Foreign investors wishing to set up their business in Curaçao can choose from a variety of business structures:
• The limited liability company (NV)
• The private limited liability company (BV)
• The foundation
• The private foundation (also known as SPF)
• Sole proprietorship
It should be noted that the private limited liability company is the most popular form of vehicle for doing business in Curaçao. A distinction can be made between entities with and without legal personality. The corporate law of Curaçao is based on the Dutch corporate law.
The BV and NV
Under Curaçao law, two types of Limited Liability Companies are recognized:
• BV (‘besloten vennootschap’). The BV is a privately held company comparable to the ‘Limited Company’ (Ltd) in the United Kingdom or the ‘Gesellschaft mit beschränkter Haftung’ (GmbH) in Germany; and
• NV (‘naamloze vennootschap’). The NV is a public company comparable to the ‘Public Limited Company’ (plc) in the United Kingdom or ‘Aktiengesellschaft’ (AG) in Germany. The shares in an NV may be freely transferable. Both the BV and the NV are separate legal entities with shareholders. They can be used for the same business purposes, to be set out in articles of association. The BV is the more flexible of the two and is the most popular in local as well as international business.
A corporation is established by the execution of a notarial deed. At least one founder is required to form the corporation, either an individual or a legal entity. Non-residents can establish a BV or NV by proxy.
Historically the cooperative (the co-op’) was used by community organizations (e.g. a consumer cooperative) or businesses, such as credit unions, banks and insurance companies. In recent years the cooperative has also become popular as a holding company in international structures.
The cooperative is very flexible from a Curaçao legal and tax perspective. It is a separate legal entity similar to the NV and BV, governed by articles of association but is characterized by a less regulated governance structure. The cooperative does not have a capital divided into shares, instead the participants are called members. At least two members are required to form a cooperative. It is considered an extension of the businesses of its members, who can be individuals, partnerships or legal entities.
The private foundation is different from a ‘normal’ foundation as it is not subject to the disbursement restrictions which a ‘normal’ foundation is subject to. The founder enjoys a great deal of latitude to set up a private foundation in the way that he sees fit. The private foundation can generally be used for the same purposes as a trust. However, contrary to the trust it has the status of a legal entity. In addition to this the private foundation is also a form of the foundation, a legal entity that exists in many jurisdictions.
The Curaçao trust regime is comparable to that of trusts in Anglo-Saxon jurisdictions. When setting up a trust, at least one trustee must be appointed along with one or more beneficiaries. It is mandatory for a trust to be established in Curaçao that at least one trustee must live or is located here. The trust will cease to exist in case the trustee becomes the sole beneficiary, the trust has no assets anymore or, if the trust has been set up for a set period, after that period.
Beneficiary and protector
When setting up the trust at least one beneficiary must be designated and the trust assets must be defined. The settlor may also become the trustee and can even be designated as beneficiary. However, it is not permissible that a trustee is the sole recipient. In that case someone else should be appointed as trustee.
The deed of establishment of the trust may appoint a protector. The protector may also be designated as beneficiary, but like the trustee may not be the sole beneficiary.
A Curaçao trust must be established in Curaçao by a notarial deed. The trust must be registered at the registry of the Chamber of Commerce. Amendments to the trust deed must also be recorded in this register
Open or limited partnership
Partnerships are used by individuals and entities to work together without being incorporated in a separate legal entity. No legal form is required, only a partnership agreement. Although it can acquire rights and assume obligations in its own name, it is not a legal entity separate from its partners.
The most common partnerships are the general partnership (ov or openbare vennootschap) and the limited partnership (cv or commanditaire vennootschap). Partners in an ov have unlimited liability, as do the general partner(s) in a cv. The limited partners in a cv have limited liability but are not allowed to perform acts of management and / or represent the partnership.
An alternative to the partnership can be the transparent company. A transparent company is a legal entity except for tax purposes. This combines the liability protection of a legal entity with the tax efficiency of a partnership such as with regard to offsetting startup losses against existing business profits.
A corporation in the international financial services industry is in practice often incorporated by a local trust office. After incorporation the shares will be transferred to the beneficial owner. A corporation must have one or more ‘managing directors’, who can be either an individual or a legal entity. At least one managing director must be a resident of, or domiciled in, Curaçao. The powers of the management board are set out in the law and in the articles of incorporation.
The Public as well as the Private Limited Liability Corporation have to issue at least one share with any nominal value. The equity is not allowed to be negative during the period of existence.
Different classes of shares may be issued, for variations in voting rights, participation in profit distributions and in entitlement to a balance after liquidation. Shares are registered. However, an NV may also issue bearer shares.
• No minimum capital is required. The founders will determine the issued capital (at least one share) and required paid-up capital. The issued capital and paid-up capital will be laid down in the articles of association. Companies with multiple shareholders can issue different types of shares to vary the voting rights of shareholders and to vary their dividend rights;
• Some shareholders (e.g. banks) can be excluded from voting rights;
• Shares of a particular class may give no or limited entitlement to profit sharing. Shares with no rights to profit or liquidation proceeds must always have voting rights;
• Depending on the wording in the articles of association, shares may or may not be freely transferable.
A BV can only issue registered shares and they cannot be listed on a stock exchange.
A supervisory board (or non-executive directors (NEDs) on the board) is optional. Large companies may be subject to the ‘Large Company regime’. In that case, the supervisory board (or the NEDs) is mandatory. In case a company has a supervisory board, the requirements of the ‘Large Company regime’ must always be complied with.
For a BV it is also possible to be managed directly by the shareholders. In that case the BV does not have a separate board of directors; the shareholders combined operate as directors. This has the advantage of simplifying formalities such as appointing, suspending or discharging of directors, and there is also no difference between shareholder meetings and board meetings.
Publication obligations for a large NV
An NV is deemed to be a large NV depending on three cumulative criteria, namely the number of employees, the total balance sheet value of assets and the net turnover. NVs that do not meet these criteria as well as all BVs, even those that are comparable in size to the so-called large NV, do not have the obligation to deposit their financial statements for inspection by third parties.
A so-called large NV must deposit the financial statements at the offices of the limited liability company for inspection by interested parties within eight days after approval of the financial statements and during two years thereafter, thus enabling inspection by parties concerned such as creditors, employees or business partners. The Trade Register of the Chamber of Commerce must be notified of the deposit of the financial statements for inspection. Further publication is not required. It is for example not necessary to deposit the financial statements at the Trade Register.
Transforming into another legal entity
If required, an NV may be transformed into a BV and vice versa. It is also possible for a foreign entity to be transformed into an NV or BV if the law governing that entity does not oppose this. The reverse is also possible.
The most important licenses required are the following:
• Business license from the Ministry of Economic Development permitting the
corporation to act on the island;
• Director’s license for each managing director (the law does not limit the number
of managing directors); in addition, managing directors need a residence
permit and a working permit to work in Curaçao. This requirement applies to all
expatriates except those with a Dutch passport who no longer need a working
In specific cases, a foreign exchange license can be obtained, which exempts the
corporation from foreign exchange control. This license is issued by the Central Bank.
It is possible to request a transparent status. A BV or an NV may opt, if certain conditions are met, to be treated as a partnership (fiscal transparent company). The fiscal transparent company is not subject to corporate income tax. However, if it carries on a business in Curaçao through a permanent establishment, the shareholder could be subject to corporate income tax with regard to this permanent establishment. The main requirement for this status is that all the company’s shares must be registered and a notification for the application of this status must be filed with the Tax Authorities.
Accounting and reporting requirements
There are no specific accounting requirements. It is general practice that when the accounts for international corporations are prepared, the requirements that are complied with by accountants are the financial reporting standards applied in the country of the parent corporation.
According to law, anyone who conducts a business must:
• Administer their affairs in accordance with the standards of the business in such
a way that it will always be possible to know one’s rights and obligations;
• Prepare annual financial statements; and
• Keep all books and documents, including balance sheets, correspondence received and copies of outgoing correspondence for a period of ten years.
For the regular NV and the BV, financial statements must be prepared within eight months after the end of the financial year. Each shareholder is entitled to inspect the financial statements within a period of two years. The reporting requirements for the large NV are more specific than for the regular NV or the BV.
• The financial statements must be prepared within six months after the end of the financial year;
• The financial statements must be prepared in accordance with standards set by the International Accounting Standards Board (‘IASB’); and
• An external qualifying expert, such as a chartered accountant or a certified public accountant must be appointed to audit the financial statements.