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The short answer: the articles of association are the public basic rules of the BV and apply to everyone under corporate law; the shareholders' agreement is a private contract between shareholders with effect under the law of obligations. In the event of a conflict, the articles of association generally take precedence — but shareholders can bind each other contractually to act or vote in a specific manner within those statutory limits.
Bram and Joris had proper articles of association from the notary for their private limited company. When Joris wanted to admit an external investor and Bram did not, they discovered that the articles of association said nothing sensible about the matter. The shareholders' agreement they should have had would have regulated exactly that. In this article: what the difference is, who wins in the event of conflicting agreements, and which agreements belong in which document.
Articles of Association in a single paragraph
The articles of association are the founding document of a private limited company (BV). They are drawn up by a notary upon incorporation and filed with the Chamber of Commerce — which means they are public. Anyone can view them. They regulate the basic structure of the BV: name, registered office, purpose, share capital, how the management is organized, how meetings are conducted, and which resolutions require which majority. The statutory rules are found in Book 2 of the Dutch Civil Code; many articles of association repeat or supplement these.
Shareholders' agreement in one paragraph
The shareholders' agreement is a private contract concluded between shareholders. It is not public. It regulates agreements that do not fit into the articles of association, do not belong there, or that you would rather not show to the whole world — think of exit prices, leaver schemes, deadlock mechanisms, dividend policy, and non-compete clauses. Under the law of obligations, it applies only between the parties who sign it. Full explanation in what is a shareholders' agreement.
The five most important differences
- Public access. The articles of association are available online at the Chamber of Commerce; the shareholders' agreement is private. Do you want the price at which a departing shareholder receives their shares to be made public? No. Therefore, that does not belong in the articles of association.
- Operation. The Articles of Association have corporate law effect and apply to the BV as a legal entity, to the management board, and to successive shareholders. The shareholders' agreement has contractual effect and binds only the signatory.
- Binding effect of new parties. Anyone who becomes a shareholder automatically falls under the articles of association. Anyone who becomes a shareholder does not automatically fall under the shareholders' agreement — you must have them co-sign (often via a deed of accession).
- Amend. Amending the articles of association requires a notarial deed and, often, a qualified majority. You amend a shareholders' agreement with the signatures of all parties — faster, cheaper, more flexible.
- Level of detail. The articles of association are brief and formal; the shareholders' agreement is more extensive and concrete. The shareholders' agreement contains the real rules of the game.
Who wins in the event of conflicting agreements?
The short version: under corporate law, the articles of association take precedence. But that is not the whole story. Three scenarios:
- Contradictory regarding how the BV must act. A resolution that conflicts with mandatory articles of association or the law is in principle invalid, even if you have agreed otherwise in a shareholders' agreement.
- Contradictory regarding how shareholders behave towards one another. Shareholders can bind each other under contractual law, for example to vote in a specific manner. The Supreme Court has confirmed on several occasions that such voting agreements are valid, provided they do not conflict with the law or mandatory articles of association. Shareholders can therefore make mutually binding agreements within the scope of the articles of association.
- Contrary to mandatory law. Nothing takes precedence over mandatory law. A shareholders' agreement cannot grant you rights that the law does not recognize.
Practical tip: ensure that the articles of association and shareholders' agreement supplement, rather than contradict. The shareholders' agreement specifies what the articles of association regulate in general terms and regulates what the articles of association leave open.
What belongs where?
A rule of thumb to follow when drafting:
- In the articles of association: everything that may (and must) be public — name, purpose, capital, structure, management, main rules for decision-making, transfer blocking arrangement.
- In the shareholders' agreement: everything that must remain private or for which you want flexibility — price determination upon exit, leaver arrangements, dividend policy, deadlock mechanisms, non-compete and non-solicitation clauses, detailed voting agreements.
Are you unsure about a topic? Remember: anything you do not want the whole world to see does not belong in the articles of association. And anything affecting the structure of the BV *must* be included in the articles of association to have corporate law effect.
Restraint: can a shareholders' agreement be held liable against third parties?
In principle, no. A shareholders' agreement is a contract between parties; third parties (a new shareholder who has not signed, or the BV itself) are not bound by it. However, through the open standards of reasonableness and fairness (Article 2:8 of the Dutch Civil Code), a shareholders' agreement can sometimes influence the decision-making process of the BV — for example, if a majority shareholder forces a decision that conflicts with the agreements in the shareholders' agreement, this may, in exceptional cases, be voidable due to a violation of reasonableness and fairness towards a minority.
Case law on this matter is nuanced and depends heavily on the facts. No reason to rely on it — though it is reassuring that there is a safety net. Better yet: arrange it carefully in advance, so that you never have to fall back on reasonableness and fairness.
Practical advice
Two short lines.
- Start with the articles of association, preferably properly drafted by a notary who thinks along with you. Standard articles of association are often too bare.
- Supplement this with a shareholders' agreement drafted by a legal expert or lawyer with experience in corporate law. One document manages the structural aspects, the other the personal ones.
Bram and Joris have their affairs in order by now. The articles of association were revised at the notary, a shareholders' agreement was drafted by a legal expert, and — importantly — for the first time, both know where they stand. Do you want to take the same step? View the options for having a shareholders' agreement drafted or read about drafting a shareholders' agreement . For the difference between a legal expert and a notary: lawyer versus legal expert.
Frequently Asked Questions
Articles of association are public (filed with the Chamber of Commerce) and regulate the basic structure of the BV; under corporate law, they apply to everyone dealing with the BV. A shareholders' agreement is private and regulates agreements between shareholders; it only takes effect between the parties who sign it.
In corporate law, the articles of association generally take precedence. A resolution contrary to mandatory articles of association or the law is usually invalid. However, shareholders can contractually bind each other to act or vote in a specific manner within the scope of the articles of association.
Not to deviate from mandatory articles of association or mandatory law. However, to supplement the articles of association or to make concrete agreements within the statutory scope. Supplementing is permitted, replacing is not.
Articles of Association: name, purpose, capital, governance structure, general rules for decision-making, and blocking arrangement. Shareholders' Agreement: price determination upon exit, leaver arrangements, dividend policy, deadlock mechanisms, non-compete clauses, and detailed voting agreements.
Not automatically. A new shareholder is only bound by the shareholders' agreement if he co-signs, usually via an admission declaration. Without that signature, the agreement does not apply to him.
Articles of association are mandatory; you cannot incorporate a BV without them. A shareholders' agreement is not mandatory, but is strongly recommended when there are multiple shareholders. Together, both form the complete legal framework of your BV.
In principle, not directly; the BV is not a party to the agreement. However, through the principles of reasonableness and fairness (Article 2:8 of the Dutch Civil Code), effect may arise in exceptional cases. Better: regulate structural agreements in the articles of association, and personal ones in the shareholders' agreement.
