The coming into effect of the Private Limited Company simplification and flexibilisation Act (Wet vereenvoudiging en flexibilisering BV-recht) (the “Flex BV Act”) on 1 October 2012 has simplified the rules for – inter alia – adopting the annual accounts of a B.V. Below you will find an overview of the currently applicable rules for (i) drawing up, (ii) adopting, and (iii) publication of a B.V.’s annual accounts and the relevant deadlines for these activities.
Unaltered is that the board of managing directors of a B.V. is required to draw up the annual accounts within five months of the end of the financial year of the company. The general meeting may extend this term by a maximum of six months on account of special circumstances. The annual accounts that have been drawn up must be made available at the company’s office for inspection by the shareholders. Unless exempted from doing so, the board of managing directors must also make the annual report available at the company’s office for inspection by the shareholders within this term of no more than eleven months.
The annual accounts must be signed by the managing directors. If the company has a supervisory board, the members of the supervisory board must also sign the annual accounts. If a managing director or member of the supervisory board is unable to sign the annual accounts, that fact and the reason for not signing must be stated.
As in the past, the annual accounts drawn up and signed by the managing directors (and members of the supervisory board, if applicable) must be submitted to the general meeting for adoption. The general meeting’s adoption of the annual accounts will not automatically constitute a discharge of the managing directors (and of the members of the supervisory board). The general meeting must pass a separate resolution to discharge managing directors and members of the supervisory board (from liability towards the company regarding the information contained in the annual accounts).
Since 1 October 2012, the new legislation provides that – if the articles of association of the B.V. do not exclude this – the signing of the annual accounts by the managing directors (and the members of the supervisory board) will constitute both an adoption of the annual accounts and a discharge of the managing directors (and the members of the supervisory board) if:
- all shareholders are also managing directors of the B.V.; and
- all other holders of a meeting right (vergadergerechtigden) have had the opportunity to take cognisance of the annual accounts in question and have approved this method of adoption.
Because the Flex B.V. Act also simplified the rules on decision-making outside meetings, there are currently three legally valid ways for the general meeting to adopt a B.V.’s annual accounts, namely:
- at a general meeting attended by all holders of a meeting right;
- pursuant to a shareholders’ resolution adopted outside a meeting, provided that all holders of a meeting right have agreed with this method of decision-making and the managing directors (and members of the supervisory board) have been given the opportunity to advise on the items to be resolved before the adoption thereof; and
- by all managing directors (and members of the supervisory board) signing the annual accounts, provided that all of the company’s shareholders are also managing directors of the company and the articles of association of the B.V. do not exclude this.
The term for adopting the annual accounts has also remain unchanged. This term is set for a maximum of thirteen months.
As mentioned above, a B.V. is obliged to publish its annual accounts (annual reports and other information) unless it is exempt from doing so by virtue of their status as a group company. Annual accounts are published by filing them with the Trade Register of the Chambers of Commerce. The annual accounts filed must either state the date on which the accounts were adopted or include a statement that such adoption has yet to take place.
The term within which a B.V. must file its annual accounts is a maximum of thirteen months from the end of its financial year. Although according to the law publication of the annual accounts must me made within eight days after the adoption, up to now literature states that this term also applies to the situation where the adoption (and discharge) is done by signing of the annual accounts by all managing directors-shareholders, and therefore not within a shorter publication period of no later than the eighth day after eleventh months.
More stringent enforcement of timely publication
Although it remains unclear what the consequences of late filing will be under the Flex B.V. Act, it seems more important than before that managing directors should file the annual accounts within the prescribed term. Specifically, the failure to publish the annual accounts, or to publish them on time, could be interpreted as withholding information, which could constitute a reason to call a company’s corporate governance into question, which could in turn entail the risk of triggering issues of directors’ and officers’ liability (bestuurdersaansprakelijkheid) should the company be declared bankrupt.
It must also be noted that the not timely filing of annual accounts has since become a political issue. The State Secretary of Finance (Staatssecretaris van Financiën) has announced that a report on the filing of annual accounts will be published. In this context, the Dutch Tax Authorities (Belastingdienst), in cooperation with the Chambers of Commerce, has begun actively investigating companies that have failed to file their annual accounts, or have failed to file them on time. The breach of this obligation is an economic offence and a criminal act. Currently, the primary targets of this investigation are companies that have breached their filing obligation for several years.
In contrast to previous years, a B.V. that has breached its duty to publish its annual accounts will not be afforded the chance to rectify its failure because of the ‘impossibility’ of re-investigating situations that have allegedly already been remedied. In said situations an official report will be drafted immediately and the case will be handed over to the Public Prosecutor (Officier van Justitie) for further proceedings.
Although it is the responsibility of the board of managing directors of a B.V. to file the annual accounts within the set tine frame, also natural persons other than managing directors can be prosecuted for this offence. Because a conviction for an economic offence, and, under certain conditions, a proposal for an out-of-court settlement (transactievoorstel) (a proposal to pay a sum of money to avoid prosecution through the courts), are retained as “judicial information”, other government agencies (foreign and domestic) could, in certain situations, learn of such an offence or proposal. This means that the failure to file a B.V.’s annual accounts, or file them on time, could for example result in such undesirable consequence as being refused an unqualified certificate of good conduct (Verklaring Omtrent het Gedrag) or certain licences.