Excuus, deze pagina is alleen beschikbaar in het Engels.

Publication
03.11.2022
The modernization of partnership law is a long-term process. On 10 October 2022, in response to the comments on the consultation for new rules for partnerships of early 2019, civil-law rules and tax measures (jointly: "the bill") as well as a number of implementing provisions (hereinafter: transitional law) were submitted for consultation.

This is based on the 2016 report by the partnership working group (hereinafter: "the report"). The consultation period ends on 10 February 2023.

This update covers the following elements of the bill:

Introduction of public and undisclosed partnerships without distinction between profession and business
In the bill, the current public partnership (openbare maatschap) and the general partnership (vennootschap onder firma) will be replaced by the new public partnership (openbare personenvennootschap). A public partnership is a partnership that participates in legal transactions under a name used by the partnership and in a manner that is clearly recognisable to third parties. In addition, the bill introduces the undisclosed partnership (stille personenvennootschap). This corresponds to the current undisclosed partnership (stille maatschap) and, according to the bill, it is a partnership that is not public.

The limited partnership (commanditaire vennootschap) will continue to exist as a particular type of public partnership. All partnerships may be used to conduct both business and professional activities. On the basis of transitional law, existing entities of the forms vennootschap onder firma and maatschap may continue to be referred to as such, provided that they continue to meet the corresponding criteria. The designation limited partnership will continue to exist. Partnerships are formed by agreement. As under current law, the bill presumes that this agreement is laid down in a deed; however, this is not a formal requirement but a rule of evidence.

Introduction of legal personality and registration with the trade register
The bill introduces legal personality for public partnerships and limited partnerships. Undisclosed partnerships do not have legal personality. Legal personality is linked to – and effected by – publicly acting under a common name. This does not require drawing up a notarial or private deed or registration with the trade register.

According to the main rule in the bill, public partnerships are to be registered with the trade register. This means that the partners are registered too. In the event that, or for as long as, the public partnership has not been registered with the trade register, it will have limited legal capacity. A public partnership that has not been registered cannot act as director of a legal entity, cannot effect its conversion into another legal form, cannot merge or demerge, cannot acquire registered shares or registered property and cannot be entitled to restricted rights created on the aforementioned goods, nor can it inherit.

Based on the definition in the bill, a limited partnership must be registered with the trade register. This could mean that, as long as an entity intended to be a limited partnership has not been registered in the trade register, it may be qualified as a public partnership or an undisclosed partnership, which creates the risk that limited partners attract liability. The bill needs to be clarified on this point. According to the explanatory memorandum to the bill (hereinafter: "the explanatory memorandum"), a new element appears to be that limited partners with a certain minimum interest must be registered with the trade register. According to the explanatory memorandum, transitional law would provide for this. However, there is no such provision in the transitional law.

According to Article 18 of the Trade Register Act, if an undisclosed partnership conducts a business, it is obliged to register with the trade register. If the undisclosed partnership becomes a public partnership as a result of that registration with the trade register, the assets will pass from the undisclosed partnership's community to the public partnership by universal title at the time of registration, according to Article 810(2) of the bill. For non-registered property, this may be done without any further acts being necessary. If registered property is involved, the partnership will have to ensure that the registration is updated afterwards, for example by notifying the Cadastre, Land Registry and Mapping Agency. See the overview here.

Partnership assets
Under current law, it follows from Supreme Court decisions that general partnerships and public partnerships must hold separate assets; there was some discussion on this point in relation to undisclosed partnerships. The bill now provides clarity. Public partnerships and limited partnerships will have legal personality. This will simplify the rules on new and departing partners and the transfer of goods to partnerships. The bill provides that undisclosed partnerships must hold separate assets in the form of a special community.

Management and representation of partnerships
Responsibility for the partnership's management would, in principle, continue to be vested in all of the partners (with the exception of limited partners in the case of a limited partnership). In principle, when managing an undisclosed partnership, consent is required for effecting legal acts performed for the account of the partnership. An exception to this rule applies in the case of a public partnership, where each partner is authorised to perform, for the account of the partnership, all legal acts falling under the partnership's normal activities, as well as legal acts that permit no delay. This concerns the internal relationship between the partners. With regard to representation, a distinction is made between public and undisclosed partnerships. In the case of public partnerships, each partner is, in principle, authorised to represent the partnership. Any possible restrictions on this power should be recorded with the trade register in order to be enforceable against third parties. An undisclosed partnership can still only be represented by means of a power of attorney.

Under current law, the limited partner is, in principle, prohibited from performing management acts on behalf of the limited partnership, even if a power of attorney is granted to this end. The bill takes a fundamentally different approach: a limited partner is allowed to represent the partnership if the partner in question has been granted a power of attorney to do so.

Partners' joint and several liability
The partners of a public partnership and an undisclosed partnership are jointly and severally liable, regardless of whether the partnership performs professional or business activities. In this respect, the liability includes obligations arising from legal acts, legislation and wrongful acts. The liability of partners in a partnership for equal shares ceases to exist. It is worth noting that this simplified liability regime is clearly explained in the explanatory memorandum, while in the bill itself this joint and several liability only follows from Article 814, which provision only applies to public partnerships. In principle, in the case of limited partnerships, liability only applies to ordinary partners and not to the limited partners. In the case of public partnerships, subsidiary liability applies, i.e. liability to the extent that the public partnership is in default. Furthermore, specific rules are introduced for public partnerships on the acceptance of assignments, after the Biek Holding decision met with much criticism. Only those partners entrusted with the performance of the assignment will be jointly and severally liable along with the public partnership.

The limited partner in a limited partnership is jointly and severally liable if that partner has managed the limited partnership as if he was an ordinary partner, or has acted on the basis of a power of attorney, and if this is an important cause of the bankruptcy of the limited partnership. The main rule remains that the limited partner will not be liable beyond the agreed contribution.

Obligations of new and departing partners
If partners join or exit the partnership, this will no longer result in the general dissolution of a partnership, but in the partial dissolution of the agreement, i.e. to the extent it relates to the departing partner. In addition, a proposed new rule regarding the joining of a public partnership that is registered with the trade register is that the joining partner is merely bound to the contractual obligations that had already been assumed by the public partnership before the partner joined the partnership but that only become due and payable after their joining. Contrary to current law, this only applies to obligations arising from agreements. The bill contains no provisions regarding undisclosed partnerships and public partnerships that have not been registered.

A special limitation period is introduced for the departure of partners from public partnerships registered in the trade register. The departing partner will remain liable for obligations assumed by the public partnership for a maximum period of five years. This special limitation period does not apply to partnerships that have not been registered with the trade register, which are subject to the ordinary limitation period laid down in Title 11 of Book 3.

Right of pledge and usufruct
New rules are proposed regarding the establishment of a right of usufruct on a participation right (referred to as 'legal relationship' in the previous consultation) of a partner in a public partnership or limited partnership. In addition, an arrangement is introduced for the establishment of a right of pledge on a right to distribution charged to the assets of the public partnership or limited partnership, on a compensation in the event of departure, or, if agreed, on a participation right. A pledgee can obtain control rights in connection with the restricted right, a usufructuary cannot. For the time being, the bill does not provide for an arrangement for the establishment of a right of usufruct or pledge in connection with undisclosed partnerships.

Restructuring
An arrangement has been included for the conversion of public partnerships that are registered in the trade register. This arrangement is in line with the provisions of Book 2 of the Dutch Civil Code. Public partnerships can be converted into every other legal entity and vice versa, subject to rules to protect creditors, partners and minority shareholders. For example, partners or former partners remain liable on the same grounds for debts that had arisen prior to the conversion. The possibility of converting a public partnership or limited partnership into an undisclosed partnership, or relinquishing legal personality, has not been included. Conversely, an undisclosed partnership can first be disclosed, after which conversion into every legal entity is possible. Rules governing mergers and demergers will be introduced in the future. A limitation of liability has been provided for a change in status from general partner to limited partner and vice versa.

Dissolution, liquidation and continuation
The bill introduces the possibility of dissolution and liquidation of the public partnership and the limited partnership. In this respect, alignment was sought with the arrangement for legal entities defined in Book 2 of the Dutch Civil Code. The basic principle remains that liquidation will be performed by all partners jointly, unless otherwise agreed or resolved. In addition, the bill allows a remaining partner to continue the public partnership under sole proprietorship. What is new is that in that case the assets of the public partnership will transfer to the continuing partner by universal title after three months. Another novelty is the option of one partner continuing the public partnership temporarily. If a second partner joins within three months, the public partnership will be restored. The dissolution and liquidation of an undisclosed partnership with a special community takes place pursuant to Title 3.7 of Book 3 of the Dutch Civil Code.

Transitional law, transfer by universal title and tax aspects
Based on transitional law, every general partnership, limited partnership and old public partnership will become a public partnership with legal personality after the bill has entered into force. Goods belonging to general partnerships, limited partnerships or public partnerships will transfer directly to the new partnership by universal title. The transfer by universal title only concerns goods that were delivered in the name of the partnership, general partnership or limited partnership.

Undisclosed partnerships will remain undisclosed partnerships. With regard to tax aspects, it is relevant that despite their legal personality, public partnerships will be considered transparent for income tax, corporate income tax and dividend tax purposes, as they are under current law. This also applies to limited partnerships with the exception of so-called open limited partnerships. Undisclosed partnerships do not acquire legal personality and therefore also remain transparent for tax purposes.

We encourage modernisation of partnerships so that loopholes and ambiguities from current law no longer need to be filled in contractually. Although the bill still has a few points for improvement and the consultation period runs until February 2023, we hope that this lengthy legislative process will be brought to a definitive conclusion as soon as possible. We will inform you if there are any relevant developments. Our Corporate Governance team is happy to discuss how we can help you to navigate this evolving landscape.

Related articles

Cookie notificatie

Deze website maakt gebruik van cookies en daarmee vergelijkbare technieken om een optimale gebruikerservaring te bieden. Je kunt je voorkeuren aanpassen of meer informatie bekijken.
Deze cookies zorgen ervoor dat de website naar behoren werkt. Deze cookies kunnen niet uitgezet worden.
Deze cookies kunnen geplaatst worden door derde partijen, zoals YouTube of Vimeo.
Door categorieën uit te zetten, kan het voorkomen dat gerelateerde functionaliteiten binnen de website niet langer correct werken. Het is altijd mogelijk om op een later moment de voorkeuren aan te passen. Bekijk meer informatie.