Corporate Restructuring

By Tim B. Schreuders

Posted: 9th January 2013 10:52

If an enterprise grows both functionally and geographically, there is often a need for operational, tax, legal and practical reasons to set up a group structure consisting of different legal entities.  If the expansion of the business activities includes conducting the business abroad, foreign companies will become part of the group.  As much as there is a need to create a group structure, there is from time-to-time a need to restructure and reorganise an existing group structure.  Although there are many different reasons why the management of a certain group would decide to make changes to the existing group structure, most corporate restructurings are conducted for one or more of the following reasons:
If cross-border corporate restructuring projects are being implemented many different executives and professionals in often many different jurisdictions will be involved and they all have their different but important roles to play.  One of the main challenges that arise in practically all cross-border corporate structuring projects is to make certain that all legal, tax and regulatory formalities under the laws of all jurisdictions that are involved in the relevant project are duly and timely performed.   This includes obtaining all governmental and internal approvals for each of the contemplated restructuring steps.  An important factor that should be considered in any project involving different jurisdictions is the language factor.  It is noted that although in cross-border corporate restructuring projects the relevant documentation and all communication, both orally and in writing, will typically be in English, the English language will usually not be the native language of all persons involved in the project.  This should be taken into account as it may otherwise lead to misunderstanding among some of the persons involved.   
Another important factor that should be considered when implementing a cross-border corporate restructuring project is the time difference.  This will be important particularly when certain steps need to occur in a specific order and the implementation needs to occur in different time zones.
In order to make certain that all the challenges that are being faced when implementing a cross-border corporate structuring project are efficiently and successfully handled, it is important that all parties involved know exactly what is expected of them and when they must deliver.  Equally important, however, is to monitor progress and compliance.  In order to be able to achieve this, effective project management is essential.  In practice, work plans, action lists or step plans are prepared and updated regularly, which provide a description of each of the relevant steps in often great detail and will provide who will be responsible for preparing the relevant document or taking the relevant action, when the step is due, who the signatories will be etc.   Furthermore, it is common practice to hold regular telephone conferences and meetings to monitor progress and compliance.  This will enable the parties involved in the restructuring to identify important issues that have come up during the implementation phase of the restructuring project and to determine how such issues will be handled.   
Recent Developments in the Netherlands
On 1 October 2012 the new Act on the simplification and flexibilisation of the rules applicable to Dutch BVs (private companies with limited liability) entered into force.  The new Act is part of a broader package of rules and legislation aimed at modernising Dutch company law, which includes the most recent development; the introduction of a “one-tier board” in Dutch corporate law (effective as of 1 January 2013).  The new BV rules make it a far more flexible legal entity and very attractive for use in the international corporate practice, including the cross-border corporate restructuring practice.  The new BV rules include the following:
As the Netherlands is the preferred jurisdiction of many international companies and enterprises for establishing their international holding companies, and the Dutch BV is the legal entity most commonly used in the Netherlands for this purpose, the new rules will make it possible to implement corporate structuring projects in a more efficient and cost effective manner.
HEUSSEN B.V. (“HEUSSEN”) is a Dutch law firm with its offices in Amsterdam.  It is associated with the German law firm HEUSSEN Rechtsanwaltsgesellschaft mbH and with the Italian law firm HEUSSEN Italia Studio Legale e Tributario. 
HEUSSEN is an internationally oriented firm.  We have vast experience in both domestic and cross-border transactions and projects.  Our client base comprises large and medium sized national and multinational companies. 
Tim B. Schreuders (1966) is a partner in the corporate law practice and one of the firm’s founders.  He is a specialist in cross-border corporate restructuring and has more than 20 years of experience in this area.

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