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Renowned as a world-class business destination, Netherlands has long been at the commercial and creative heart of Europe. In this enterprising environment, Fieldfisher offers clients a sophisticated, partner-led legal service.

Our Amsterdam office goes the extra mile for clients by offering dedicated support both domestically and internationally. Our highly experienced partners and associates advise clients on all manner of legal, regulatory and compliance issues relevant to organisations in Netherlands and the EU.

Our team is highly specialised in corporate and M&A, financecompetition, regulatorydata protection, ITintellectual propertyinsolvencydispute resolution, employment law and notarial law.   

The Safe dissected: does this hybrid financing instrument qualify as equity or debt?

In recent years, Dutch start-ups have become more interested in using the American Simple Agreement for Future Equity (Safe) as a financing instrument. But what is the Safe and for what purpose is the instrument used? Can the Safe be used as a financing instrument under Dutch law and what adjustments are required for this? The use of the Safe raises in particular the question of whether the instrument qualifies as debt or equity based on the agreed terms. The directors of the start-up and the appointed auditor should conform to the answer to that question when preparing the financial statements.

This article described the adjustments which must be made to the standard Safe template so that Safe be subjected to Dutch law and assesses whether the Safe qualifies as debt or as equity. Finally, the article concludes what alternative Dutch law equity financing instrument would have the desired effect.