Investment Funds 2022 - Netherlands: Law & Practice Vilmar Feenstra, Robert Veenhoven, Roderik Boogaard and Iris Veldman Loyens & Loeff N.V ...
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Definitive global law guides offering comparative analysis from top-ranked lawyers Investment Funds 2022 Netherlands: Law & Practice Vilmar Feenstra, Robert Veenhoven, Roderik Boogaard and Iris Veldman Loyens & Loeff N.V. practiceguides.chambers.com
NETHERLANDS
Law and Practice
Amsterdam
Contributed by: Netherlands
Vilmar Feenstra, Robert Veenhoven, Roderik Boogaard
Germany
and Iris Veldman Belgium
Loyens & Loeff N.V. see p.21
CONTENTS
1. Market Overview p.3
1.1 State of the Market p.3
2. Alternative Investment Funds p.3
2.1 Fund Formation p.3
2.2 Fund Investment p.9
2.3 Regulatory Environment p.10
2.4 Operational Requirements p.12
2.5 Fund Finance p.12
2.6 Tax Regime p.13
3. Retail Funds p.14
3.1 Fund Formation p.14
3.2 Fund Investment p.17
3.3 Regulatory Environment p.17
3.4 Operational Requirements p.19
3.5 Fund Finance p.19
3.6 Tax Regime p.19
4. Legal, Regulatory or Tax Changes p.20
4.1 Recent Developments and Proposals for
Reform p.20
2
NETHERLANDS Law and Practice
Contributed by: Vilmar Feenstra, Robert Veenhoven, Roderik Boogaard and Iris Veldman,
Loyens & Loeff N.V.
1. MARKET OVERVIEW 2 . A LT E R N AT I V E
INVESTMENT FUNDS
1.1 State of the Market
The Netherlands is a commonly used jurisdiction 2.1 Fund Formation
for the formation of investment funds, and has a
sophisticated, clear and flexible legal and gov- 2.1.1 Fund Structures
ernance system. In addition to its stable busi- In the Netherlands, depending on the tax analyses
ness and political environment, the Netherlands performed in relation to them, alternative invest-
has various tax advantages that also make it an ment funds (AIFs) are generally structured in the
attractive fund jurisdiction. Capital is raised both form of a limited partnership (commanditaire
internationally and from domestic investors (eg, vennootschap, or CV), a co-operative (coöpera-
Dutch pension funds). tie, or Coop), a contractual fund for joint account
(fonds voor gemene rekening, or FGR) and/or a
As a location for private equity and venture private limited liability company (besloten ven-
capital funds, the Netherlands is typically used nootschap met beperkte aansprakelijkheid, or
by fund managers who operate in and from the BV), or a combination thereof.
Netherlands. However, the Netherlands is also
frequently used as a fund structuring jurisdiction Private Equity Funds
by fund managers who have their head office Private equity funds are generally structured in
outside the Netherlands, in which case they typi- the form of a CV or a Coop.
cally have some form of presence in the Nether-
lands, often for operational purposes. CV
A CV is a limited partnership for the purpose
Despite the pandemic, in 2021 there was much of a durable co-operation between one or more
activity in the market, including new fundrais- managing (or general) partners (beherend ven-
es and an increasing number of general part- noten), each with unlimited liability, and one or
ner (GP)-led secondaries and continuation more limited partners (commanditaire vennoten),
vehicles to address end-of-term issues. The with limited liability (see 2.1.3 Limited Liabili-
trend towards more manager-friendly terms in ty). A CV has no legal personality and is not a
fund documents seems to be unaffected by separate legal entity distinct from its partners.
the pandemic. At the same time, the scrutiny In principle, assets cannot be held by a CV in its
on managers has increased due to new pan- own name, but are held by a community of prop-
European legislation such as the EU Sustain- erty of the partners (gemeenschap) or by one or
able Finance Disclosure Regulation (Regulation more partners or a third party for the account
(EU) 2020/2088, or SFDR) and new legalisation of the community of property of the partners.
regarding cross-border distribution of funds. Investors participate in the CV as limited part-
Investors are increasingly aware of the changing ners and receive a limited partnership interest
landscape and are demanding higher standards, in the investment fund. Substantially all terms
particularly in the field of ESG and reporting. and conditions of an AIF can be laid down in the
limited partnership agreement of the CV.
3
Law and Practice NETHERLANDS
Contributed by: Vilmar Feenstra, Robert Veenhoven, Roderik Boogaard and Iris Veldman,
Loyens & Loeff N.V.
Coop 2.1.2 Common Process for Setting Up
A Coop is a special form of association and is Investment Funds
a separate entity from its members (ie, it has Although the process for setting up an invest-
separate legal personality), with legal title and ment fund in the Netherlands shall mainly
beneficial ownership of its assets. Investors depend on the specific facts and circumstances,
participate in a Coop as members, with corre- as a general rule, fund managers typically start
sponding membership interests. The terms and discussing the structure and terms and condi-
conditions of the investment fund are typically tions of the investment fund with their profes-
laid down in a membership agreement (in addi- sional advisers. The fund manager will decide
tion to the articles of association of the Coop). A on the structure (thereby taking into account
Coop does not have capital divided into shares the outcome of discussions on the various tax
or units. aspects, the investor type it wishes to bind and
the type of investments and investment pur-
BV poses of the fund) and will prepare a term sheet
A BV is the Dutch equivalent of a private com- setting forth the main terms and conditions of
pany with limited liability, and is generally the the investment fund.
preferred legal form for privately held companies
in the Netherlands. The BV is a legal entity with In order to start (pre-)marketing activities, the
capital divided into one or more transferrable fund manager will prepare the marketing mate-
shares, and has legal personality. A BV is incor- rial. Depending on the regulatory regime of the
porated by the execution of a notarial deed of investment fund (please see below), (regulatory)
incorporation (including the articles of associa- approvals and/or registrations will first need to
tion of the BV) to that effect. be obtained and/or made before the fund man-
ager may approach potential investors. The fund
Hedge Funds, Debt Funds, Real Estate Funds manager typically makes available the main
These types of funds are generally structured in fund agreement, management agreement and
the form of an FGR, which is not a legal entity. It subscription agreement for investors to review.
is a contractual arrangement sui generis (often Additional investors may be admitted at subse-
referred to as its terms and conditions) between quent closings. During negotiations, investors
a fund manager and each investor (ie, the partici- may request side letters and/or legal and tax
pants), obliging the fund manager to invest and opinions.
manage assets contributed by the participants
for their joint account. Generally, the legal own- Under Dutch law, the regulatory regime and
ership of the FGR assets is held by a separate supervision with respect to externally managed
legal entity (ie, the title-holder). The FGR is not AIFs concern the alternative investment fund
dealt with in Dutch corporate law. Parties are manager (AIFM) of an AIF, rather than the AIF
free to determine the financial and governance itself (unless the latter is managed internally).
structure of an FGR. The regulatory regimes that apply to Dutch
AIFMs and non-Dutch AIFMs when setting up
The FGR is established by the execution of a Dutch AIFs are discussed below.
notarial or private deed setting out its terms and
conditions. The parties involved are the fund
manager, the title-holder and the participants.
4NETHERLANDS Law and Practice
Contributed by: Vilmar Feenstra, Robert Veenhoven, Roderik Boogaard and Iris Veldman,
Loyens & Loeff N.V.
Dutch AIFM the AFM. In order to obtain such approval, a so-
The fully licensed regime called investment institution notification form
Pursuant to the Dutch Act on Financial Super- should be submitted to the AFM, with, inter alia,
vision (Wet op het financieel toezicht, or AFS), the following attached:
an AIFM is prohibited from managing an AIF or
marketing interests in an AIF in the Netherlands • a structure chart of the AIF and all connected
without a licence thereto from the Netherlands entities;
Authority for the Financial Markets (Stichting • the fund agreement and other contractual
Autoriteit Financiële Markten, or AFM), unless arrangements between the vehicle and the
an exemption or exception applies. investors;
• the prospectus in which the information
The AFM will grant a licence to a Dutch AIFM required pursuant to Article 23 of the AIFMD
upon application if the AIFM meets the require- is contained; and
ments under Dutch law implementing the Alter- • a notification form containing information on
native Investment Fund Managers Directive the depositary.
(2011/61/EC, or AIFMD). The licence require-
ments relate to, inter alia, the suitability and The AFM has one month to decide on the appli-
trustworthiness of the board members, the cation, which can be extended by one month. If
operational and control structure of the AIFM, the AIF is managed or marketed to professional
the management of potential conflicts of inter- investors outside the Netherlands, a marketing
est, the appointment of a depositary, and solid- passport needs to be obtained, pursuant to the
ity and minimum own funds requirements. The Dutch implementation of Article 32 of the AIFMD.
AFM has a review period of 26 weeks and may
request additional documents or information A Dutch licensed AIFM can also pre-market an
during the application process (the review period AIF in the Netherlands or another EU member
will then be suspended). In practice, therefore, state to professional investors, provided it made
the process to obtain a licence takes more time. a notification to the AFM and the conditions set
forth in Article 30a of the AIFMD, as implement-
If a Dutch AIFM holds a licence from the AFM ed in the Netherlands, are met.
pursuant to the AIFMD, it is, in principle, allowed
to manage AIFs and to offer the interests in the Registration regime for “Small Managers”
AIF it manages to professional investors with- There is an exception from the above-mentioned
in the meaning of the AFS in the Netherlands, licence obligation for Dutch AIFMs that can make
provided that it has obtained approval thereto use of the “small managers registration regime”
from the AFM, as further discussed below. If the (the “Small Managers Regime”) of Section 2:66a
AIFM complies with the “retail top-up regime” of the AFS. In order to be able to make use of
(as further discussed under 3. Retail Funds), the this exemption, each of the following conditions
AIFM may also offer interests to non-profession- has to be met by the AIFM.
al investors in the Netherlands.
• The AIFM manages directly – or through an
A licensed Dutch AIFM can manage a new AIF undertaking with which it is linked through
within the investment strategy covered by its common management, common control or a
licence and can market such AIF to professional qualified holding – portfolios of AIFs whose
investors if it has obtained approval thereto from
5Law and Practice NETHERLANDS
Contributed by: Vilmar Feenstra, Robert Veenhoven, Roderik Boogaard and Iris Veldman,
Loyens & Loeff N.V.
assets under management (AuM) in total do Small Managers Regime, it can start managing
not exceed (the “AuM Thresholds”): the AIF and marketing the AIF in the Netherlands
(a) EUR100 million; or after the registration is submitted to the AFM.
(b) EUR500 million if all the AIFs managed There is no waiting period.
by the AIFM are unleveraged and there
are no redemption or repayment rights If the AIFM wishes to raise a new AIF after regis-
exercisable with respect to interests in the tering itself, it should register the AIF two weeks
AIFs for a period of five years following prior to the commencement of the marketing of
the date of the acquisition of the interests the AIF. This term of two weeks is a request from
in the respective AIFs. the AFM and is not provided for in Dutch legisla-
• Interests in each AIF managed by the AIFM tion, but it is advisable to take this period into
may only be marketed (the “Placement account. If the AIFM exceeds the AuM Thresh-
Restrictions”): olds or no longer fulfils the Placement Restric-
(a) to professional investors within the mean- tions, the AIFM must apply for a licence from the
ing of Section 1:1 of the AFS; AFM within 30 calendar days thereafter.
(b) to fewer than 150 persons; or
(c) for a countervalue of at least EUR100,000 Non-Dutch AIFM
per investor. A non-Dutch AIFM that intends to set up a Dutch
• The AFM clarified that the following condi- AIF should comply with the following regulatory
tions should be met, in order to make use of regimes, depending on whether the non-Dutch
the third Placement Restriction mentioned AIFM is an EU AIFM or a non-EU AIFM.
above:
(a) the amount of the first capital commitment EU non-Dutch AIFM
per investor is at least EUR100,000 (exclu- An EU AIFM with an AIFMD licence in another
sive of costs); EU member state can manage a Dutch AIF pur-
(b) the first amount called under the com- suant to a passport obtained in accordance with
mitment per investor should be at least Article 33 of the AIFMD.
EUR100,000; and
(c) the amount of committed capital may nev- An EU sub-threshold AIFM is, pursuant to the
er fall below EUR100,000. Dutch implementation of the AIFMD, not allowed
to manage a Dutch AIF. For the sake of com-
A Dutch AIFM that meets the AuM Thresholds pleteness, the authors note that a legislative
and the Placement Restrictions and wants to proposal is pending, pursuant to which, EU sub-
make use of the Small Managers Regime needs threshold AIFMs are allowed to manage Dutch
to register itself and the AIF it manages/intends AIFs, provided that interests in the AIF are mar-
to market with the AFM, by submitting a reg- keted to professional investors.
istration form through a digital portal (includ-
ing an overview of the AuM and a description Non-EU AIFM
of the investment strategy). The AFM charges A non-EU AIFM that intends to manage a Dutch
EUR4,400 for a registration. After review and AIF needs to comply with the Dutch implemen-
acceptance of the registration form, the AIFM tation of the national private placement regime
and the AIFs managed by it will be included in of Article 42 of the AIFMD (NPPR). A number
the public register of the AFM kept on its web- of conditions apply in order to make use of the
site. If the AIFM meets the conditions of the Dutch NPPR, such as:
6NETHERLANDS Law and Practice
Contributed by: Vilmar Feenstra, Robert Veenhoven, Roderik Boogaard and Iris Veldman,
Loyens & Loeff N.V.
• that interests in the AIF can only be marketed sonally liable towards third parties for the obli-
to professional investors; gations of the CV in excess of the amount they
• a memorandum of understanding is entered have contributed or have agreed to contribute
into between the competent supervisory to the CV, unless the names of the limited part-
authority of the non-EU AIFM and the AFM; ners (or characteristic elements of their names)
• the AFM is notified by the non-EU AIFM are used in the name of the CV or the limited
through a notification form including an attes- partners engage in any act of management or
tation of the competent supervisory authority control (daden van beheer) or are involved in any
of the non-EU AIFM; and activities of the CV (even by virtue of a power of
• certain transparency rules of the AIFMD are attorney – volmacht). However, a limited partner
complied with, as set out in Articles 22, 23, may be held liable for obligations of the CV if:
24 and 26–30 of the AIFMD.
• such limited partner has committed a tort
A non-EU AIFM can also pre-market an AIF in (onrechtmatige daad);
the Netherlands to professional investors, pro- • such limited partner qualifies as a policy-
vided it made a notification to the AFM and the maker (beleidsbepaler) or a co-policymaker
conditions set forth in Article 30a of the AIFMD, (medebeleidsbepaler) of the GP and there is
as implemented in the Netherlands, are met. evidently improper management of the GP;
• such limited partner voluntarily assumes
2.1.3 Limited Liability liability for the obligations of the CV; or
The Dutch legal forms commonly used for • in certain exceptional circumstances only, a
investment fund formations are a CV, a Coop, an limited partner is identified with a GP.
FGR and/or a BV. All these forms provide for the
limited liability of investors. Typically, upon the Coop
request of investors, legal opinions are given in If the articles of association of the Coop do not
this respect, subject to the applicable assump- provide otherwise, members and former mem-
tions and qualifications. bers of a Coop are liable for deficits upon liqui-
dation or bankruptcy. However, Dutch law allows
The Netherlands, furthermore, provides for two the liability of the members to be limited or
specific tax fund regimes that may be used for excluded in the articles of association. The let-
specific strategies: ters W.A. (wettelijke aansprakelijkheid – unlimited
liability), B.A. (beperkte aansprakelijkheid – lim-
• the exempted investment institution (vri- ited liability), or U.A. (uitsluiting aansprakelijkheid
jgestelde beleggingsinstelling, or VBI); and – exclusion of liability), respectively, have to be
• the fiscal investment institution (fiscale beleg- added to the name of the Coop to indicate the
gingsinstelling, or FBI), which is a Dutch REIT level of liability of the members. A member of a
regime. Coop U.A. is not personally liable for any deficit
of the Coop. However, a member of a Coop U.A.
CV may still be held liable for the obligations of the
A CV is a limited partnership for the purpose of a Coop if:
durable co-operation between one or more man-
aging (or general) partners, each with unlimited • such member has committed a tort;
liability, and one or more limited partners (com-
manditaire or stille vennoten) who are not per-
7Law and Practice NETHERLANDS
Contributed by: Vilmar Feenstra, Robert Veenhoven, Roderik Boogaard and Iris Veldman,
Loyens & Loeff N.V.
• such member qualifies as a policymaker or a among the fund manager, the title-holder and
co-policymaker of the Coop and there is evi- the investors (ie, the participants) or among the
dently improper management of the Coop; or participants cannot be ruled out if, as a factual
• such member voluntarily assumes liability for matter, it meets the constitutive requirements
the obligations of the Coop. of such a partnership. Upon such a requalifica-
tion, the investors may become liable for equal
BV amounts (gelijke delen) (if the FGR is requalified
A BV is a legal entity with capital divided into one as a maatschap) or jointly and severally liable
or more transferrable shares, which has legal (hoofdelijk aansprakelijk) (if the FGR is requali-
personality (rechtspersoonlijkheid). A sharehold- fied as a vennootschap onder firma or comman-
er of a BV is, in principle, not personally liable for ditatire vennootschap) for the liabilities of such
acts performed in the name of the company, and partnership.
does not have to contribute to the losses of the
company in excess of the amount to be paid up 2.1.4 Disclosure Requirements
on its shares. However, the liability of a share- Dutch AIFMs
holder for the obligations of the BV may arise if: Pursuant to the Dutch implementation of Article
23 of the AIFMD, a Dutch licensed AIFM should
• such shareholder committed a tort; provide professional investors with a prospectus
• such shareholder qualifies as a policymaker setting out the disclosures required pursuant to
or a co-policymaker of the company and Article 23 of the AIFMD when marketing an AIF
there is evidently improper management of in the Netherlands. If the AIF is marketed under
the company; the retail top-up regime to non-professional
• such shareholder voluntarily assumes liability investors that invest less than EUR100,000,
for the obligations of the company; additional disclosure requirements apply, as set
• in exceptional circumstances, where “hiding” out under 3. Retail Funds. Also, if the AIF is
behind separate legal identities constitutes an marketed to non-professional investors, a key
abuse of law, such shareholder may be identi- information document (KID) has to be prepared
fied (vereenzelvigd) with the company; or and made available to non-professional inves-
• a shareholder receives a distribution in tors pursuant to Regulation (EU) No 1286/2014
excess of the company’s freely distributable of the European Parliament and of the Council
reserves while being aware – or when it rea- of 26 November 2014 on key information docu-
sonably should have been aware – that such ments for packaged retail and insurance-based
distribution was not permitted. investment products (PRIIPs), regardless of the
amount invested.
FGR
The liability of a participant of an FGR to make With respect to marketing communications by
contributions is generally limited to the amount Dutch AIFMs, as a general rule, marketing infor-
that each participant has paid or agreed to pay. mation provided by an AIFM has to be accurate,
However, although the FGR is not a legal entity clear and not misleading. Also, all information
(rechtspersoon) or a partnership (personen- provided by the AIFM may not be contrary to
vennootschap), but a contractual arrangement the information that is required to be disclosed
sui generis, the possibility of an FGR being pursuant to the AFS, and it should be made clear
requalified as a partnership (maatschap/ven- whether documents are of a commercial nature.
nootschap onder firma) or a limited partnership As of 1 February 2022, marketing communica-
8NETHERLANDS Law and Practice
Contributed by: Vilmar Feenstra, Robert Veenhoven, Roderik Boogaard and Iris Veldman,
Loyens & Loeff N.V.
tions with respect to AIFs or UCITS marketed the AIF is marketed under the Dutch retail top-up
by licensed AIFMs and UCITs managers should regime to non-professional investors that invest
comply with the requirements of the ESMA Mar- less than EUR100,000, additional disclosure
keting Communication Guidelines. requirements apply, as set out under 3. Retail
Funds. Also, if the AIF is marketed to non-pro-
Dutch AIFMs that are registered under the Small fessional investors, a KID should be provided. In
Managers Regime should include a selling leg- addition, if an AIF is closed ended with tradable
end in the private placement memorandum and units, the AIF should publish an approved pro-
other marketing materials, in which the Place- spectus pursuant to the Prospectus Regulation
ment Restrictions that will be used by the AIFM (EU 2017/1129), unless an exemption applies.
(as set out in 2.1.2 Common Process for Set-
ting Up Investment Funds) are explained. If the With respect to non-EU AIFMs, the non-EU AIFM
marketing is not limited to professional inves- that is marketing an AIF pursuant to the Dutch
tors, the marketing materials and offering docu- NPPR should provide a prospectus setting out
mentation must contain an exemption statement the disclosures required pursuant to Article 23 of
in the manner as provided for by the AFM, and a the AIFMD when marketing an AIF in the Nether-
PRIIPs KID has to be prepared and made avail- lands to professional investors. In addition, the
able to the non-professional investors. disclosure requirements pursuant to the SFDR
and Taxonomy Regulation for Dutch AIFMs
In addition, if an AIF is closed ended with trad- apply mutatis mutandis to non-EU AIFMs.
able units, the AIF should publish an approved
prospectus pursuant to the Prospectus Regu- 2.2 Fund Investment
lation (EU 2017/1129), unless an exemption
applies. 2.2.1 Types of Investors in Alternative Funds
The main fund investors located in the Nether-
Furthermore, pursuant to the SFDR and Tax- lands investing in investment funds are Dutch
onomy Regulation (Regulation (EU) 2020/852, pension funds, commercial banks and insurance
the “Taxonomy Regulation”) that have intro- companies. There are also multiple Dutch family
duced additional disclosure requirements to offices and multi-family offices/asset managers,
the existing elements of relevant sectoral leg- high net worth individuals and regional public
islations (AIFMD, UCITS, etc) both at the legal investment institutions that invest in investment
entity as well as at the financial product-level, funds. The Dutch government (via the European
Dutch AIFMs shall be required to make certain Investment Fund, or EIF) frequently invests in
disclosures in, amongst others, the prospectus Dutch funds targeting SMEs.
or private placement memorandum and on the
website. 2.2.2 Legal Structures Used by Fund
Managers
Non-Dutch AIFMs Dutch fund managers often adopt the legal form
With respect to EU AIFMs, on the basis of their of a BV to carry on their risk and portfolio man-
home country rules implementing the AIFMD, agement activities for the benefit of the invest-
authorised AIFMs from other European Econom- ment funds under management.
ic Area (EEA) member states will be required to
provide a prospectus when marketing to Dutch
investors, pursuant to Article 32 of the AIFMD. If
9Law and Practice NETHERLANDS
Contributed by: Vilmar Feenstra, Robert Veenhoven, Roderik Boogaard and Iris Veldman,
Loyens & Loeff N.V.
2.2.3 Restrictions on Investors 2.3.2 Requirements for Non-local Service
AIFMs under the Small Managers Regime may Providers
only offer the interests in each AIF in accordance Pursuant to the Dutch Trust Offices Act 2018
with the Placement Restrictions. (Wet toezicht trustkantoren 2018), it is prohibited
to provide the following trust services (trustdien-
Dutch or EU-licensed AIFMs are restricted to sten) in the Netherlands, unless a licence to do
offering the interests in the AIFs they manage so has been obtained from the Dutch Central
to professional investors (within the meaning of Bank (De Nederlandsche Bank N.V, or DNB):
Section 1:1 of the AFS), unless they have opted
for the “retail top-up”. The AIFM is not required • being a director/partner of a legal entity/com-
to comply with the requirements under the retail pany;
top-up regime if interests are offered for a coun- • providing a (postal) address for an object
tervalue of more than EUR100,000 per investor. company and performing “additional activi-
ties” such as record-keeping or preparing and
Non-EEA AIFMs making use of the Dutch NPPR filing tax returns (domicile plus);
may only offer interests to “qualified investors” • selling or intermediating in the sale of legal
within the meaning of the AFS. entities;
• acting as a trustee; and
2.3 Regulatory Environment • providing a conduit company.
2.3.1 Regulatory Regime Non-local service providers located in another
Under Dutch law, the regulatory regime and EEA member state are prohibited from providing
supervision with respect to investment funds is trust services in the Netherlands, unless a trust
the concern of the fund manager of an invest- office licence has been obtained. Non-local ser-
ment fund, rather than the investment fund itself vice providers located outside the EEA cannot
(unless the latter is managed internally). In princi- apply for such a licence, thus are prohibited from
ple, fund managers of AIFs that are active in the offering trust services in the Netherlands. With
Netherlands fall within the scope of the AIFMD respect to custody services, a licence pursuant
and the Dutch implementation thereof in the to the second Markets in Financial Instruments
AFS and the rules and regulation promulgated Directive (2014/65/EU, MiFID II) may be required.
thereunder.
2.3.3 Local Regulatory Requirements for Non-
It is, in principle, prohibited in the Netherlands for local Managers
an AIFM to manage an AIF or to market interests An AIFM authorised in another EEA member
in an AIF without having obtained a licence from state in accordance with Article 6 sub-paragraph
the AFM. This is only different if an exemption 1 of the AIFMD may manage a Dutch AIF in the
to the licence requirement is available, such as Netherlands on a cross-border basis with a
using a passport by a licensed EU AIFM, making passport, provided that the procedure of Article
use of the Small Managers Regime or registra- 33 of the AIFMD is followed, which, in summary,
tion under the NPPR. In principle, there are no entails certain documentation and information
investment limitations, other than those included being provided to the home member state regu-
in the authorisation (licence or registration). lator of the AIFM, and in so far as the AIFM has
notified the AFM of its intentions to manage a
Dutch AIF in the Netherlands.
10NETHERLANDS Law and Practice
Contributed by: Vilmar Feenstra, Robert Veenhoven, Roderik Boogaard and Iris Veldman,
Loyens & Loeff N.V.
An AIFM within the EEA that is not authorised 2.3.5 Rules Concerning Marketing of
in another EEA member state is not allowed to Alternative Funds
manage Dutch AIFs on a cross-border basis. Reference is made to 2.1.2 Common Process
The Small Managers Regime as set out under for Setting Up Investment Funds. The regula-
2.1.2 Common Process for Setting Up Invest- tory regimes set out therein also apply if an AIF is
ment Funds is not available to “small” EU AIFMs marketed in the Netherlands. As a result, a Dutch
outside the Netherlands. For the sake of com- AIFM should make use of the Fully Licensed
pleteness, the authors note that a legislative pro- Regime or, if applicable, the Small Managers
posal is under consultation, pursuant to which, Regime when marketing interests in AIFs in the
EU sub-threshold AIFMs are allowed to manage Netherlands. A licensed AIFM in another EEA
Dutch AIFs, provided that interests in the AIF are member state may market interests in EU AIFs
marketed to professional investors. in the Netherlands pursuant to the passporting
regime set out in Article 32 of the AIFMD. Pres-
A non-EEA AIFM may manage a Dutch AIF on ently, a legislative proposal is under consulta-
a cross-border basis if such AIFM complies tion in which it is provided that sub-threshold
with the conditions of the Dutch NPPR. These AIFMs in other EEA member states may market
conditions entail, in summary, certain reporting, interests in AIFs to professional investors in the
disclosure and transparency requirements relat- Netherlands. Non-EEA AIFMs may only market
ing to the annual report, disclosures to investors interests in AIFs in the Netherlands while making
(both initially and on an ongoing basis), reporting use of the Dutch NPPR. If a licensed EEA AIFM
obligations to regulatory authorities and, where intends to market a non-EEA AIF in the Nether-
relevant, transparency and asset-stripping lands, the Dutch NPPR should be complied with.
requirements relating to investments in portfolio
companies, and co-operation arrangements are Regarding the information to be made available
in place between the supervisory authority of the when marketing interests in AIFs in the Nether-
non-EEA country where the AIFM is established lands, reference is made to 2.1.2 Common Pro-
and the AFM. In addition, a notification should cess for Setting Up Investment Funds.
be filed with the AFM, including an attestation
of the home country supervisor of the non-EEA 2.3.6 Marketing of Alternative Funds
AIFM. Furthermore, the non-EEA country where Please see 2.2.3 Restrictions on Investors
the AIFM is established should not be listed as a regarding the applicable restrictions on inves-
non-co-operative country for the purposes of the tors.
Financial Action Task Force (FATF). Finally, pur-
suant to the Dutch NPPR, units in the relevant 2.3.7 Investor Protection Rules
AIFs may only be offered to “qualified investors”, For Dutch AIFMs that are registered under the
within the meaning of the AFS. Small Managers Regime, from a regulatory per-
spective, there are generally no investor protec-
2.3.4 Regulatory Approval Process tion rules that should be taken into account.
With respect to the regulatory approval process,
please see 2.1.2 Common Process for Setting For the AIFMs (including Dutch-licensed AIFMs)
Up Investment Funds. authorised under the fully licensed regime, the
investor protection rules pursuant to the AIFMD
apply. Generally speaking, no gold plating of
the AIFMD has taken place in the Netherlands,
11Law and Practice NETHERLANDS
Contributed by: Vilmar Feenstra, Robert Veenhoven, Roderik Boogaard and Iris Veldman,
Loyens & Loeff N.V.
which means that, inter alia, the following AIFMD under management have to be held by a sepa-
investor protection rules on the following topics rate legal entity whose sole object stated in the
should be taken into account: articles of association is holding the legal owner-
ship of the assets of investment funds.
• operating conditions, including requirements
regarding remuneration, conflict of interest Certain other operational requirements are
and risk management; also relevant, such as customer due diligence
• depositary; requirements on the basis of the Dutch imple-
• fair treatment of investors; and mentation of the (revised) Fourth Anti-Money
• transparency requirements. Laundering and Terrorist Financing Directive,
which is applicable to AIFs.
When interests are marketed to non-profession-
al investors that invest less than EUR100,000, Dutch AIFMs registered under the Small Manag-
additional investor protection rules pursuant to ers Regime are, in principle, not subject to any
the Dutch retail top-up regime need to be com- specific operational requirements.
plied with.
2.5 Fund Finance
2.3.8 Approach of the Regulator All types of investment funds in the Netherlands
The AFM may be described as a supervisor that generally have access to subscription financing
duly considers the legal basis for its supervision and leverage financing. Traditional subscription
and enforcement, while adopting a rather prag- financing remains the main type of financing
matic approach if possible. This is no different selected by investment funds in the Netherlands,
when it comes to the supervision of AIFMs on although there has been an overall increase in
the basis of the Dutch implementation of the the use of financing by managers and invest-
AIFMD. ment funds, including fund-level leverage (such
as hybrid credit lines and NAV financings). Tra-
2.4 Operational Requirements ditionally, financings to Dutch investment funds
For Dutch licensed AIFMs, the operational are made available by (Dutch) banks; however,
requirements pursuant to the AIFMD apply. nowadays, foreign lenders (including alternative
Generally speaking, provided that the offering is lenders) are also active on, or entering, the Dutch
limited to professional investors, no gold plat- fund finance market.
ing of the AIFMD has taken place in the Nether-
lands. Generally, there are no restrictions on the An important consequence of incurring leverage
types of activity or the types of investments for at the level of a Dutch investment fund is that,
the AIF, provided that the envisaged activities/ depending on the structure of the fund and the
investments fall within the investment strategy details of the financing, the relevant fund man-
covered by the AIFM’s licence. ager may be required to obtain authorisation
(by way of a licence) in the Netherlands. Other
Licensed AIFMs have to appoint a depositary than that, for all practical purposes, there are
for the AIF. In principle, in the Netherlands, no material restrictions on borrowing funds, pro-
such depositary is subject to a licence require- vided that borrowed funds are attracted from
ment, unless a specific exemption to the licence professional market parties (eg, banks, pension
requirement is available. If the AIF has no legal funds and those persons that commit at least
personality, the legal ownership of the assets EUR100,000).
12NETHERLANDS Law and Practice
Contributed by: Vilmar Feenstra, Robert Veenhoven, Roderik Boogaard and Iris Veldman,
Loyens & Loeff N.V.
Typically, subscription financing granted to a “open” CV). The closed character requires that
Dutch investment fund would be secured by any admission or substitution of a limited part-
providing security in the form of a right of pledge ner, as well as any change in relative interests
over (i) bank accounts, and (ii) the receivables or among the existing limited partners, is subject to
contractual rights that the investors owe to the the prior unanimous consent of all partners, both
investment fund arising out of the fund agree- general and limited partners. These restrictions
ment, such as the contractual right of the invest- also apply to transfers to affiliates. The fund
ment fund to receive capital contributions. documentation generally provides that such
consent shall be deemed to have been given if
Pursuant to Dutch law, security over receiva- an investor has not declined its approval within
bles can be established by way of a disclosed four weeks of the date on which the request for
right of pledge or by way of an undisclosed right approval was sent. It is expected that the con-
of pledge. Typically, in relation to subscription sent requirements and accordingly the distinc-
financing granted to a Dutch fund, a disclosed tion between the closed and open CV will be
right of pledges over those investor receivables abolished in 2023. Accordingly, each CV (as well
or contractual rights is created. A disclosed right as foreign law limited partnerships) is expected
of pledge is created by way of a security agree- to become tax transparent by default.
ment and notification of the right of pledge to
the relevant debtors of the secured receivables. A Coop cannot be organised as a tax-transpar-
There is no prescribed form for notification, and ent entity in the Netherlands. A Coop is subject
no requirement to include a detailed description to corporate income tax on worldwide income,
of the security agreement. Such notification can provided that it is fully exempt from Dutch cor-
be made by uploading the notice to the relevant porate income tax on dividends and capital
investor portal, making the process of serving gains derived from the qualifying equity stakes
notice a fairly effortless procedure. An undis- in portfolio companies (the participation exemp-
closed right of pledge is created by way of a tion). Typically, the investments made by buyout
notarial deed or by way of a security agreement funds and venture capital funds in their portfo-
that is registered with the Dutch tax authorities lio companies are eligible for the participation
for date-stamping purposes. exemption. Profit distributions made by a Coop
are subject to Dutch dividend tax if the Coop
In addition, depending on the type of financing qualifies as a mere holding vehicle. A Coop
and the structure of the investment fund, securi- that is used as a principal fund vehicle by fund
ty could also be granted in respect of the assets managers that are (substantially) based in the
in which an investment fund would (indirectly) Netherlands may, however, be eligible for an
invest. exemption.
There are generally no legal issues that com- Open and Closed FGRs
monly arise in relation to fund finance in the Similar to the CV, also with regard to the FGR,
Netherlands. two types of entity exist: “closed” FGRs (“Closed
FGR”) and “open” FGRs (“Open FGR”). A
2.6 Tax Regime Closed FGR is a transparent entity for Dutch
Currently, a CV (and its foreign law equivalents) tax purposes. An FGR is considered a Closed
can be organised as a tax-transparent entity FGR if either the participations in the FGR are
(a “closed” CV) or as a tax-opaque entity (an not transferable other than to the FGR itself by
13Law and Practice NETHERLANDS
Contributed by: Vilmar Feenstra, Robert Veenhoven, Roderik Boogaard and Iris Veldman,
Loyens & Loeff N.V.
way of redemption, or if the participations are 3 . R E TA I L F U N D S
transferable only with the consent of all other
participants. For example, debt funds may be 3.1 Fund Formation
structured as a Closed FGR. As a consequence
of its tax transparency, any income and gains 3.1.1 Fund Structures
realised by investing through the Closed FGR Retail funds (eg, UCITS funds) are often struc-
are attributed to the participants as if the partici- tured in the form of an Open FGR or a public
pants were investing directly in the investment limited liability company (naamloze vennootsc-
portfolio of the FGR. hap met beperkte aansprakelijkheid, or NV) that
adopts the legal status of an investment institu-
Open FGRs (ie, FGRs that do not meet the tion with variable capital (beleggingsmaatschap-
transferability criteria for the Closed FGR) are pij met variabel kapitaal, or BMVK).
subject to Dutch corporate income tax on world-
wide income, and profit distributions made by With respect to the description of the Open FGR,
an Open FGR are, in principle, subject to Dutch please see the description of the FGR under
dividend withholding tax. However, if certain 2.1.1 Fund Structures.
conditions are met, the Open FGR can opt for
the status of “exempt investment institution” (vri- The NV has legal personality and capital divided
jgestelde beleggingsinstelling, or VBI) or “fiscal into shares. Shareholders of an NV are required
investment institution” (fiscale beleggingsinstel- to hold at least one physical meeting each year.
ling, or FBI). The NV is incorporated by the execution of a
notarial deed of incorporation (including the arti-
An FGR that elects to be treated as a VBI is fully cles of association of the NV) to that effect. The
tax exempt; ie, the VBI is not subject to Dutch incorporation of an NV requires a bank account
corporate income tax and its profit distributions to be set up in the company’s name prior to
are not subject to Dutch dividend withholding incorporation, a bank statement providing evi-
tax. A VBI may only invest in financial instru- dence of the payment of the minimum paid-in
ments, including transferable securities. share capital (if in cash) or a description of the
contribution drawn up and signed by the incor-
The FBI is subject to Dutch corporate income porators, and an auditor’s certificate attesting to
tax at a rate of 0%. The FBI may only hold mere such payment (if in kind).
portfolio investments. However, unlike the VBI,
the FBI may also invest in real estate. Conse- Both the Open FGR and the NV BMVK are
quently, in practice, the FBI may be referred to suitable for the setting up of (semi) open-end
as the Dutch REIT regime. The FBI is required to and closed-end funds, as well as for umbrella
meet statutory requirements as to its sharehold- funds. Both the participations in the FGR and
ers and leverage restrictions. Furthermore, the the shares in the NV BMVK can be listed on a
FBI must distribute its net income within eight stock exchange.
months of the fiscal year-end. Profit distributions
made by the FBI are, in principle, subject to 15% 3.1.2 Common Process for Setting Up
Dutch dividend withholding tax. Investment Funds
The (fund managers of) retail investment funds
have to be authorised on the basis of either the
Dutch implementation of the AIFMD and the
14NETHERLANDS Law and Practice
Contributed by: Vilmar Feenstra, Robert Veenhoven, Roderik Boogaard and Iris Veldman,
Loyens & Loeff N.V.
AIFMD retail top-up regime, or the Dutch imple- of the board members, the operational and con-
mentation of UCITS. trol structure, the appointment of a depositary,
solidity and minimum own funds requirements.
AIFMD Holders of a qualifying holding (ie, >10% capital
Please see 2.1.2 Common Process for Setting or voting rights) need to obtain a declaration of
Up Investment Funds regarding the registra- no objection from the DNB.
tion and/or approval requirements for AIFMs
and AIFs pursuant to the Dutch implementation The AFM has a review period of 13 weeks for a
of the AIFMD. As the authorisation pursuant to licence application of a ManCo, and eight weeks
the AIFMD is, in principle, limited to professional for a licence application of a UCITS. The AFM
investors, managers who intend to offer inter- may request additional documents or informa-
est in the AIF they manage to non-professional tion during the application process. The review
investors (retail) in the Netherlands should com- period is suspended while additional documents
ply with the so-called Dutch retail top-up regime. are being requested.
The licence for these authorised AIFMs should
specifically include the retail top-up. A licensed ManCo can manage a new UCITS
within the investment strategy covered by its
The authorised AIFM with a retail top-up will have licence, and can market such UCITS to retail
to meet all requirements that apply for author- investors if it has submitted the notification form
ised AIFMs under the fully licensed regime. In to the AFM at least two weeks prior to the mar-
addition, the retail top-up regime, inter alia, keting of the respective UCITS. The following
requires the manager to comply with detailed should be attached to the notification form:
additional compliance, information and report-
ing requirements. However, the manager is not • a prospectus (pursuant to Section 4:49 of the
required to comply with the requirements under AFS); and
the retail top-up regime if interests are offered • a so-called key investor information docu-
to non-professional investors for a countervalue ment (Essentiele Beleggersinformatie, or
of more than EUR100,000 per investor. AIFMs UCITS KID).
have to prepare a UCITS-like KID (in the Dutch
language) for each new AIF they are marketing, Until 31 December 2022, UCITS funds benefit
and provide this to the investors prior to invest- from an exemption to the PRIIPs KID require-
ing in the AIF. In this respect, please see 3.1.4 ments under PRIIPs. As of 1 January 2023, a
Disclosure Requirements. PRIIPs KID will have to be made available to
retail investors.
UCITS
Pursuant to Section 2:69b of the AFS, it is pro- 3.1.3 Limited Liability
hibited to manage and market UCITS funds in the Open FGR
Netherlands without a licence from the AFM. A Please see 2.1.3 Limited Liability for a descrip-
licence can be obtained by the UCITS fund man- tion of the Open FGR, and the limited liability of
ager (ManCo) or by the (self-managed) UCITS. investors in an FGR.
The AFM will grant a licence upon application
if the ManCo meets the licence requirements NV
under Dutch law. The licence requirements relate An NV is a legal entity with capital divided into
to, inter alia, the suitability and trustworthiness one or more transferrable shares, which has
15Law and Practice NETHERLANDS
Contributed by: Vilmar Feenstra, Robert Veenhoven, Roderik Boogaard and Iris Veldman,
Loyens & Loeff N.V.
legal personality. A shareholder of an NV is, in activities and investment strategy, costs and
principle, not personally liable for acts performed remuneration, participation rights, risk profile
in the name of the company and does not have of the fund and valuation of assets);
to contribute to the losses of the company in • the fund rules or the articles of associations
excess of the amount to be paid up on their of the UCITS; and
shares. However, the liability of a shareholder • if made public, the annual accounts of the
for the obligations of the NV may arise if: UCITS of the two preceding years (on the
basis of Article 4:50 of the AFS).
• such shareholder committed a tort;
• such shareholder qualifies as a policymaker Furthermore, a UCITS KID should be available,
or a co-policymaker of the company and in Dutch. As of 1 January 2023, a PRIIPs KID
there is evidently improper management of will have to be made available to retail investors.
the company;
• such shareholder voluntarily assumes liability In addition, as of 1 February 2022, marketing
for the obligations of the company; communications with respect to AIFs or UCITS
• in exceptional circumstances, where “hiding” marketed by licensed AIFMs and UCITs manag-
behind separate legal identities constitutes an ers should comply with the requirements of the
abuse of law, such shareholder may be identi- ESMA Marketing Communication Guidelines.
fied with the company; or
• a shareholder receives a distribution in AIFM with Retail Top-Up
excess of the company’s freely distributable In principle, a licensed AIFM with a retail top-up
reserves while being aware – or when they will have to meet all the (disclosure) requirements
should reasonably have been aware – that that apply to licensed AIFMs under the fully
such distribution was not permitted. licensed regime (as set out in 2.1.2 Common
Process for Setting Up Investment Funds).
When a shareholder supports or effects a divi-
dend or other distribution whilst knowing that With respect to an AIF that is closed ended and
the NV would, as a consequence, not be able to with tradable units, an approved prospectus
continue paying its debts when these become should be published pursuant to the Prospectus
due, it may qualify as acting in a tortious manner. Regulation (EU 2017/1129), unless an exemption
applies.
3.1.4 Disclosure Requirements
UCITS With respect to an AIF whose units are not trans-
The ManCo has to publish the following disclo- ferable and open-end AIFs, unless an exemp-
sures on its website: tion applies as a result of which there is no pro-
spectus requirement, a prospectus including the
• a prospectus including the information information required pursuant to Article 23 of the
required pursuant to Article 4:49 of the AFS AIFMD should be made available and published
in conjunction with Article 118 of the Market on the AIFM’s website, to be supplemented
Conduct Supervision Financial Institutions with particular information deemed important
Decree (the “Decree”) and Annex I to the for retail investors as set out in the retail top-
Decree (such as certain information about the up regime (such as certain information about
fund, the (co-)policymakers, changes in con- the AIF, the (co-)policymakers, the procedure
ditions, the provision of information, the fund regarding amendment of fund terms, reporting
16NETHERLANDS Law and Practice
Contributed by: Vilmar Feenstra, Robert Veenhoven, Roderik Boogaard and Iris Veldman,
Loyens & Loeff N.V.
to investors, the fund activities and investment 3.2.2 Legal Structures Used by Fund
strategy, costs and remuneration, information Managers
with respect to the participation rights, risk pro- Dutch fund managers often adopt the legal form
file of the fund and valuation of assets). Also, of a BV to carry on their risk and portfolio man-
semi-annual accounts with respect to the AIFs agement activities for the benefit of the invest-
will have to be published. ment funds under management.
Furthermore, AIFMs have to prepare a key inves- 3.2.3 Restrictions on Investors
tor information document similar to the UCITS There are no restrictions on the types of inves-
KID (a “UCITS-like KID”) (in the Dutch language) tors that can invest in a retail fund.
for each new AIF they are marketing and provide
this to the investors prior to them investing in the 3.3 Regulatory Environment
AIF. AIFs that currently produce a UCITS-like KID
under the national retail top-up regime can ben- 3.3.1 Regulatory Regime
efit from an exemption to the PRIIPs KID require- The (fund managers of) retail investment funds
ments under PRIIPs until 31 December 2023. As have to be authorised on the basis of either the
of 1 January 2023, a PRIIPs KID will have to be Dutch implementation of the AIFMD and the
made available to retail investors. Dutch retail top-up regime if investors are able
to invest less than EUR100,000, or the Dutch
In addition, as of 1 February 2022, marketing implementation of UCITS.
communications with respect to AIFs or UCITS
marketed by licensed AIFMs or UCITs manag- With respect to authorised AIFMs with a retail
ers should comply with the requirements of the top-up, in principle, no investment limitations
ESMA Marketing Communication Guidelines. apply. A Dutch UCITS, however, should take into
account specific investment limitations as set
AIFM without Retail Top-Up out in the Dutch implementation of the UCITS
AIFMs registered under the Small Managers Directive.
Regime and authorised AIFMs under the full
licence that market interests to retail investors 3.3.2 Requirements for Non-local Service
for a countervalue of more than EUR100,000 per Providers
investor have to prepare a PRIIPs KID and make Please see 2.3.2 Requirements for Non-local
this available to investors before they invest in Service Providers.
the AIF.
3.3.3 Local Regulatory Requirements for Non-
3.2 Fund Investment local Managers
AIFMD
3.2.1 Types of Investors in Retail Funds EEA AIFMs with a licence and that obtained a
In general, private individuals invest in liquid passport pursuant to Article 32 of the AIFMD can
funds, for the purpose of their personal wealth market to retail investors in the Netherlands once
management. they have filed a retail distribution notification
form with the AFM. If retail investors can invest in
the AIF marketed for less than EUR100,000, the
retail top-up regime needs to be complied with.
17Law and Practice NETHERLANDS
Contributed by: Vilmar Feenstra, Robert Veenhoven, Roderik Boogaard and Iris Veldman,
Loyens & Loeff N.V.
EEA sub-threshold AIFMs cannot market AIFs to from UCITS to the AFM at least two weeks prior
retail investors in the Netherlands. to the marketing of the respective UCITS.
Under certain circumstances, non-EEA AIFMs 3.3.5 Rules Concerning Marketing of Retail
located in the USA, Guernsey, Hong Kong or Funds
Jersey may market AIFs to Dutch retail inves- As a general rule, information provided by an
tors pursuant to the so-called designated state AIFM or ManCo has to be accurate, clear and
regime. Otherwise, non-EEA AIFMs are not not misleading. Also, all information provided by
allowed to market AIFs to Dutch retail investors. the AIFM or ManCo may not be detrimental to
the information to be supplied or made available
UCITS pursuant to the AFS, and it should be made clear
A non-local EEA-authorised ManCo may man- whether documents are commercial. Also, rules
age and market authorised UCITS funds in the regarding marketing materials apply. Please also
Netherlands on a cross-border basis, provided see 3.1.4 Disclosure Requirements.
that the passporting procedure (Article 91 and
further of the UCITS Directive) is followed. In addition, the Unfair Commercial Practice
The EEA ManCo will need to obtain separate Act (Wet oneerlijke handelspraktijken, or UCPA)
approval from the AFM for the management of a applies to all financial institutions that market,
Dutch UCITS fund in the Netherlands (pursuant offer or sell products or services to consumers in
to the Dutch implementation of Article 5(3) of the the Netherlands, regardless of the authorisation,
UCITS Directive). If a non-Dutch UCITS fund is registration or exemptions that may be relied
marketed in the Netherlands, the UCITS KID will upon for Dutch financial regulatory purposes.
have to be provided in the Dutch language. If the AFM, as competent supervisory authority
of the UCPA, deems that information provided
3.3.4 Regulatory Approval Process to consumers is misleading or unfair, it may, for
AIFMD example, impose a fine on the (fund managers
With respect to the regulatory approval pro- of the) fund in question.
cess for Dutch AIFMs under the Fully Licensed
Regime and the Small Managers Regime, please 3.3.6 Marketing of Retail Funds
see 2.1.2 Common Process for Setting Up There are no restrictions on the types of inves-
Investment Funds. tors that can invest in a retail fund.
UCITS 3.3.7 Investor Protection Rules
If a ManCo applies for a licence from the AFM In principle, an authorised AIFM with a retail
pursuant to the AFS, the AFM has a review top-up will have to meet all the requirements
period of 13 weeks. With respect to a licence that apply for authorised AIFMs under the fully
application for a UCITS, the AFM has a review licensed regime (see 2.3.7 Investor Protection
period of eight weeks. During the application Rules).
process, the AFM may request additional docu-
ments or information; the review period is sus- Authorised AIFMs with a retail top-up and
pended when the AFM is requesting additional authorised ManCos have to comply with certain
documents. A licensed ManCo can manage a investor protection requirements pursuant to
new UCITS if it has submitted the notification the AFS and the promulgated regulations there-
under, such as the requirement to have certain
18NETHERLANDS Law and Practice
Contributed by: Vilmar Feenstra, Robert Veenhoven, Roderik Boogaard and Iris Veldman,
Loyens & Loeff N.V.
organisational and administrative procedures 3.5 Fund Finance
in place relating to, inter alia, conflicts of inter- Please see 2.5 Fund Finance.
est, complaints handling and product approval
procedures. In addition, the requirement to be 3.6 Tax Regime
registered with the Dutch Financial Services Retail funds that are structured as an Open FGR
Complaints Tribunal (Klachteninstituut Financiële or NV BMVK often elect to be treated as a VBI
Dienstverlening) applies. or an FBI.
3.3.8 Approach of the Regulator An FBI is subject to Dutch corporate income tax
The AFM may be described as a supervisor that at a 0% rate.
duly considers the legal basis for its supervi-
sion and enforcement, while adopting a rather Profit distributions by an FBI are, in principle,
pragmatic approach if possible. Please see 2.3.8 subject to 15% Dutch dividend withholding tax,
Approach of the Regulator. with two important exceptions.
3.4 Operational Requirements • The FBI can apply a conditional rebate for the
In principle, the authorised AIFM with a retail amount of directly suffered (foreign) withhold-
top-up will have to meet all the requirements ing taxes against the FBI’s own obligation to
that apply for authorised AIFMs under the fully remit 15% Dutch dividend tax to the Dutch
licensed regime and the rules set out in the retail tax authorities, withheld in respect of its own
top-up regime. profit distributions. Effectively, the (foreign)
withholding tax levied in connection with the
With respect to authorised Dutch UCITS funds, investments of the FBI will be converted into
specific operational requirements apply, as set Dutch withholding tax, for which the retail
out in the Dutch implementation of UCITS. For investors may be eligible for a credit or (par-
instance, the legal ownership of the assets under tial) refund. This is considered an apparent
management of the UCITS has to be held by a benefit of the FBI regime compared to other
separate legal entity whose sole object as stated investment tax regimes (including the Dutch
in the articles of association is holding the legal VBI regime), where (foreign) withholding
ownership of the assets of the UCITS fund. taxes suffered in connection with the invest-
ment portfolio are often neither creditable nor
Authorised Dutch UCITS funds have to appoint refundable, as a consequence of which, such
a depositary. In principle, in the Netherlands, withholding taxes will be a fund cost, reduc-
such depositary is subject to a licence require- ing the return on investment.
ment, unless a specific exemption to the licence • The FBI can elect to apply a so-called rein-
requirement is available. vestment reserve (herbeleggingsreserve) by
claiming such a reserve in its Dutch corpo-
Certain other operational requirements are rel- rate income tax return. This reserve is equal
evant, such as customer due diligence require- to the net balance of (unrealised) gains and
ments on the basis of the Dutch implementation losses reduced with a proportionate part of
of the (revised) Fourth Anti-Money Laundering the running costs of the FBI. By creating a
and Terrorist Financing Directive, which is appli- reinvestment reserve, items of a capital nature
cable to Dutch UCITS funds. will be excluded from the FBI’s taxable profits
and, therefore, will not fall under the annual
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