Introduction
Book 2 of the Aruba Civil Code (hereinafter: Book 2 ACC) entails the new Aruba company law that became effective on January 1st, 2021. The relevant changes are discussed below.
A coherent company code
The Aruba company law was until recently scattered over several laws, i.e. the Commercial Code (Wetboek van Koophandel) for the NV / AVV / Insurance Company, Book 7A:1665 ACC for the Association, Book 5:112 ACC for the Owners Association, the VBA Ordinance (Landsverordening vennootschap met beperkte aansprakelijkheid), the Ordinance on Foundations (Landsverordening op stichtingen), and the Ordinance on Cooperative Associations (Landsverordening op cooperatieve verenigingen).
Book 2 ACC introduces a coherent company code that includes and regulates all legal entities in one Book (2:1(1) ACC). It is noted that other entities may also qualify as legal entities under Book 2 ACC if so decided by the Aruba Court (2:1(2) ACC). Limited and general partnerships (CV’s and VOF’s) do not have legal entity status and thus are not included in Book 2 ACC.
The company/director-relationship
The relationship between the company and the director(s) may constitute an employer-employee relationship, if so expressly agreed upon (Article 2:8(5) ACC).
The Aruba Exempt Company is phased out
The Aruba Exempt Company, the AVV (Aruba Vrijgestelde Vennootschap) is phased out. The AVV regime is discontinued and the VBA regime becomes applicable to existing AVV’s (exceptions apply). The AVV must be converted into a VBA, an NV or other legal entity within 3 years of the introduction of Book 2 ACC, hence not later than on January 2nd, 2024 (Article 37cc (2) Transitional provisions new ACC). The transition period may be shorter, e.g. in case the AVV wishes to amend its bylaws.
No bearer shares only registered shares
The issuance of bearer shares (aandelen aan toonder) is not possible under Book 2 ACC. All existing bearer shares are automatically converted into registered shares with the introduction of Book 2 ACC. Rights connected to the bearer share are deferred until the bearer certificate is returned, which should take place on January 2nd, 2022 at the latest. If not, the shares will go over to the company for free. It is noted that the issuance of bearer shares is no longer possible in Aruba since 2012, and that rights connected to bearer shares can no longer be exercised since February 1st, 2015.
Fewer requirements to establish a company
The establishment of a company is subject to fewer formal requirements under Book 2 ACC. The ministerial ‘declaration of no objection’ for the NV and VBA is scrapped, as well as the publication requirement for the NV. Furthermore, the NV no longer requires a registered capital (maatschappelijk kapitaal).
VBA: regulations instead of bylaws
The VBA may suffice with regulations instead of bylaws. Bylaws must be registered with the Chamber of Commerce which makes them available to the general public. Regulations that are attached to or included in a notarial deed need not be registered (2:150(2) ACC).
The layout of the company is flexible
Book 2 ACC allows for a flexible layout of the company. The option of a one-tier board, wherein the board consists of executive and non-executive board members, also becomes available to the NV (2:18(1) ACC). The option of a one-tier board already applies to the VBA (51(1) VBA Ordinance). Board members may be appointed by binding nomination or by others than the general meeting of shareholders. Shares may be issued to a shareholder condition to the performance of certain actions, or the bylaws may exclude or instruct a transfer of shares under certain circumstances.
Specifically for the VBA applies that one or more board members, or members of the supervisory board, may be appointed or elected by one or more shareholders individually or by a general meeting of shareholders with shares of a specific kind or class. Furthermore, shares in the VBA may be valued other than at the nominal value. Moreover, shareholders of the VBA may be held liable for debts of the company.
Stricter accounting rules (optional)
Book 2 ACC introduces the possibility for the NV and the VBA to opt for stricter accounting rules (2:120-126 ACC). Under the strict regime (verzwaard regime), the term for the preparation of the company’s financial statements is reduced from 8 months to 6 months, following the end of the book year. The financial statements must be audited by an external accountant, and the statements must comply with accounting standards as determined by the International Accounting Standards Board or the International Public Sector Accounting Standards Board, or similar reporting standards.
ABV: simplified decision-making for a shareholders-directed LLC
Book 2 ACC introduces the simplified decision-making process for the NV, in case all shareholders also act as directors of the company (ABV: Aandeelhouders-Bestuurde Vennootschap, 2:133(7) ACC). In said case, there is no distinction between board and general meetings, and all decisions may be taken in any meeting, provided the convocation rules for a general meeting are met. In case a board decision would require the approval of the general meeting, then said approval is considered implied in the board decision. The ABV was regulated for the VBA in 44(8) VBA Ordinance.
The derivative suit
The derivative suit is introduced for the NV. The general meeting, or one or more shareholders of the NV may request the board (or the supervisory board) to inquire whether a board member can be held liable for the improper performance of his duties. The board is required to, within 30 days, convene a general meeting to inform whether or not the request will be complied with. In case of non-compliance, any shareholder may hold the board member liable and file a lawsuit against him on behalf of the company. The derivative suit already applied to the VBA prior to the introduction of Book 2 (60 VBA Ordinance).
A right of inquiry with sanctions
Book 2 ACC introduces certain sanctions to be applied by the Court of Appeal when the company is subjected to an inquiry (recht van enquete). The sanctions are provisional or final. Provisional sanctions include among others the suspension of decisions by the board or the general meeting; the suspension of board members and the appointment of interim board members; a court order to perform certain actions or to refrain from performing certain actions by the company or persons connected to the company (2:276(4) ACC). Final sanctions include the annulment of decisions by the board or the general meeting; the dismissal of board members; the dissolution of the company (2:283 ACC).
The right of inquiry is new for the VBA, and also applies to non-commercial associations and foundations.
Other changes
Book 2 ACC furthermore introduces the requirement of a legal representative company for offshore NV’s. Also the forced buyout by the majority shareholder and resignation by a minority shareholder is introduced, as well as the conversion, the legal merger and legal division of companies.