Money loan: private or as a representative of the company in general? Dutch lawyer for corporate law explained

If a legal entity, such as a limited company Liability Are you curious about the importance of liability? AMS Advocaten explains it. More about liability or liability Public limited company A NV is a legal person with company capital that is divided into transferable shares. 

Private or as a representative of BV iG?

money loan

The appeal raised the question of whether the founder of a company had concluded a loan agreement for $ 60,000.00 privately or as a representative of his company iG. In the first instance, the court ruled that the loan was taken out privately and that it had to be paid back privately by the borrower.

Loan Agreement

To answer the question of whether and in what capacity the loan contract was concluded, the Court used two judgments of the Dutch High Council (HR 11 March 1977 and HR 28 November 2014). In these judgments, the High Council states that it was about what the parties had explained to each other and derived from, and were allowed to derive from, their respective mutual statements and behaviors.

Act on behalf of society?

The Dutch Court of Justice examined the facts of the matter on the basis of the above criteria. From the facts it was evident that the borrower was not referred to in the loan contract as a representative acting on behalf of a company iG, but as a private person without reference to the company. The company is also not mentioned in the signature on the last page of the contract.

Certificate of incorporation: private deposit

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In addition, there is no mention in the recitals, also known as “considerans” in Dutch, that the loan was to be regarded as a loan for a company. It can be seen from the company’s founding certificate that both founders had paid $ 60,000. From this, the Court deduced that the founders had made a private capital contribution of $ 60,000. If this capital contribution comes from a loan, it will not become a loan that the company will start up with.

Loan to Found the Company

Based on the above, the Court then upheld the ruling of first instance and ruled that the loan was taken out privately. The fact that the loan will ultimately be used to make a deposit of $ 60,000 to set up the company does not mean that the loan will suddenly become a loan that the company in question is taking up.

Attorney at law when founding a company iG in the Netherlands

On the one hand, it can be seen from the above judgment that a legal entity can already start with the company before it is actually founded. This judgment also shows the downside: the actions must be documented well and cleanly to prevent the founders from being ultimately held personally liable. A lawyer can help.

Gregory Joseph