Dutch law provides for a fast-track procedure allowing Dutch legal entities that do not have any known assets to immediately cease to exist when a resolution to dissolve the relevant entity is adopted by the competent corporate body. The main advantages of the accelerated liquidation process over the ordinary liquidation process are that less documentation is required, less disclosure is required, and the two-month creditor opposition period is waived.
The existing accelerated liquidation process has become prone to abuse as a legal entity could incur additional debt while deliberately working towards a situation where there are no more assets, allowing the legal entity to immediately cease to exist but leave its debts behind to the detriment of its creditors.
The Act has been adopted in order to prevent abuse of the current fast-track liquidation process. The Act aims to create more transparency in the liquidation process and to mitigate risks for creditors while allowing legal entities without any known assets to quickly dissolve and cease to exist.
The Act stipulates the following measures:
1. Accountability and disclosure obligations (verantwoordings en bekendmakingsplichten): The following documents must be filed with the Dutch Commercial Register within a 14-day period following the adoption of the resolution to dissolve the entity:
- A balance sheet and statement of income and expenses relating to the final financial year in which the legal entity was dissolved, and the preceding financial year, if no annual accounts have been published for that preceding financial year;
- A description of: (i) the cause of the absence of assets at the time of the dissolution; (ii) the manner in which the assets of the legal entity have been realized and the amounts have been distributed; and (iii) the reasons that creditors have been left wholly or partially unpaid; and
- Annual accounts for any financial year preceding the final year in which the legal entity is dissolved, which have not been published despite the legal obligation to do so.
2. Notification of creditors: In addition to these disclosure obligations, the management board must send a written notification to the legal entity's known creditors (if any).
3. Consequences of non-compliance: Failure to comply with these obligations will qualify as an economic offense under the Economic Offences Act. In addition, a so-called director disqualification (bestuursverbod) can be imposed on a managing director under certain circumstances.
The director disqualification can be imposed on the managing director by the Dutch courts upon request of the Netherlands Public Prosecution Service (Openbaar Ministerie) for a maximum period of five years. During such period, the director cannot be appointed as a managing director or as a supervisory director of any legal entity in The Netherlands.