In July 2020, the Dutch government announced its plans to introduce the BVm (maatschappelijke BV) in Dutch corporate law – see our previous In Context article. The BVm is a new type of private limited liability company for social entrepreneurs active in addressing societal issues. The new type of legal entity will make it easier to identify companies with a positive impact on society. This will in turn help social enterprises and stakeholders connect and do business with each other.
The BVm option will offer social enterprises new business opportunities and legal recognition. The Dutch government has announced active government support via funding, knowledge sharing, and regulations and legislation. On 9 March 2021 a regulation outline for the BVm was made available for public consultation, and is open for feedback until the end of April 2021.
Key features of the outline
- The new legal entity can only exist as a BV. A public limited liability company (NV) or a cooperative is not considered a suitable option for social enterprises.
- When incorporating a BV or amending a BV's articles of association, the company can opt for BVm law to apply. From this moment on, the BVm status of the company can be identified by using "B.V.m" or "BVm" in its trade name.
- The BVm is required to pursue or promote, through its activities, objectives that benefit society. The following topics are regarded as relevant objectives to include in the BVm's articles of association: welfare; culture; education; science and research; protection of nature and the environment; health care; care of young people and the elderly; animal welfare; religion and spirituality; promotion of the democratic legal order; public housing; human rights; labour market participation; or a combination of these objectives.
- The primary purpose of BVm's is to have a positive impact on society, above realising purely financial profits. The management board of a BVm may, therefore, only approve a dividend distribution if it does not have (or does not need to have) any reasonable doubt that the distribution will prevent the BVm from achieving its primary purpose.
- The BVm must include a report, or paragraph in its management report, describing how it is benefiting society. This should be available annually and should include: the objectives, activities and values achieved in the past financial year. This requirement applies to all BVms regardless of their size.
- The tax status and regime of the BVm are equal to those of the BV. Based on the current legislative outline, the BVm will not have any additional tax benefits compared to a BV.
It is too early in the process for clients to act in anticipation of the proposed changes, but we will keep you informed on further developments. Please reach out to your De Brauw client team, or to one of our corporate advisory experts, to discuss any questions you may have.