55 Rue de Luxembourg, 8077 Bertrange
Grand Duchy of Luxembourg
+352 278 755 01
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Used for securitisation and preservation of (family) business, amongst others, this type of foundation
attracts investors worldwide.
A Dutch stichting is a legal entity incorporated under Dutch law, which is translated to “foundation” in English. The stichting has a separate legal personality, without members, shareholders and thus no owners. It is governed and fully controlled by a board of directors. However, other supervisory bodies can be set up. The board of directors requires no specific requirements regarding the composition, nationality, appointment and resignation. These aspects allow flexibility in the structure.
Further, there are no requirements in terms of minimum capital of the stichting, and often no publishing requirements for annual accounts exist. In most cases, the stichting is tax exempt. Although this centuries old entity traditionally was used for charity, it can be used for a whole range of business purposes.
Administratiekantoor or Administrative Foundation (STAK). Under a STAK, the economic rights, or dividends are split from the voting rights. This means that the stichting, through issuance of share certificates or depository receipts, prevents shareholders to have voting rights along receipt of dividends. Thus the board of directors keeps full control over governance of the STAK.
This structure is particularly recommended to protect the heritage and independence of a family business. Indeed, family relatives or trusted relations will usually act as directors of the board and hold the assets on behalf of the beneficiaries. The latter, by transferring the ownership of the assets to the stichting, preserve it from their creditors and allow them to have an indirect and anonymous participation. Future transfers to heirs can also be planned in the stichting and do not fall under inheritance laws.
"The STAK is particularly recommended to protect the heritage and independence of a family business"
Another type of stichting is the Stichting Continuïteit or Continuity Foundation (STICO). The main advantage is its possibility to acquire as many shares as needed at a preferential price to prevent or stop a (hostile) takeover.
Such mechanism is called the Dutch poison-pill and has been used in several high-profile cases like Ahold Delhaize and ABN Amro. It is applicable for family businesses as well as for publicly listed companies. By using a call option, the STICO is ensured to constantly hold 50% of the shares and push back any attempt to take control.
Those anti-takeover measures were usually activated at the level of the listed holding company, but in the recent years we have seen an increasing utilisation of the poison-pill at subsidiary level.
The use of a STICO is also a good choice for any transactions that would require the use of an orphan vehicle, like securitisations. The stichting should then be established in tandem with a securitisation vehicle (SV) for the following advantages : keeping the bankruptcy-remote status, providing a good bankruptcy-remote structure and having an independent shareholder and incorporator.
The STICO can also serve as a security trustee vehicle in structured finance transactions, for example to hold securities for the secured parties. In this case, the STICO would act as the shareholder of the SV.
Thanks to its orphan set-up, a stichting might as well be used in the following cases:
– holding assets in trust for investment funds;
– as anonymous investment vehicle for segregation and isolation of assets;
– acting as bankruptcy-proof depositories of IP rights;
– investing in sharia-compliant investment structures;
– warehousing assets in case of antitrust concerns.
"Globally, a stichting is also a good choice for any transactions that would require the use of an orphan vehicle, like securitisations"
Through these examples, we can see that the Dutch stichting can be set up and integrated in many structures with a lot of different purposes. It can be paired to Luxembourg entities to protect a family business, avoid a hostile takeover, set-up a securitisation structure or guarantee an anonymous investment.
For all these reasons, the Dutch stichting has gained a lot of interest worldwide.
Looking to set up a Dutch stichting ?
Would you like to know more about Dutch stichting and how it can fit in your financial structure ?
Feel free to contact us !
55 Rue de Luxembourg, 8077 Bertrange
Grand Duchy of Luxembourg
+352 278 755 01
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