NETHERLANDS Law and Practice Contributed by: Gianluca Kreuze, Ruben den Hollander, Anne van Geen and Sanne van Esterik, Loyens & Loeff
unity with respect to the period it was part of the fiscal unity. The potential (secondary) tax liability of a Dutch obligor may therefore extend to the (potential) standalone tax liabili- ties of non–obligor group entities that are a member of the same fiscal unity. • 403 statement – under Dutch law, parent companies may choose to file consolidated financial statements for its subsidiaries. If a parent company chooses to do so, then: (i) the subsidiaries are exempted from their obligations to file financial statements; and (ii) the parent company declares itself jointly and severally liable for all obligations of its sub- sidiaries that result from legal acts by issuing the so-called 403 statement. As both the fiscal unity and the 403 statement qualify as a guarantee and may result in incur- ring additional debt (other than debt arising from it being an obligor under the credit agreement), these concepts should be considered in the con- text of the loan documentation. If such liabilities are incurred, a lender would typically want to limit these to liabilities between members of the obligor group to prevent any leakage. If a Dutch obligor is part of a fiscal unity for Dutch corporate income tax purposes, deconsolidation of such fiscal unity (including as a result of secu- rity enforcement) may result in taxable income (and actual tax cash outs) for the Dutch obligor and in principle results in any available tax loss and interest carry forwards to remain with the fis- cal unity parent. As this may have adverse con- sequences to a lender’s recourse, this is usually assessed in the relevant financing documenta- tion or a separate tax sharing agreement. Works Council The Works Councils Act (WCA) requires that a company with 50 employees or more is obliged
to set up a works council. A company that is not obliged to set up a works council under the WCA can be obliged to do so under a collective bargaining agreement or do it voluntarily. A works council with jurisdiction over a Dutch company has or may have the right to render its advice on certain important economic or organi- sational decisions, such as the transfer of control of the company or any part thereof, attracting financing out of its ordinary course of business, granting guarantees or security for obligations of third parties and pledging shares in the com- pany. If the company has failed to request and obtain advice on a timely basis from the works council when it should have done so, or has not followed the advice of the works council when making its final decision, the works council can lodge an appeal with the Enterprise Chamber of the Amsterdam Court against the decision of the company, which will lead to a delay of the contemplated transaction. Transfer/Pledge Restrictions It is important that it be possible to pledge col- lateral for encumbrance with a valid Dutch law security right. Traditionally (and currently widely used in practice) parties (being the creditor and the debtor of a receivable) can agree on clauses in their contracts prohibiting the transfer and/ or pledging of receivables, known as transfer, assignment or pledgeability restrictions. Such restrictions may limit companies (especially small and medium enterprises (SMEs)) in using receivables as collateral for financing, which in turn reduces their access to credit. The Dutch parliament recently approved the Act on the abolition of pledge prohibitions ( Wet opheffing verpandingsverboden ) which is aimed at stimulating credit provision, particularly for SMEs, by removing restrictions on the transfer-
294 CHAMBERS.COM
Powered by FlippingBook