How do you create a chart of your business structure?

When you apply for business finance or register with a business address provider such as MrKantoor.nl, you may be asked to submit a structure chart with your application. This is needed to assess the company structure and authorisations. It gives the organisation receiving your application a clear picture of your business, enabling it to make an informed decision about whether financing is appropriate or whether your business qualifies to use a postal address for KvK registration.

A structure chart provides clarification. It does not replace documents such as a BV’s articles of association or a list of shareholders.

Organisation charts and ownership charts

You may be familiar with organisation charts and have probably seen one before. An organisation chart shows how an organisation is arranged. The director appears at the top, with management, departments and teams below. Employees’ names are often included if there are not too many of them. This type of chart can help a new employee quickly understand how the organisation works.

It is often included in a staff directory with employees’ photographs, names and roles. A chart showing ownership and control serves a different purpose. Rather than showing job roles within a business, it focuses on responsibilities and ownership. It contains information such as who the shareholders are and how many shares each person owns, which legal entities belong together and which individuals are involved in the business.

What information belongs in a structure chart?

Creating a chart of your company’s ownership and control can be time-consuming. It is therefore important to establish beforehand which information it needs to contain, so you can collect it in advance. This makes preparing the chart much easier. The following elements may be included:

The entities involved

List the private limited companies, foundations or other legal entities that form part of the business.

The relationships between them

Show who owns each private limited company, foundation or other part of the business.

Distribution of shares

Suppose your business consists of a holding company with several operating companies. It is then logical for the holding company to own 100% of the shares in the operating companies. If you own a BV with a business partner, however, the shares are usually divided, for example 50/50 or in unequal proportions. An investment company may also hold shares.

Individuals

Clarify which individual or individuals form part of the structure described above. This concerns ownership and control, rather than employees. Where there is an indirect interest, a structure chart may be needed to clarify the position of an Ultimate Beneficial Owner (UBO) within the organisation.

An example of a structure chart

The following example explains a structure chart for a holding company with an operating company.

P. de Vries - 100% of shares in De Vries Holding BV - 100% of shares in De Vries Bouw BV

In this example, P. de Vries is a shareholder in the holding company. The holding company is, in turn, a shareholder in the operating company, which carries out the actual work. P. de Vries may be a director of one or both BVs. Being a director is different from being a shareholder. The holding company is a legal entity and therefore cannot be a UBO.

According to the KvK, a UBO must always be a natural person.

Which conditions must a UBO meet?

To qualify as an organisation’s UBO, an individual must meet a number of conditions set out by the KvK. For a BV or NV, a UBO must own more than 25% of the shares and also hold more than 25% of the voting rights, economic interest and actual control. If nobody within the organisation meets these conditions, senior management may also be designated as UBOs.

The Dutch Tax Administration also applies criteria such as actual control over the business and uses the same ‘more than 25%’ thresholds as the KvK.

Always remember that a structure chart provides supplementary information. A business address provider or lender will always request additional supporting documents, such as a shareholder list. Check that the chart you provide is complete. Does it include all relevant legal entities, and are the ownership relationships clear? Are shareholding percentages stated, and are the individuals clearly identified?

Also ensure that the chart is up to date. A chart prepared earlier may be outdated. In particular, check individuals’ names and roles to avoid mistakes.

Why does a business address provider need an explanation of the organisation?

A business address provider such as MrKantoor needs to know who it is doing business with and who the ultimate beneficial owner is. It must also be clear exactly what the company does, because certain sectors are excluded from using a business postal address. For a sole proprietorship or a two-person general partnership, the structure is immediately clear.

For a holding company with one or more operating companies, however, a business structure chart can provide the clarity needed to make a considered decision.

A good structure chart does not need to be complicated. The most important thing is that it shows at a glance which entities belong to the business, who actually owns it and which individuals are part of its organisational structure.

For more information, read the following articles on MrKantoor:

holding and operating companies → for an explanation of the structure

customer due diligence → for an explanation of how and why information about ownership and control is requested.