Governance Academy
4 oktober 2023

Decisions within the Dutch private limited liability company ‘Besloten Vennootschap’

In a Dutch private limited liability company, referred to in Dutch as a Besloten Vennootschap or BV, decisions are taken regarding the internal organization and regarding relationships with third parties;

What is a Besloten Vennootschap (BV)?

Many companies in the Netherlands operate as a BV. The BV is the company’s ‘legal coat’. Founders and investors invest time, money, assets and energy in the BV with the aim of operating a successful business and earning a profit.

The BV is a paper reality with rights and obligations. The decisions are taken by the BV’s “bodies”. Every BV has at least two bodies, i.e., the board of directors and the (Annual) General Meeting of Shareholders (AGM/GSM). All of the company’s shareholders can participate in the GSM. Some BVs also have a supervisory board (SB) or there are special groups of shareholders (for example, the holders of preference shares), who can also take certain decisions. The board of directors represents the BV externally. This blog focuses on the internal governance of the BV: the decisions that are taken by the board of directors and the GSM.

Division of powers between the board of directors and the GSM

Which body is authorized to take a specific decision depends on in whose power domain the issue falls by virtue of the law and the articles of association. The board of directors takes decisions about strategic choices, the daily business operations, and the general management of the company. The GSM takes decisions about other matters, such as the adoption of the annual accounts, distribution of profits, appointment of directors and supervisory board members, issue of shares, discharge of the board for the management of the company, reduction or increase of the share capital, amendments of the articles of association, and the continuation of the BV.

Decision-making process for decisions of the board of directors

Decisions of the board of directors can be taken in any form, therefore also verbally. Taking minutes is not mandatory but is definitely advisable. When a board of directors consists of more than one person, no director may be excluded from the decision-making process. A simple majority of votes is required for board decisions, i.e., more than half of the votes. Each board member has one vote. Other rules regarding decisions of the board of directors can be specified in the articles of association or shareholders’ agreement. It is often stipulated in these documents that certain decisions require the prior approval of, for example, the GSM.

Conflicts of interest of board members

A board member may not participate in consultations and the decision-making process if he/she has a direct or indirect personal interest with regard to the decision that conflicts with the interest of the BV. In such a case, the board member must leave the meeting, or if there is no other board member, the supervisory board or the GSM must take the decision. If the same person is the director and shareholder, then this person takes the decision despite the conflict of interest.

For instance, it can be the case that there is a conflict of interest if the board takes a decision about entering into a purchase agreement between the BV and the director, a family member of the director or another BV of which the shares are held by a good friend of the director. Another example is the situation where the board has taken a decision about holding a board member (or a family member or good friend of a board member) liable for damage suffered by the BV.

Decision-making process for decisions of the GSM

Shareholders can take decisions during a shareholders’ meeting and also outside of a shareholders’ meeting. The law specifies certain requirements for the decision-making process. Other rules can be specified in the articles of association or shareholders’ agreement regarding certain decisions.

Decision-making in the (annual) general meeting of shareholders (AGM/GSM)

The objective of the meeting of shareholders is to obtain information from the board of directors and to discuss the course of affairs in the BV, to discuss the agenda items and the proposed decisions and to vote on these decisions. The idea is that the participants discuss matters with each other. The board of directors and the supervisory board (if applicable) have an advisory role.

All sorts of formalities apply with regard to the meeting. For instance, the meeting has to be convened correctly by the board of directors. A convocation notice must be sent to the shareholders at least eight (8) days before the meeting. This takes place by means of a convocation letter specifying the date and the time, the to be discussed topics and the (online) location of the meeting. This letter must be sent to the correct address of the shareholder as specified by the shareholder. The location of the meeting is stated in the articles of association (or the shareholders’ agreement)

A minimum number of shareholders (quorum) must be present to take certain decisions. In principle, each shareholder has one vote. A simple majority is required for most decisions (more than half of the votes). Certain decisions can only be taken if a larger majority is in favor. For example, for exceptional decisions about important matters such as issuing shares, the dismissal of board members or dividend payments.

Taking minutes is sometimes required, this is then stipulated in the articles of association. In any case, it is always advisable to take minutes in case a dispute should arise. The board must maintain a list of decisions taken by the GSM.

Decision-making by the shareholders outside of a general meeting of shareholders

Decision-making outside of a general meeting of shareholders is only possible when all those who are entitled to attend a shareholders’ meeting agree to this. Voting on the decisions takes place in writing. In this manner, decisions can be taken faster by the shareholders in (smaller) BVs.

Void and voidable decisions

A decision can be void. The decision is void and thus such decisions have no effect. This is the case, for example, if the wrong body has taken the decision, the required majority for the decision was not attained or the approval that was required beforehand by another body is lacking. The parties in question can ignore the void decision.

Sometimes something can be wrong with a decision that has been taken and someone can have the decision nullified. For instance, decisions of the GSM that were taken while the convocation notice for the meeting was sent too late, or a decision was taken not to distribute any dividend whereas there was sufficient profit, and the interests of a minority shareholder were not taken into account. Every stakeholder can submit a request to a court to nullify a decision. Stakeholders are, for example, the BV itself, board members, shareholders, supervisory board members, creditors, employees, and the works council. This right expires one year after the decision was taken.

For most of the decisions that are void or voidable, it is the case that this only has an internal effect and therefore no effect on the relationship between the BV and a third party. The invalidity of a decision does not, in principle, affect the representative authority of the board of directors.

Decision making made effortless with Govin

With the Govin platform the decision making process is made easy. Find your correct clause and voting thresholds with our power AI driven search functionality, share resolutions with your stakeholders through your Govin platform and receive notifications of approvals and signatures received. All stored in your searchable repository of previous decisions and resolutions.

Note: this is a content article where Govin and @AMSAdvocaten collaborate on a variety of governance and legal topics, feel free to suggest new article topics at