NETHERLANDS Law and Practice Contributed by: Vilmar Feenstra, Robert Veenhoven, Joyce Kerkvliet and Sebastiaan Verkerk, Loyens & Loeff N.V.
4.1 Recent Developments and Proposals for Reform ). Coop A Coop is a special form of association and is a separate entity from its members (ie, it has separate legal personality), with legal title and beneficial ownership of its assets. Investors participate in a Coop as members, with corre - sponding membership interests. The terms and conditions of the investment fund are typically laid down in a membership agreement (in addi - tion to the articles of association of the Coop). A Coop does not have capital divided into shares or units. Units can be created to accommodate the tax requirements of certain investors. BV A BV is the Dutch equivalent of a private com - pany with limited liability, and is generally the preferred legal form for privately held compa - nies in the Netherlands. The BV is a legal entity with capital divided into one or more transferable shares, and has legal personality. A BV is incor - porated by the execution of a notarial deed of incorporation (including the articles of associa - tion of the BV) to that effect. Hedge Funds, Debt Funds and Real Estate Funds These types of funds are generally structured in the form of an FGR, which is not a legal entity. It is generally a contractual arrangement sui gen - eris (often referred to as its terms and conditions) between a fund manager and each investor (ie, each participant) separately, obliging the fund manager to invest and manage assets contrib - uted by the participants for their joint account. Generally, the legal ownership of the FGR assets is held by a separate legal entity (ie, the title- holder). The FGR is not dealt with in Dutch cor -
porate law. Parties are free to determine the financial and governance structure of an FGR. The FGR is established by the execution of a notarial or private deed setting out its terms and conditions. The parties involved are the fund manager, the title-holder and each of the par - ticipants separately. The UBOs of an FGR need to be registered in the trust register, which, after a European Court of Justice ruling, is no longer publicly available. 2.1.2 Common Process for Setting Up Investment Funds Although the process for setting up an invest - ment fund in the Netherlands shall mainly depend on the specific facts and circumstances, as a general rule, fund managers typically start discussing the structure and terms and condi - tions of the investment fund with their profes - sional advisers. The fund manager will decide on the fund structure (primarily based on the attributes of the prospective investors, the fund’s investment strategy and related tax considera - tions) and will prepare a term sheet setting forth the main terms and conditions of the investment fund. In order to start (pre-)marketing activities, the fund manager will prepare the marketing mate - rial. Depending on the regulatory regime of the investment fund (see below), (regulatory) approvals and/or registrations will first need to be obtained and/or made before the fund man - ager may approach potential investors. The fund manager typically makes available the fund agreement, management agreement (if appli - cable) and subscription agreement. Additional investors may be admitted at subsequent clos - ings. During negotiations, investors may request side letters and/or legal and tax opinions.
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