«The Consequences of the Dissolution of the Netherlands Antilles for the Practice of Corporate and Finance Law: A Puzzle with a Few Missing Pieces By ...»
The Consequences of the Dissolution of the Netherlands Antilles for the Practice
of Corporate and Finance Law: A Puzzle with a Few Missing Pieces
By Bouke Boersma
The Netherlands Antilles dissolved on 10 October 2010. The two largest islands that formed part of
the Netherlands Antilles, Curaçao and St. Maarten, became independent countries within the Kingdom of
the Netherlands. Apart from these two countries, the Kingdom consists of the Netherlands and, since 1
January 1986, Aruba. The four countries stand on equal footing: each country with its own set of laws but subject to the Statute of the Kingdom (Statuut voor het Koninkrijk) and certain Kingdom Acts (Rijkswetten). The Netherlands Antilles also included Bonaire, Sint-Eustatius and Saba, together known as the BES islands. The BES islands have, as public entities, chosen to become part of the Netherlands, a status comparable to that of a Dutch municipality.
Curaçao, St. Maarten and, insofar as it concerns the BES islands, the Netherlands are successors to the Netherlands Antilles. These countries have taken the place of the Netherlands Antilles with respect to applicable laws, legal obligations and legal relationships. It should be remembered that Curaçao, St.
Maarten and the Netherlands can themselves decide, as autonomous countries, which legislation that was in force in the Netherlands Antilles before dissolution they want to amend or repeal. This article discusses the consequences of the constitutional reform in regard to the following topics: (i) the corporate and financial legislation of Curaçao, St. Maarten, and the BES islands; (ii) the applicability of treaties that were previously applicable to the Netherlands Antilles to Curaçao, St. Maarten, and the BES islands; and (iii) the validity of licenses, exemptions and other similar decisions issued or taken by Netherlands Antilles’ authorities.
II. Corporate and Financial Legislation After 10 October 2010 A. Curaçao and St. Maarten The corporate law of the former Netherlands Antilles was overhauled on 1 March 2004 and was incorporated in Book 2 of the Civil Code. The legislature of the Netherlands Antilles had intended to implement a set of ordinances to finalize the new civil law project before the dismantling of the Netherlands Antilles, but it is by now clear that the legislature of the Netherlands Antilles was unsuccessful in doing so. Curaçao and St. Maarten now want to implement these ordinances in 2011.
The most important ordinances intend to amend Book 2 of the Civil Code, introduce the concept of trusts that is based on the Anglo-American trust, amend the Code of Civil Procedure and the Bankruptcy Code of 1931 and, as the Netherlands intends to do, fully revise the outdated partnership legislation. The most significant amendment is included in the proposal to amend Book 2 of the Civil Code and simplifies the conflict-of-interest rules. As under previously applicable law of the Netherlands Antilles, the proposed rule in principle only covers legal acts between the corporation and a managing director and legal proceedings between the corporation and a managing director. The corporation must in these limited circumstances be represented by the supervisory board if there is one, and, if not, by the other managing directors, acting jointly, and, if there are none, by a person who has been specially appointed by the general meeting of shareholders for that purpose. All other possible conflicts of interest, for example, an employment contract entered into by the corporation with the son of a managing director, fall outside the scope of the proposed rule, unless the corporation’s articles of association or by-laws provide otherwise.
It should be noted that the conflicts of interest rule is optional and its applicability can be excluded partially or entirely. A legal act executed in violation of Article 2:11 is void, unless the counterparty acted in good faith (which is in practice unlikely). The general meeting of shareholders will no longer have the authority to “always” appoint special representatives to represent the corporation in conflict-of-interest
-1situations; moreover, the corresponding obligation of the managing directors to timely disclose conflicts of interest to the general meeting is done away with.
The financial supervision of the former Netherlands Antilles was sector-based, as was the case in the Netherlands before it implemented the Financial Supervision Act on 1 January 2007. The Central Bank of the Netherlands Antilles supervised financial institutions of the Netherlands Antilles pursuant to the Banking and Credit System Supervision Act 1994 (Landsverordening toezicht bank- en kredietwezen 1994), the Act on the Supervision of Investment Institutions and Administrators (Landsverordening toezicht beleggingsinstellingen en administrateurs), the Act on Foreign Exchange Transactions (Landsverordening deviezenverkeer), the Supervision of Stock Exchanges Act (Landsverordening toezicht effectenbeurzen), the Supervision of Trust Companies Act (Landsverordening toezicht trustwezen) and the Act on the Supervision of Insurance Companies (Landsverordening toezicht verzekeringsbedrijf). The legislature of the Netherlands Antilles intended to harmonize various financial supervision laws before dissolution of the Netherlands Antilles, thereby eliminating inconsistencies that mostly resulted from the fact that none of the laws was enacted at the same time. The proposed legislation covered, inter alia, the following subjects: (i) silent receivership, (ii) fines, (iii) the publication of violations and, (iv) the appointment of an auditor in certain cases. The legislation cannot be described in further detail because it has not yet been published. In any event, it is by now clear that the Netherlands Antilles legislature did not enact this harmonization legislation before dissolution of the Netherlands Antilles.
The dissolution of the Netherlands Antilles itself did not materially change the corporate and financial laws applicable to Curaçao and St. Maarten. Ever since constitutional reform, a corporation with its seat on Curaçao or St. Maarten is governed by the law of Curacao and St. Maarten, respectively (on the basis of the incorporation doctrine). The legislation that was in force in the Netherlands Antilles immediately before dissolution remains in effect in Curaçao and St. Maarten, including the corporate and financial legislation described above. Additional Article 1 of the Constitution of St. Maarten (Staatsregeling van Sint Maarten) provides that legislation of the Netherlands Antilles that was in force before dissolution continues to apply in St. Maarten until it is amended or revoked. The Act on the General Transitional Regime and Administration (Landsverordening algemene overgangsregeling wetgeving en bestuur), adopted by the Island Council of Curaçao before dissolution of the Netherlands Antilles pursuant to Additional Article 1 of the Constitution of Curaçao (Staatsregeling van Curaçao), confirms the continued applicability of Netherlands Antilles’ legislation, provided that the laws that no longer apply in Curaçao are listed in an attachment. This list includes constitutive laws that have been replaced with laws fine-tuned for Curaçao and St. Maarten, such as their respective Constitutions, and joint regulations that will be entered into by Curaçao, St. Maarten and/or Aruba. Pursuant to Article 60b of the Statute of the Kingdom, which entered into force on 16 September 2010, draft ordinances that have been enacted by the Island Councils of Curaçao or St. Maarten before the constitutional reform, have the status of ordinances since 10 October 2010. The Act on the General Transitional Regime and Administration and the Act Protecting Personal Data (Landsverordening bescherming persoonsgegevens), which area of law was not regulated in the Netherlands Antilles, were enacted by the Island Council of Curaçao on this basis before the constitutional reform.
The corporate and financial legislation of Curaçao and St. Maarten differs substantially from the corresponding legislation of the Netherlands and Aruba, but is at the same time very similar. A reason for the similarity can be found in Article 39(1) of the Statute of the Kingdom that provides that all countries within the Kingdom of the Netherlands are to have substantially the same civil and corporate laws insofar as possible (the so-called concordance principle). Although heavily debated in Dutch and Dutch Caribbean juridical literature, this principle is not affected by the constitutional reform. Curaçao and St.
Maarten have agreed that their civil, procedural and bankruptcy laws will remain the same going forward.
The new Joint Court of Appeal (Gemeenschappelijk Hof van Justitie) of Aruba, Curaçao, St. Maarten and the BES islands could otherwise not have properly functioned as a joint appellate court. It is noted that the agreement to have identical civil, procedural and bankruptcy laws will be limited to Curaçao and St.
Maarten and does not extend to the BES islands or Aruba. Curaçao and St. Maarten have also agreed that their financial supervisory legislation will remain the same, partly because the Central Bank of Curaçao and St. Maarten, which is the successor to the Central Bank of the Netherlands Antilles, has
The legal system of the BES islands is a hybrid and is complicated since the constitutional reform.
Most of the laws of the Netherlands Antilles that were in force on 15 December 2009 have been converted into laws applicable in the BES islands (these are referred to as BES laws) without important changes. The Act on the Implementation of Public Entities BES (Invoeringswet openbare lichamen BES) contains a list of all laws of the Netherlands Antilles that remain in force in the BES islands. This list includes the Civil Code of the Netherlands Antilles and all financial laws of the Netherlands Antilles, with the exception, inter alias, of the Act on Foreign Exchange Transactions (Landsverordening deviezenverkeer). Legislation of the Netherlands Antilles that has thus been converted into Dutch legislation was immediately thereafter amended by way of the Amendment Acts Public Entities BES (Aanpassingswetten Openbare Lichamen BES). Although it is odd that laws of the Netherlands Antilles that were enacted or amended after 15 December 2009 did not immediately become applicable in the BES islands, this has mattered little in practice because the Amendment Acts purport to reflect amendments enacted by the legislature of the Netherlands Antilles after that date.
Since the constitutional reform, neither the law of the Netherlands in force before 10 October 2010 nor European law is directly applicable to the BES islands. The Netherlands therefore effectively has two separate legal regimes. Perhaps surprisingly, the legal complications arising from having one country with two legal systems seem quite limited. This can be illustrated by considering three possible complications.