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More and more companies aim to contribute to social purposes, in addition to making a profit, in areas such as healthcare, education, energy, and climate: the 'social' enterprises. The Dutch government has been working for several years on a legal framework for these companies. The core of this framework is that a company may add "BVm" to its trade name if it meets certain legal requirements. This should contribute to the recognition and identification of social enterprises.
The future BVm is essentially a private limited company (besloten vennootschap met beperkte aansprakelijkheid or BV). There will be no new legal form. The legal rules for a BV will also apply to the BVm. To qualify as a BVm, a company must meet the following conditions:
Subsequently, the board of the BV must register the BVm status in the Trade Register of the Chamber of Commerce.
The BVm distinguishes itself from the BV by its focus on achieving positive social impact. The BVm legislative proposal will include a requirement for the BVm to pursue or promote a social purpose with its activities. This goal must be described in the articles of association. The following topics are considered social purposes:
For a BVm, making profit is secondary to the social purpose. Profit distributions to the shareholders of the BVm remain possible, but the promotion of the social purpose takes precedence. This means that most of the profit will have to flow back into the company for the benefit of the social purpose.
An important part of the future BVm legislative proposal is the obligation to report on social results. The board of the BVm will have to address the activities of the BVm and the social value achieved with these activities in an annual social report. This can also be done through a separate section in the management report.
An important principle is that entrepreneurs can choose whether they want to adhere to the future legal framework and the obligations that arise from it. Social entrepreneurs cannot be forced to become a BVm.
The first step towards a legal framework for the BVm was taken in 2021. Since then, no legislative proposal has been presented. This is expected to take some time. Earlier this year, the Minister of Economic Affairs and Climate indicated that the beginnings of the legal framework is currently being reviewed by various experts. Whether the legislative proposal will be presented in 2025 is still unknown. We will, of course, keep an eye on developments.
Would you like to know more about the BVm? Please contact Jarno de Graaf, Corporate Law Attorney.
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