Stichtings (foundations)
A stichting is a legal entity with full legal authority. It has no members, no shareholders, no owners, no distributions (unless of a charitable nature), and no minimum capital (Dutch Civil Code, Book 2, article 285 and following). It has numerous uses, including: charity and fundraising purposes or administration of shares in a company, of an art collection, or of other property. Stichtings operate through a management board and have one or more members. Legal entities and natural persons may be board members; it is not necessary that Dutch residents are on the board.
The problem with the stichting is that, by law, it is forbidden to make distributions to the incorporator and/or officers of the foundation, and distributions to other parties are only allowed if those distributions are of an idealistic or social nature. Honouring a contractual obligation – for example, payments of dividends to a holder of depositary receipts – is not regarded as a distribution.
The problem with the stichting is that, by law, it is forbidden to make distributions to the incorporator and/or officers of the foundation, and distributions to other parties are only allowed if those distributions are of an idealistic or social nature
The stichting is incorporated by notarial deed. It is registered in the Trade Register of the Chamber of Commerce and a copy of the articles of association is kept in the Trade Register. The stichting is the owner of the property, and there are no beneficial owners.
Stichting administratiekantoor (administrative foundation)
This legal entity takes the form of a foundation, and is incorporated to administer property. The aim is to create a division of legal ownership and beneficial ownership in order to transfer the property to the stichting administratiekantoor in exchange for depositary receipts. The conditions of administration contain the rules applicable between the stichting administratiekantoor and the holder of the depositary receipts. These structures are frequently used to hold shares in a company, hold an art collection, a portfolio, a racehorse and so on.
The stichting administratiekantoor is registered in the Trade Register of the Chamber of Commerce. The stichting is the owner of the property. The owners of the depositary receipts are the beneficial owners of the property owned by the stichting. Upon the death of a holder of a depositary receipt, the depositary receipt is inherited by their heirs. The owners of the depositary receipts are not known to the public and are not registered in any public register.
Stichting particulier fonds (private foundation)
In the Netherlands Antilles, it is possible to incorporate a stichting particulier fonds (SPF), which can make distributions of a social nature. The SPF is not allowed to have profit-making via a commercial activity as its statutory purpose.
Usually, a trust office acts as incorporator. Upon incorporation, so-called incorporator’s rights can be granted. This is a personal right that is transferred to the settlor, giving them the right, inter alia, to appoint the members of the management board, to appoint or exclude beneficiaries, and so on. Management must be by a Netherlands Antilles resident. Management has discretionary powers, and a letter of wishes may exist.
The SPF is registered in the Trade Register of the Chamber of Commerce in the Netherlands Antilles. The SPF is the owner of the property. Like a trust, there are present or future beneficial owners who may or may not have fixed rights.
Vruchtgebruik (usufruct)
The beneficiary is the legal owner of the property, but not the beneficial owner as long as the usufruct lasts. The usufructuror has the right to receive the profits of the assets and to use them. It is possible to give the usufructuror the right to dispose of the property without the prior consent of the legal owner. Furthermore, the usufructuror may be given the right to spend and use the property for their own purposes. It is common practice to give the usufructuror the right to freely spend the property and to freely dispose of it. In that case, the legal owner has no power whatsoever while the usufruct is in place.
When the usufruct rests on real property, it is registered in the Land Register. It is not unusual to appoint a bewindvoerder (administrator) with respect to the property burdened with a usufruct. In that case, the bewindvoerder has all powers given to the usufructuror.
Bewind (administration)
Two types of bewind exist:
- A public bewind created by court order to protect the interests of an incapacitated adult.
- A private bewind created by will with respect to inherited property, or by a private deed on the occasion of a donation with respect to donated property.
The private bewind is frequently used. The heir/donee is the legal and beneficial owner but has no access to the assets. The bewindvoerder has full discretion to sell the property or invest in property without requiring the prior consent of the legal owner. The bewindvoerder also has full discretion to make distributions from the property to the legal owner.