On 16 February 2023, the Dutch House of Representatives approved the Temporary Act on Transparency Turbo Liquidation (Tijdelijke wet transparantie turboliquidatie) without any objection being raised. The expectation is that the Senate will also approve the bill on 14 March, and that it comes into force within a few months.
On 16 February 2023, the Dutch House of Representatives approved the Temporary Act on Transparency Turbo Liquidation (Tijdelijke wet transparantie turboliquidatie) without any objection being raised. The expectation is that the Senate will also approve the bill on 14 March, and that it comes into force within a few months.
Turbo liquidation
If a Dutch company does not have any assets at the moment of dissolution, the company directly ceases to exist without the standard liquidation procedure that involves a liquidator; this accelerated procedure is called ‘turbo liquidation’. Until now, if turbo liquidation was applicable, a simple decision of shareholders has been sufficient to end a Dutch company completely.
Filing obligations
According to the legislative proposal, directors of a turbo-liquidated company will have to file the following documents at the Chamber of Commerce within 14 days after the dissolution.
- A balance sheet and a statement of income and expenses of the financial year in which the entity is dissolved, as well as of the previous financial year if the financial statements of the previous financial year have not been filed yet;
- A written submission on the reasons as to why there were no assets at the moment of dissolution, and if applicable, how the assets and proceeds were distributed and/or why creditors were left unpaid; and
- Financial statements of the previous financial years if the obligations to publish these have not been fulfilled yet.
Directorship ban
In case creditors of a turbo-liquidated company were left unpaid at the moment of the dissolution, the court can, upon request of the prosecution, impose a directorship ban on the directors of this turbo-liquidated company. This entails that the concerned directors will not be allowed to manage any other legal person. Such directorship ban will be possible in the following cases:
- the director has not complied with the filing obligations mentioned above;
- the director has deliberately acted or failed to act on behalf of the legal entity through which one or more creditors are significantly disadvantaged; or
- during the previous two years, the director has been involved at least twice in a bankruptcy or termination of a legal person for which the director can be personally blamed.
Temporary effect
This legislative proposal, if passed, will be initially valid for a period of two years, in order to prevent potential abuse by entrepreneurs that wish to stop their business as a result of the COVID-19 pandemic. However, if deemed necessary by the Minister of Legal Protection, this period can be extended by another two years, or until a permanent legislation is adopted in case such proposal is made.
Please feel free to contact CIS Management for further information.