Published on · Last updated
A joint venture is a cooperation between two or more businesses on a shared project, either by contract only or through a jointly owned company. Dutch law has no specific joint venture statute. A contractual joint venture can qualify as a partnership (maatschap, Article 7A:1655 Dutch Civil Code); a joint venture company is often a private limited company (besloten vennootschap, BV, Article 2:175).
The term joint venture is used for various forms of business cooperation between two or more partners (venturers). The companies cooperate but remain separate businesses; there is no merger. Depending on the structure, however, they can become liable for the debts of the joint venture (see below). A joint venture with a Dutch company requires a good understanding of the position of the Dutch partner and of Dutch law. Our Dutch lawyers are happy to assist.
Let’s take the example of two companies that want to manufacture a product that must first be preceded by a research and development process. The parties can then set up a joint venture for the development and production of their product. In this case, each company contributes something, for example knowledge, the possibility of using a factory hall and machines or the supply of a certain waste product which, after a recycling process, forms the raw material for the new product.
Particularly in the case of cross-border business cooperation, it is advisable to draw up the contract details with the assistance of a specialist attorney for business law and Dutch contract law in order to ensure that interests are protected in the event of a dispute.
What Is a Joint Venture with a Dutch Company?
A joint venture involves two or more businesses pooling resources, such as capital, knowledge or facilities, to achieve a specific goal.
For a foreign business, a Dutch partner can bring local knowledge, customers or facilities. Before the parties start, they should choose a legal structure, because the structure determines liability, control and the options to exit. Tax consequences differ per structure and per country and should be checked separately.
How Does Dutch Law Impact Joint Ventures?
Under Dutch law, a joint venture can be a contractual cooperation or a separate legal entity, often a private limited company (besloten vennootschap, BV). Each structure has its own consequences for liability, tax and governance:
- Contractual joint venture. If the parties agree to bring something into a common pool in order to share the resulting benefit, Dutch law treats this as a partnership (maatschap, Article 7A:1655 Dutch Civil Code). A creditor who dealt with the partners can, in principle, hold each of them liable for an equal share (Article 7A:1680).
- General partnership. If the partnership carries on a business under a common name, it is a general partnership (vennootschap onder firma, Article 16 Commercial Code). Each partner is then jointly and severally liable for all its obligations (Article 18 Commercial Code).
- Joint venture BV. A BV is incorporated by notarial deed (Article 2:175(2) Dutch Civil Code). A shareholder is not personally liable for acts performed in the name of the BV and does not have to contribute to its losses beyond what it must pay up on its shares (Article 2:175(1)).
It’s crucial for businesses to consult with Dutch legal experts who specialize in contract law and corporate structures. This ensures compliance with local regulations and alignment of the joint venture’s objectives with legal requirements. Setting up the vehicle itself is described in founding a company in the Netherlands.
What Are the Key Considerations When Forming a Joint Venture in the Netherlands?
When forming a joint venture in the Netherlands, several critical factors must be considered. First, due diligence is essential to understand the potential risks and align strategic objectives between the entities.
Secondly, the joint venture agreement should set clear terms on contributions, profit sharing, intellectual property rights, decision-making and exit. In a joint venture BV, the articles of association can give each class of shares the right to appoint directors, provided every shareholder with voting rights can take part in the appointment of at least one director (Article 2:242(1) Dutch Civil Code). A director must act in the interest of the company, whoever appointed him. According to the Dutch Supreme Court, in a joint venture company that interest is also determined by the nature and content of the cooperation agreed between the shareholders (HR 4 April 2014, ECLI:NL:HR:2014:797, Cancun, paras. 4.2.1 and 4.2.3).
What is the advantage of a joint venture contract?
Parties concluding a joint venture agreement enjoy freedom of contract: in principle, they shape their cooperation themselves. That freedom has limits. An agreement that conflicts with mandatory law, public order or good morals can be void or voidable (Article 3:40 Dutch Civil Code), the agreement also has the legal effects that follow from the law, custom and reasonableness and fairness, and an agreed rule does not apply to the extent this would be unacceptable by those standards (Article 6:248). Competition law also applies (see below). No particular form is required for the agreement itself (Article 3:37(1)), but incorporating a BV and transferring its shares require a notarial deed (Articles 2:175(2) and 2:196(1)).
Disputes between the parties can be submitted to the competent Dutch civil court, to arbitration if the parties have agreed on it, or to the Netherlands Commercial Court (NCC). The NCC is an English-language chamber of the Amsterdam District Court and Court of Appeal. It hears an international dispute about a legal relationship that is at the parties’ free disposal only if the Amsterdam court has jurisdiction and the parties have expressly agreed in writing to litigate there in English; cases for the subdistrict court are excluded (Article 32a(1) Dutch Code of Civil Procedure). MAAK Advocaten lawyers can represent you before the Dutch courts, including the NCC.
To avoid disputes, record the arrangements between the parties in writing, even though Dutch law does not require this for the agreement itself. Concentrate on the essential arrangements so that the cooperation remains flexible, but do not leave out contributions, decision-making, deadlock and exit. Our corporate lawyers can help you draft a contract under Dutch law.
What should a joint venture agreement under Dutch law contain?
An advantage of a joint venture is that the parties remain separate businesses despite the cooperation. Before you record the arrangements, however, your legal position must be analysed: the structure determines whether you are liable for the joint venture’s debts, who controls it and how you can leave. Only then can a tailor-made agreement be concluded.
MAAK Advocaten can assist you in drafting a joint venture agreement, and in disputes between joint venture partners that have already arisen.
Some countries require foreign companies to enter into cooperation with a local company when entering the new market. However, Dutch law does not provide for such a rule.
Does competition law apply to a joint venture?
Yes. Agreements between undertakings that have as their object or effect the restriction of competition on the Dutch market are prohibited and void, unless an exception applies, such as the de minimis rule (bagatelvrijstelling) of Article 7 or the efficiency conditions of Article 6(3) (Article 6 Dutch Competition Act). This can affect, for example, non-compete clauses between the partners. In addition, setting up a joint venture that performs all the functions of an autonomous economic entity on a lasting basis is a concentration (Article 27(2)). If the turnover thresholds of Article 29 are met, the concentration must be notified to the ACM and may not be implemented before it has been notified and four weeks have passed (Article 34(1)). If the ACM decides within those four weeks that a licence (vergunning) is required, the concentration may not be implemented without that licence (Articles 37(1) and 41(1)).
Frequently asked questions about joint ventures in the Netherlands
What is a joint venture under Dutch law?
A joint venture is a cooperation between two or more businesses on a shared project. Dutch law has no specific joint venture statute. The cooperation is either purely contractual, in which case it can qualify as a partnership (maatschap, Article 7A:1655 Dutch Civil Code) or general partnership (vof, Article 16 Commercial Code), or it runs through a jointly owned company, often a BV.
How do you set up a joint venture in the Netherlands?
The partners first choose the structure and negotiate a joint venture agreement (joint venture-overeenkomst). For a joint venture BV, a civil-law notary in the Netherlands executes the deed of incorporation (Article 2:175(2) Dutch Civil Code). If the joint venture is a concentration that meets the turnover thresholds, it must first be notified to the ACM (Articles 29 and 34 Competition Act).
Does a joint venture agreement have to be in writing?
No. Under Dutch law, the agreement itself can be made in any form (Article 3:37(1) Dutch Civil Code). A written agreement is still strongly advisable as evidence. Incorporating a BV and transferring its shares require a notarial deed (Articles 2:175(2) and 2:196(1)).
Are the partners liable for the debts of a joint venture?
That depends on the structure. A shareholder of a BV is not personally liable for acts performed in the name of the BV (Article 2:175(1) Dutch Civil Code). In a partnership (maatschap), a creditor can in principle hold each partner liable for an equal share (Article 7A:1680). In a general partnership (vof), each partner is jointly and severally liable (Article 18 Commercial Code).
Does a joint venture need approval from the ACM?
Only in some cases. Setting up a joint venture that performs all the functions of an autonomous economic entity on a lasting basis is a concentration (Article 27(2) Competition Act). If the turnover thresholds of Article 29 are met, it may not be implemented before it has been notified to the ACM and four weeks have passed (Article 34(1)), and not without a licence if the ACM decides that one is required (Articles 37(1) and 41(1)). Other cooperation agreements must comply with the cartel prohibition (Article 6).
Primary sources
- Dutch Civil Code (Burgerlijk Wetboek): Articles 2:175, 2:196, 2:242, 3:37, 3:40, 6:248, 7A:1655 and 7A:1680
- Dutch Commercial Code (Wetboek van Koophandel): Articles 16 and 18
- Dutch Competition Act (Mededingingswet): Articles 6, 7, 27, 29, 34, 37 and 41
- Dutch Code of Civil Procedure (Wetboek van Burgerlijke Rechtsvordering): Article 32a
- Supreme Court (Hoge Raad) 4 April 2014, ECLI:NL:HR:2014:797 (Cancun)
Do you need a Dutch lawyer for a joint venture?
Do you have questions about Dutch contract law or corporate law, or do you need legal advice on a joint venture with a Dutch company? Our English-speaking lawyers in the Netherlands will be happy to help you.
