Tokenisation: How to digitalise your Dutch company

Looking to digitalise the assets from your Dutch company? Dennis Vermeulen from House of Companies defines tokenisation and explains everything you need to know about the process.

Tokenisation is the process by which sensitive data is replaced by a digital and unique identification token. Basically, it creates a digital representation of a real thing (e.g. your credit card or business assets). Tokenisation is used to protect sensitive data or to process large amounts of data.

Tokenising your Dutch company

Understanding the process of tokenising your Dutch company is becoming a critical consideration for entrepreneurs aiming for growth and innovation. The Dutch B.V., or besloten vennootschap, presents a unique legal structure with share-based equity, allowing for flexible management and shareholder arrangements, making it an excellent candidate for tokenisation. With the upcoming allowance for fully digital general meetings by 2025, the B.V. structure is adapting to modern business practices, further facilitating the process of tokenising shares.

Tokenisation offers Dutch businesses, particularly those utilising a Dutch holding company or a Dutch stichting (STAK), an innovative approach to equity management and fundraising. By leveraging platforms like Eyevestor in the Netherlands, companies can issue tokens as profit certificates, streamlining investments and expanding their shareholder base without the complexities traditionally associated with share distribution.

This method aligns with the objectives of Dutch company formation, providing a clear path for how to start a Dutch business that capitalises on the benefits of modern financial technologies.

Why should you tokenise your Dutch private limited company (B.V.)?

Tokenising your Dutch private limited company (B.V.) isn't just a trend; it's a strategic move towards modernising your business and expanding its horizons.

Here's why you should consider it:

Democratising investment

Tokenisation breaks down assets into more affordable, digital tokens. This not only democratises ownership but also opens up investment opportunities to a broader audience, making your Dutch B.V. more accessible and appealing to potential investors worldwide.

Enhancing liquidity and flexibility

By converting assets into liquid digital tokens, transactions become as simple as a click on blockchain-based marketplaces. This increased-liquidity means token holders can buy and sell tokens more effortlessly than traditional shares, offering more flexibility in managing the company's assets. It also simplifies the management and transfer of digital assets, which is crucial for B.V.s dealing with such assets.

Global reach and simplified processes

Tokenisation erases geographical constraints, allowing global access to your B.V.'s assets. Coupled with blockchain technology, the asset transfer process is streamlined, reducing the risk of errors and disputes. The integration of smart contracts further expedites transactions and lowers costs by automating agreements.

Tokenising your Dutch B.V. aligns with the objectives of Dutch company formation, leveraging modern financial technologies to foster growth. By utilising platforms like Eyevestor, your B.V. can issue tokens as profit certificates, simplifying investments and expanding your shareholder base. This innovative approach not only offers more flexibility in asset management but also enhances the professional and transparent structure of your business, making it an attractive proposition for financing and investment.

Understanding the Dutch legal framework

Navigating the Dutch legal framework for tokenisation involves understanding the roles and perspectives of various stakeholders, from banking associations to regulatory bodies.

The Dutch Banking Association (NVB) views crypto-assets as integral to the future financial ecosystem, highlighting their potential to enhance the Dutch economy through efficiency and new asset classes.

Regulatory landscape

The Netherlands is moving towards an innovation-friendly regulatory framework for crypto-assets, emphasising the need for a harmonised European approach and specific measures to encourage tokenisation.

Upcoming changes in crypto-legislation will require service providers dealing with virtual currencies to obtain a licence from De Nederlandsche Bank (DNB), expected to be enforced late 2024.

International comparisons and innovations

Globally, countries like France, Luxembourg and Germany have implemented legislative frameworks for security tokens, with Germany enabling the issuance of dematerialised securities on DLT (Distributed Ledger Technology) platforms.

The European Union, while having finalised regulations for digital asset services, lacks a bloc-wide commercial law framework for tokens, contrasting with initiatives in the US and UK to accommodate digital assets within existing legal structures.

Choosing the right corporate structure

Choosing the right corporate structure is pivotal for Dutch entrepreneurs looking to tokenise their Dutch B.V., particularly when considering issuing tokens as profit certificates.

So why is the STAK (Stichting Administratiekantoor) such an ideal holding company for Dutch entrepreneurs, especially when they consider to tokenise their company's capital?

Each platform offers unique advantages tailored to different business needs and visions. For Dutch B.V.s, the choice hinges on the specific assets being tokenised, desired blockchain infrastructure and compliance requirements. Entrepreneurs should consider platforms that align with their goals for growth, global reach and investor accessibility, ensuring a smooth transition into the digital asset space.

Strategic advantages of tokenisation

The following are benefits that tokenisation can have on your Dutch company:

• Lowered entry barriers: By tokenising, entry barriers to data and assets can be significantly reduced, allowing investors globally to participate without the constraints of geography or capital size.
• Enhanced liquidity and accessibility: The move towards digitalisation facilitates earlier liquidity and broadens the fundraising base, making investments more accessible and appealing to a diverse group of investors.
• Cost efficiency: Compared to traditional systems, tokenisation presented far lower issuing costs, making it a financially-viable option for both the company and potential investors.
• Easy trading for investors: The profit certificates can be easily and publicly traded, so that investors can easily withdraw their investments.

Tokenisation can have various benefits for Dutch B.V.s and for their investors. If you would like to set up this system within your own company, it is best to go through the process with an expert with experience in digitising business assets.

Are you an aspiring entrepreneur who wants to start their own company abroad? House of Companies can help you navigate the process to help you overcome corporate and tax hurdles. Contact their team at +31 63 851 5956 or at [email protected].