Choosing the right company form: practical differences explained

Choice of a company

All companies, except the partnership, have legal personality. This means that they can act independently in legal transactions, with their own rights, obligations and assets, separate from the persons involved. A company differs from, for example, the sole proprietorship, where there is no distinction between the entrepreneur and the company.

The partnership

The partnership has three forms:

• The partnership (without legal personality);
• The ordinary limited partnership (‘CommV’); and
• The general partnership (‘VOF’).

Each of these company forms requires a minimum of two founders and can be incorporated through a private deed, without the intervention of a notary. No minimum initial capital or financial plan is required.

The CommV and VOF have incomplete legal personality. These companies can act in their own name, but there is no strict separation between the business assets and the private assets of the partners.

In a general partnership, all partners are jointly and severally liable for the debts of the company without limitation. In a CommV, in addition to one or more partners with unlimited and joint and several liability, there is also at least one partner who limits himself to a contribution in cash or in kind and who does not participate in the governance of the company, as a result of which he is only liable to the extent of his contribution.

The private limited company (BV) and the cooperative company (CV)

The BV is the most popular company form for starting entrepreneurs. A BV can be established by one or more founders. There is no minimum starting capital, but the BV must have sufficient initial capital. This means that the founders must provide sufficient funds to be financially viable for the first two years, which must be documented by a financial plan. The incorporation is done by means of an authentic deed before a notary. The liability of the shareholders is limited to their contribution.

The CV has the same incorporation formalities as the BV, with the difference that at least three founders are required. The CV should have a cooperative focus, in which the shareholders pursue a common goal and share common values.

Public limited liability companies (NV)

The NV is intended for larger companies. This is demonstrated, among other things, by the capital requirement: the founder(s) must contribute at least € 61,500. As with the BV, the incorporation is done by means of an authentic deed at a notary. The liability of the shareholders is also limited to their contribution.

Common incorporation formalities

All companies must establish a share register and register their ultimate beneficial owner(s) in the UBO register. The UBO and share register must be maintained and updated throughout the life of the company in the event of changes in the shareholder structure. In addition, registration in the Crossroads Bank for Enterprises is mandatory.

Conclusion

Choosing a company form depends on various factors and the incorporation involves various (administrative) formalities. We are happy to guide you through every step of this process.