DUTCH CARIBBEAN: An Introduction to General Business Law

DUTCH CARIBBEAN GENERAL BUSINESS LAW GLOBAL OVERVIEW 2021
Contributed by Soliana Bonapart & Aardenburg

1. Current economic conditions 

COVID-19 pandemic 

1.1. The Dutch Caribbean has not been able to escape from the COVID-19 pandemic. Like in many other countries the impact of the pandemic was more severe on certain economic sectors than on others. In particular the tourism and tourism-related sectors were hit hard with the closure of airports as one of the first preventive measures issued by the local governments. As the islands of the Dutch Caribbean heavily depend on the tourism industry for their income, the economic impact of the pandemic was severe for all islands.

1.2. The islands in the Dutch Caribbean form part of the Kingdom of the Netherlands and with the help of massive financial support and medical aid from the Netherlands, the islands have been able to mitigate and overcome the initial consequences of the pandemic. Financial support to companies in sectors that have been hit hardest could not ensure that all companies survived and especially in the hotel and restaurant business massive layoffs occurred and some companies had to close their businesses.

Foreign exchange restrictions 

1.3. The economic situation and the impending lack of foreign exchange also resulted in foreign exchange restrictions imposed by both the Central Bank of Curaçao and Sint Maarten on Curaçao and Sint Maarten and the Aruba Central Bank on Aruba. When the COVID-19 pandemic started in 2020 the tourism sector on the islands came to a standstill and with it the income and revenues generated in mainly US dollars. As the islands need US dollars to buy most of their products abroad, including oil for their energy production, currency exchange reserves were needed to ensure maintenance of the fixed exchange rate of the US dollar to both the Netherlands Antilles and Aruban florin.

1.4. In order to prevent a massive outflux of foreign exchange, the central banks considered it necessary to implement foreign exchange restrictions. The measures taken by the Aruba Central Bank were the most stringent as consent for payments abroad was almost only granted for paying bills. As of 1 June 2021 the measures in Aruba have gradually been relaxed, while recently the less strict currency exchange restrictions in Curaçao and Sint Maarten were loosened as well.

1.5. At the same time, tourism on the islands is picking up again and recently occupancy rates are being realized that exceed those before COVID-19. Investments are also taking place in new hotels and leisure projects again.

Political climate 

1.6. Political tensions arose over the way in which the Dutch government wanted to make the necessary funds available through a specially established body for the islands of Aruba, Curaçao and Sint Maarten. Where the islands felt their autonomy was compromised, the Dutch government argued that this was necessary to improve the reform of the one-sided and thus fragile islands' economies.

1.7. Presently long term financial support from the Netherlands is being negotiated with the islands of Aruba, Curaçao and Sint Maarten with the aim to reform the islands' economies and to make them more varied, stress resistant and less dependent on a limited number of income generating sectors. Since the dissolution of the Netherlands Antilles on October 10, 2010 the islands of Bonaire, Sint Eustatius and Saba have the status of public body within the Kingdom of the Netherlands and as such these islands enjoy direct financing from the Netherlands.

2. New economic developments

Online gaming 

2.1. One of the sectors that Curaçao wishes to further develop is the online gaming industry, through new modernized legislation with adequate supervision. The intention is also that the public sectors will function more efficiently and that employment laws will also be made more flexible. The influx of foreign exchange and the anticipated reform is expected to have a positive impact on the islands’ economies from which the legal sector is expected to benefit, mainly through the advisory practice.

Digital nomads 

2.2. To curb the situational economic downturn the government of Curaçao also launched the program “Curaçao Convenient work and living” that promotes extended stays and remote working in Curaçao. The program aims at bolstering the economy by attracting digital entrepreneurs and nomads, hibernators and those seeking residency, to come, work, and live on the island for up to twelve (12) months. The program also aims at highly skilled migrants, focusing on the financial and fintech sector.

Investments  

2.3. As investors can provide a real economic benefit to Curaçao, the government of Curaçao also issued the Guidelines Investors Permit to facilitate the stay of high net worth investors who wish to reside in Curaçao for a period of more than six (6) months per year.

Refinery 

2.4. The government on Curaçao is still trying to find a new operator for the refinery. Major investments will have to be made to ensure that they meet current environmental standards. As the former largest private employer on Curaçao, a new operator will benefit local employment and the refinery supply chain.

3. Legal market 

3.1. The Dutch Caribbean legal market does not seem to have suffered much from the pandemic. Home work opportunities and online meetings have allowed the lawyers to keep practising and, as elsewhere in the world, have provided an alternative form of professional practice. The pandemic has specifically raised legal questions for companies, employers and government about the termination of contracts, vaccination obligations, layoffs, financial support regulations and COVID-19 measures. The pandemic has also led to further digitalization in the courts and the conduct of legal proceedings.

4. Compliance regulations 

4.1. Compliance, especially in the field of privacy and data protection, as well as anti-money laundering become increasingly more relevant for corporate clients and the legal profession. In the banking sector we see that because of AML regulations it is becoming increasingly difficult for the local banks to keep the contracts with their corresponding banks and thereby guarantee the international payment system. In combination with current foreign exchange restrictions, this requires investors to take this into account when making their investment decisions.

5. New legislation 

5.1. As of January 1, 2021, changes were made to book 2 of the Curaçao Civil Code that regulates the Curaçao legal entities, while in Aruba, where the former Commercial Code still applied, book 2 of the Civil Code was introduced on September 1, 2021. The changes in Curaçao are partly prompted by the international regulations on combatting money laundering and terrorist financing (OECD and FATFA). One of the aspects of these regulations is that shareholders must be traceable, which made it necessary, for example, to abolish bearer shares. Furthermore, the board of a private foundation now has to record the details of the foundation’s beneficiaries in a register. National authorities have the right to inspect the register.

5.2. The abolition of the existence of bearer shares and the introduction of directors’ liability are now included in Aruba corporate law legislation. Particular attention should also be paid to the regulation aimed at phasing out the Aruba Exempt Company or AVV. Furthermore, in Aruba the requirement of having a registered capital no longer applies and the inquiry proceedings have been introduced whereby an investigation into the policy and course of affairs of legal entities can be instituted.

5.3. The Aruba Chamber of Commerce has been granted the authority to dissolve inactive legal entities when certain conditions are met and directors and supervisory directors may be liable toward third parties for damages suffered as a consequence of misleading information in the financial statements of the legal entities under their management and supervision.

5.4. Several changes were also effected in Aruba employment law. Employers are obliged - where possible - to offer suitable temporary work in the event of an employee’s long-term illness. In the event of an employee’s death, the employer is obliged to payout one month’s wage to the surviving relatives as of the day of the death.