• to declare dividends and other capital distributions;
• to convert the V.B.A. into a N.V.
• to merge (fuseren) with or split-up (splitsing) into other legal entities;
• to dissolve the VBA;
• to resolve to file for bankruptcy or suspension of payments; and
• all other powers that have not been assigned by law, the articles of association or the Regulations to another corporate body.

A general meeting of shareholders should be held at least once a year to approve the financial statements.  The financial statements and explanatory notes thereto should be made available by the management board for review by the shareholders from the day the meeting is called to approve the financial statements.

Unless otherwise determined in the articles of association or Regulations the announcement to attend the shareholders meeting should be made by means of an invitation in writing sent to the address of the shareholders. Every shareholder and every person entitled to vote in the general meeting of shareholders is entitled to attend the shareholders meeting. Attendance by proxy is permitted.

Valid resolutions can also be adopted outside a meeting, provided that the votes are cast in writing and all persons entitled to attend a meeting agree with the decision making process outside of a meeting. Unless the articles of association or Regulations determine otherwise, the same rules for adopting resolutions in a meeting applies to adopting resolutions outside a meeting.

Financial year

The financial year of a V.B.A. is the calendar year, unless otherwise stipulated in the articles of association.

Each year the board of managing directors has to draw up financial statements within eight months after the lapse of the financial year. The general meeting of shareholders may extend this term to a maximum of six months. The financial statements consist of at least a balance sheet, a profit and loss account, and an explanatory note to these statements. The statements have to be signed by all managing directors and ithe supervisory directors, if any are in place. In the event one or more managing directors and supervisory directors do not sign the statements, the reason(s) therefore must be stated.

The V.B.A. must file the financial statement with the Chamber of Commerce within eight days after it has been approved by the shareholders, or within eight days after it should have been approved. The financial statements will be made available by the Chamber of Commerce to appointed authorities for inspection upon request of such appointed authorities. Such authorities and the Chamber of Commerce may not make the financial statements public without the permission of theV.B.A.

Profits and distributions

The net profits of a V.B.A. are at the disposal of the shareholders and other persons entitled to profit sharing (if any). In the articles of association it can be determined that upon adopting the financial statements the shareholders or another corporate body decides in direct connection with the approval of the financial statements whether to declare a dividend or to reserve (part of) the profits. The shareholders or another corporate body appointed to do so in the articles of association may decide to declare interim dividends from current year profits or from profits stated in financial statements which has not yet been approved. Dividends and other capital distributions cannot be made if the equity capital is or becomes negative as a result of such distributions. If the V.B.A. wishes to make a dividend distribution which would result in the equity capital becoming negative, then the capital or reserves reduction procedure as determined by law should be followed.