Social Enterprise Law Surveys |
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Aruba |
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| (Latin America/Caribbean) Firm VANEPS | |
| What jurisdiction(s) do you practice in? | Aruba |
| What are the most commonly used types of for-profit corporate organizational forms in your jurisdiction (e.g., corporation, limited liability company, benefit corporation, social purpose corporation, etc.) used by Enterprises operating a trade ... | The most common for-profit corporate organizational forms used on Aruba are:
NV and VBA The NV and VBA are intended as a legal form for running a profit-oriented company. Both are legal entities with capital divided into shares, which are therefore also called ‘capital companies’. The NV and VBA have many similarities. The differences are not very obvious but are merely related to social needs. The NV is more suitable for large companies with a strong divided shareholding structure. The organizational structure of the NV is public and therefore also suitable for public-sector companies. The VBA is aimed at smaller companies with a closed circle of shareholders. From a design perspective, a BV provides some additional flexibility, because, in addition to the articles of incorporation, it is possible to provide for corporate governance regulations in a less public so-called corporate agreement. For the NV and the VBA the following general provisions, among others, apply:
Sole proprietorship Another commonly used entity is the sole proprietorship (eenmanszaak)The sole proprietorship is mostly used for smaller businesses. In the case of a sole proprietorship, there is no distinction between personal and business assets. As a result, all assets and liabilities pertaining to the proprietorship constitute the income and expenses of the owner. Creditors of a sole proprietorship have recourse directly on the personal property of the owner, whereas private creditors can also recover their claims from the assets of the business. General partnership Foundation A foundation (stichting) is a legal entity in its own right, with its own assets and liabilities. The legal concept of the foundation developed from capital being set aside for a special non-profit or charitable purpose and was originally used by religious and welfare groups. The foundation is still frequently used for religious and non-profit organizations. The purpose of the foundation – save in case of a private foundation – may not include distributions to incorporators or to those who constitute its bodies or to others, unless distributions to these others have a charitable or social nature. The foregoing does not mean that the use of a common foundation is restricted to charitable purposes. It can be and is extensively used in structures in which the foundation is the legal owner of assets of which others hold the economic ownership. The principal difference between a foundation and a corporation is that a foundation has neither members, nor shareholders, nor a capital divided into shares. The board of a foundation, which manages its affairs, is therefore not subject to the overall control of shareholders or members. The initial managing board is appointed at the moment of incorporation. Association The association (vereniging) is a legal person with members that is aimed at a specific purpose, other than a cooperative objective. The association can make a profit, but cannot distribute profit to its members. The profit has to be used for the purpose of the association. a. Both the NV and the VBA are commonly used by Enterprises seeking financing from investors and that will have multiple owners. b. There is no clear preference for one or the other in practice because the eventual legal form is fully dependent on the type and nature of the relevant Social Enterprise. It is safe to say, that generally the NV, VBA and Foundation are taken into account when designing the Social Enterprise. |
| Do any of your jurisdiction’s traditional organizational forms require or permit the board or managers to consider, balance or prioritize interests other than shareholder value in decision making? What other interests, if any, are they required... | Generally, the stakeholder model is applied, which basically means that the board may not only act in the shareholders’ or owners’ interest but has to consider the interest of the business and all the stakeholders, e.g. shareholders, employees, creditors, other bodies. It is prohibited for a legal entity to perform activities that are contrary to public order. In any case, contrary to public order are acts that violate the generally accepted foundations of our legal system. These are, for example: unjustified violations of other people's freedom or of human dignity, violence against those with whom they disagree, prohibited discrimination, systematic non-payment of premiums and fraud. They undermine perceived fundamental principles of the justice system which, if applied more widely, would disrupt society. |
| Does your jurisdiction have organizational forms specifically designed for Social Enterprises? If so:a. What type(s) of organizational forms are they?b. How do they materially differ from the most closely analogous traditional organizational ... | No, however the association and cooperation are commonly used for social enterprises. Please note that the association and cooperation have no shareholders, but members and it is not possible to distribute profit to its members. |
| Are Social Enterprises permitted to be formed and operated as Nonprofits? If so: a. Are Nonprofits that are Social Enterprises treated differently under the law as compared to Nonprofits that are not Social Enterprises, whether from a corporat... | That depends on the legal form that will be chosen for the Social Enterprise. A common legal form to structure such a Social enterprise is the foundation. NV/VBA Both are intended to distribute profit to its shareholders, but there are constructions using other legal forms to make them nonprofit. Sole proprietorship There is no distinction between the personal and business assets and there are no shareholders. There are constructions using other legal forms to make it nonprofit. General partnership There are no shareholders, but partners. Profit is to be distributed to the partners, but there are constructions using other legal forms to make it nonprofit. Foundation Can be formed as a nonprofit, but cannot distribute profit to its board. Association The association is nonprofit, but cannot be formed to distribute profit to its members. There are constructions using other legal forms to make it nonprofit. a. No b. No c. No d. Aruba knows many charitable and social enterprises among which are Nonprofits. There has yet research to be done to which percentages of the Social Enterprises are Nonprofits. |
| Does your jurisdiction allow for worker-owned Enterprises, such as cooperatives? If so, please describe any material benefits of, and/or restrictions on, using such forms. | Yes. Our jurisdiction allows for a cooperation also known as a cooperative association. The cooperation, unlike the foundation, has members. A cooperation is a specific form of an association, established by a notarial deed and is obligated to have Article of Association. In the articles of association the cooperation must aim to provide for certain material needs to its members by virtue of agreements, other than insurances, concluded with the members in the business which it carries on or has carried on for that purpose on their behalf. Material benefits From a civil law point of view, there are no material benefits over other legal firms. Restrictions The cooperation does not make a profit for capital providers but keeps costs as low as possible for those who work together in a cooperation. The Article of Association of a cooperation may permit it to enter into agreements such as those it concludes with its members with others unless it would lead to the cooperation’s main task, providing for certain material needs to its members, to become subordinate. The name of a cooperative must be subject to a periodic penalty payment contain the word cooperative or a derivation thereof. Also the NV and VBA can be incorporated in such a way that it is worker-owned. |
| Are there unique reporting requirements for Social Enterprises? If there are, please describe them. Please also discuss what government bodies Social Enterprises are required to report to. | There are not any unique reporting requirements for Social Enterprises. For all legal entities the following general provisions apply:
[1] Art. 2:15 par. 1 CC |
| In your jurisdiction, has case law and jurisprudence evolved to address Social Enterprises? If there is meaningful jurisprudence around Social Enterprises, please provide some brief examples. | As our jurisdiction does not make a formal distinction for Social Enterprises there is little meaningful case law and jurisprudence in this area. |
| Does your jurisdiction have any ESG requirements for Enterprises generally? If it does, please describe. | No, we do not have ESG requirements for Enterprises generally, like those are in place in Europe, but environmental, social or governance laws and regulations could be applicable to Enterprises. |
| Does your jurisdiction have any ESG requirements specifically for Social Enterprises? If it does, please describe. | No. |
| Does your jurisdiction have any ESG requirements for investors? If it does, please describe. | No. |
| Are any major investor classes (e.g., pension funds, mutual funds, etc.) required to look at ESG issues when making investment decisions in your jurisdiction? a. If they are, please describe the requirements.b. If they are not, are they permi... | No. a. N/A b. We acknowledge and appreciate the trend of investors that attribute more weight to ESG considerations and issues in making their final determination in their proposed investment. c. Social contribution |
| What kinds of philanthropic funding do Social Enterprises in your jurisdiction commonly receive (e.g., grants, charitable investment, traditional investment)? | Social enterprises receive grants, charitable investments, and traditional investments. However, nonprofit social enterprises generally receive charitable donations. |
| How prevalent, if at all, are new for-profit impact investments in your jurisdiction (e.g. traditional instruments with impact terms, new investment instruments, aggregation with philanthropic capital, community based funding, etc.)? | We are not aware of any notable for-profit impact investments in our jurisdiction. |
| What are the types of government funding and support available to Social Enterprises, if any, available in your jurisdiction (e.g., grants, investments, bonds, and guarantees)? a. How difficult is it for Social Enterprises to obtain government... | We are not aware of any special government funding specifically available to support Social Enterprises. |
| Are there any companies that are formed as a Social Enterprise listed on your jurisdiction’s leading securities exchange(s)? | There are no Social Enterprises listed on our jurisdiction’s securities exchange. |
| To what extent are publicly traded Enterprises required to disclose ESG related factors in annual reports/public filings in your jurisdiction. | Aruban law does not provide for disclosure requirements in relation to ESG factors |
| How prevalent, if at all, are impact bonds in your jurisdiction? | N/A |
| In your jurisdiction, are there any restrictions on foreign investments or donations that are unique to Social Enterprises (whether incorporated as for profit entities or as Nonprofits)? | No. |
| Is “crowdfunding” legal in your jurisdiction? Are there rules under applicable securities laws that make it easier for smaller businesses or Social Enterprises to take money from investors that are not sophisticated/accredited/qualified under a... | Crowdfunding is legal in our jurisdiction. However please consider that foreign exchange restrictions and requirements may apply depending on the structure and function of foreign funding by non-Aruban-residents. |
| Does your jurisdiction have Regulatory Sandboxes or similar policy frameworks for Social Enterprises? If it does, please describe. | As our jurisdiction does not make a formal distinction for Social Enterprises there are little to no Regulatory Sandboxes or similar policy frameworks for Social Enterprises. |
| What government operational support, resources, training or services, are available for small businesses or Social Enterprises? | Arbua has no specific operational support services in connection with small businesses or Social Enterprises. |
| Are there different compliance requirements for different types of Social Enterprises than for traditional Enterprises? Please provide examples if there are. | No. |
| Is there a dedicated government agency or department that oversees Social Enterprises? If there is, please describe its mandate and effectiveness. | No. |
| Is there a different bankruptcy system available for Social Enterprises? | No. |
| What are the average time and filing fees to form an Enterprise in your jurisdiction? | 1-2 months. |
| What government or third-party certifications or accreditations, if any, are available for Social Enterprises that allow for access to benefits e.g. funding, beneficial tax status, etc.? Please provide examples and briefly describe them as well... | N/A |
| Please describe whether, in your opinion, startups and other entrepreneurial Enterprises generally can easily form and flourish in your jurisdiction. | Generally yes, no strong limitations with respect to the incorporation of an enterprise. Further, it depends on the particular business case of the enterprise. |
| Please describe whether, in your opinion, Social Enterprises, in particular, can easily form and flourish in your jurisdiction. | Generally yes, no strong limitations with respect to the incorporation of an enterprise. Further, it depends on the particular business case of the enterprise. |
| Please describe whether in your opinion there are any laws that are obstructive to the formation of Social Enterprises (i.e. that actively disfavor or penalize, or otherwise discourage their formation) in your jurisdiction (for example, are Soc... | Not that we are aware of. |
| In your jurisdiction, are there any major fraud concerns or defects due to corruption or fraud that should be addressed? If there are, please briefly discuss the concerns or defects. | Not that we are aware of. |
| What changes to the law do you think would be most beneficial to enabling Social Enterprises to flourish in your jurisdiction? | In our opinion, corporate law properly facilitates Social Enterprises. |
| What changes to the law do you think would be most beneficial to enhancing the social and environmental responsibility of Enterprises generally (whether or not Social Enterprises)? | In our opinion, from a corporate law perspective, no particular changes have to be made to the legislation in relation to the social and environmental responsibility of Enterprises. |
| Is there anything else you would like to add or guidance you would like to provide? Are there any questions we should have asked but did not? | N/A. |
Social Enterprise Law Surveys
Aruba
The most common for-profit corporate organizational forms used on Aruba are:
- limited liability company (naamloze vennootschap or NV),
- private limited liability company (vennootschap met besloten aansprakelijkheid or VBA)
- sole proprietorship
- general partnership
- foundation
- association
NV and VBA
The NV and VBA are intended as a legal form for running a profit-oriented company. Both are legal entities with capital divided into shares, which are therefore also called ‘capital companies’. The NV and VBA have many similarities. The differences are not very obvious but are merely related to social needs. The NV is more suitable for large companies with a strong divided shareholding structure. The organizational structure of the NV is public and therefore also suitable for public-sector companies. The VBA is aimed at smaller companies with a closed circle of shareholders. From a design perspective, a BV provides some additional flexibility, because, in addition to the articles of incorporation, it is possible to provide for corporate governance regulations in a less public so-called corporate agreement.
For the NV and the VBA the following general provisions, among others, apply:
- each director shall be responsible towards the legal person for the proper performance of his duties. All duties not allotted to one or more specific directors by or pursuant to the law or the articles shall form part of each director’s duties;
- each director shall be responsible for the general course of affairs. He shall be wholly liable for improper management, unless no serious reproach can be made against him, having regard to the duties attributed to specific other directors, and he was not negligent in acting to prevent the consequences of improper management;
- in case of bankruptcy, each director shall be jointly and severally liable to shortage of the estate, being the amount of the debts to the extent that they cannot be settled by the liquidation of the other revenues, if and when the management has manifestly performed its duties improperly and if it is plausible that this is an important cause of the bankruptcy;
- the board shall administer the financial condition and everything relating to the activities of the legal entity, as such activities may require and keep the books, records and other databases pertaining thereto in such manner that its rights and obligations can be ascertained at any time; and
- annually, within eight months after the end of the financial year, the board prepares the annual accounts, consisting of a balance sheet and a statement of income and expenditure.
Sole proprietorship
Another commonly used entity is the sole proprietorship (eenmanszaak)The sole proprietorship is mostly used for smaller businesses.
In the case of a sole proprietorship, there is no distinction between personal and business assets. As a result, all assets and liabilities pertaining to the proprietorship constitute the income and expenses of the owner. Creditors of a sole proprietorship have recourse directly on the personal property of the owner, whereas private creditors can also recover their claims from the assets of the business.
General partnership
A general partnership in which the individual partners are jointly and severally liable for the debts resulting from the enterprise of the partnership is referred to as the Vennootschap onder Firma (VOF).
Foundation
A foundation (stichting) is a legal entity in its own right, with its own assets and liabilities. The legal concept of the foundation developed from capital being set aside for a special non-profit or charitable purpose and was originally used by religious and welfare groups. The foundation is still frequently used for religious and non-profit organizations. The purpose of the foundation – save in case of a private foundation – may not include distributions to incorporators or to those who constitute its bodies or to others, unless distributions to these others have a charitable or social nature.
The foregoing does not mean that the use of a common foundation is restricted to charitable purposes. It can be and is extensively used in structures in which the foundation is the legal owner of assets of which others hold the economic ownership.
The principal difference between a foundation and a corporation is that a foundation has neither members, nor shareholders, nor a capital divided into shares. The board of a foundation, which manages its affairs, is therefore not subject to the overall control of shareholders or members. The initial managing board is appointed at the moment of incorporation.
Association
The association (vereniging) is a legal person with members that is aimed at a specific purpose, other than a cooperative objective. The association can make a profit, but cannot distribute profit to its members. The profit has to be used for the purpose of the association.
a. Both the NV and the VBA are commonly used by Enterprises seeking financing from investors and that will have multiple owners.
b. There is no clear preference for one or the other in practice because the eventual legal form is fully dependent on the type and nature of the relevant Social Enterprise. It is safe to say, that generally the NV, VBA and Foundation are taken into account when designing the Social Enterprise.
Generally, the stakeholder model is applied, which basically means that the board may not only act in the shareholders’ or owners’ interest but has to consider the interest of the business and all the stakeholders, e.g. shareholders, employees, creditors, other bodies.
It is prohibited for a legal entity to perform activities that are contrary to public order. In any case, contrary to public order are acts that violate the generally accepted foundations of our legal system. These are, for example: unjustified violations of other people's freedom or of human dignity, violence against those with whom they disagree, prohibited discrimination, systematic non-payment of premiums and fraud. They undermine perceived fundamental principles of the justice system which, if applied more widely, would disrupt society.
No, however the association and cooperation are commonly used for social enterprises. Please note that the association and cooperation have no shareholders, but members and it is not possible to distribute profit to its members.
That depends on the legal form that will be chosen for the Social Enterprise. A common legal form to structure such a Social enterprise is the foundation.
NV/VBA
Both are intended to distribute profit to its shareholders, but there are constructions using other legal forms to make them nonprofit.
Sole proprietorship
There is no distinction between the personal and business assets and there are no shareholders. There are constructions using other legal forms to make it nonprofit.
General partnership
There are no shareholders, but partners. Profit is to be distributed to the partners, but there are constructions using other legal forms to make it nonprofit.
Foundation
Can be formed as a nonprofit, but cannot distribute profit to its board.
Association
The association is nonprofit, but cannot be formed to distribute profit to its members. There are constructions using other legal forms to make it nonprofit.
a. No
b. No
c. No
d. Aruba knows many charitable and social enterprises among which are Nonprofits. There has yet research to be done to which percentages of the Social Enterprises are Nonprofits.
Yes. Our jurisdiction allows for a cooperation also known as a cooperative association.
The cooperation, unlike the foundation, has members. A cooperation is a specific form of an association, established by a notarial deed and is obligated to have Article of Association. In the articles of association the cooperation must aim to provide for certain material needs to its members by virtue of agreements, other than insurances, concluded with the members in the business which it carries on or has carried on for that purpose on their behalf.
Material benefits
From a civil law point of view, there are no material benefits over other legal firms.
Restrictions
The cooperation does not make a profit for capital providers but keeps costs as low as possible for those who work together in a cooperation.
The Article of Association of a cooperation may permit it to enter into agreements such as those it concludes with its members with others unless it would lead to the cooperation’s main task, providing for certain material needs to its members, to become subordinate.
The name of a cooperative must be subject to a periodic penalty payment contain the word cooperative or a derivation thereof.
Also the NV and VBA can be incorporated in such a way that it is worker-owned.
There are not any unique reporting requirements for Social Enterprises. For all legal entities the following general provisions apply:
- the board shall administer the financial condition and everything relating to the activities of the legal entity, as such activities may require and keep the books, records and other databases pertaining thereto in such manner that its rights and obligations can be ascertained at any time[1]; and
- annually, within eight months after the end of the financial year, the board prepares the annual accounts, consisting of a balance sheet and a statement of income and expenditure
[1] Art. 2:15 par. 1 CC
As our jurisdiction does not make a formal distinction for Social Enterprises there is little meaningful case law and jurisprudence in this area.
No, we do not have ESG requirements for Enterprises generally, like those are in place in Europe, but environmental, social or governance laws and regulations could be applicable to Enterprises.
No.
No.
No.
a. N/A
b. We acknowledge and appreciate the trend of investors that attribute more weight to ESG considerations and issues in making their final determination in their proposed investment.
c. Social contribution
Social enterprises receive grants, charitable investments, and traditional investments. However, nonprofit social enterprises generally receive charitable donations.
We are not aware of any notable for-profit impact investments in our jurisdiction.
We are not aware of any special government funding specifically available to support Social Enterprises.
There are no Social Enterprises listed on our jurisdiction’s securities exchange.
Aruban law does not provide for disclosure requirements in relation to ESG factors
N/A
No.
Crowdfunding is legal in our jurisdiction. However please consider that foreign exchange restrictions and requirements may apply depending on the structure and function of foreign funding by non-Aruban-residents.
As our jurisdiction does not make a formal distinction for Social Enterprises there are little to no Regulatory Sandboxes or similar policy frameworks for Social Enterprises.
Arbua has no specific operational support services in connection with small businesses or Social Enterprises.
No.
No.
No.
1-2 months.
N/A
Generally yes, no strong limitations with respect to the incorporation of an enterprise. Further, it depends on the particular business case of the enterprise.
Generally yes, no strong limitations with respect to the incorporation of an enterprise. Further, it depends on the particular business case of the enterprise.
Not that we are aware of.
Not that we are aware of.
In our opinion, corporate law properly facilitates Social Enterprises.
In our opinion, from a corporate law perspective, no particular changes have to be made to the legislation in relation to the social and environmental responsibility of Enterprises.
N/A.