Annual accounts to be filed more promptly!
The European Accounting Directive (2013/34/EU) entered into force on June 26, 2013. This directive seeks to harmonize, simplify and modernize EU accounting law, reduce administrative costs for small and medium sized businesses and facilitate the comparison of annual accounts. The Dutch Parliament passed the bill on September 30, 2015 and the Accounting Directive Implementation Act (the Act) entered into force on November 1, 2015.
The act applies to private limited liability companies (B.V.’s), public companies (N.V.’s), cooperatives, mutual insurance associations, (commercial) associations and foundations and non-Dutch companies subject to the Act on Companies Formally Registered Abroad. The alteration of most significance issued by the Act is the reduction of the extended production period and the ultimate filing period for annual accounts.
2. CURRENT SITUATION
The current periods for the board of an entity to produce (drafting and signing) the annual accounts are 4 months for listed companies, 5 months for private limited liability companies and non-listed public companies and 6 months for (commercial) foundations and associations, cooperatives and mutual insurance association. These periods start after the end of the financial year and can be extended with 6 months for private limited liability companies and non-listed public companies and 5 months for (commercial) foundations and associations, cooperatives and mutual insurance associations.
Subsequently the accounts must be adopted by the general meeting of shareholders (ava) within two months and filed with the Dutch Trade Register (Kamer van Koophandel) within 8 days thereafter. If all shareholders are also directors, the signing of the annual accounts by all directors can be considered as adoption of the annuals accounts, thus resulting in an ultimate filing period of 11 months and 8 days. However, the underlying statutory provision can be excluded by the articles of association of an entity. The ultimate filing date (including the extension period) will normally be 13 months after the end of the financial year. If the general meeting of shareholders does not adopt the accounts within 2 months after production, interim (draft) accounts must be filed with the Dutch Trade Register.
3. SIGNIFICANT ALTERATION
As mentioned above, the extension of the deadline for production of the accounts is being reduced by 1 month. Therefore, if shareholders of a private limited liability company are also the directors (and the articles of associations do not exclude the legislation) the annual accounts must be filed within 10 months and 8 days after the end of the financial year. Further to the same, the ultimate filing deadline is also being changed from 13 months to 12 months. The Act applies to financial years starting on or after January 1, 2016. The current ultimate filing period of 13 months still applies to the financial year of 2015.
The sanctions for non-compliance with the statutory filing-requirements are ambiguous. Firstly, non-compliance is deemed an economic offense (delict). More important, in case of a bankruptcy, the directors can be held liable towards the bankrupt entity, for the amount of liabilities to the extent that these cannot be recovered by the liquidation of the other assets. In order for the bankruptcy trustee to hold the director liable, the latter must have acted apparently negligent, which can be derived from an overdue filing.
Furthermore, Dutch law contains two statutory presumptions in case a board of directors does not fulfil its obligation to file annual accounts or other financial information with the trade Register within the required statutory periods. These presumptions, often used by bankruptcy trustees, concern i) the presence of apparent negligence and ii) the fact that this negligence is a significant cause of the bankruptcy.
Private limited liability companies (B.V.’s), public companies (N.V.’s), cooperatives, mutual insurance associations, (commercial) associations and foundations (both resident and non-resident of the Netherlands ) as well as non-Dutch companies subject to the Act on Companies Formally Registered Abroad are affected by the changes imposed by the Act.
In order to avoid the risks of non-compliance, it is important to be aware of the alterations imposed by the Act. As articles of association usually contain references to the preparation, adoption and filing of annual accounts and the annual reports, amendment of the articles of association in such way that the stated periods reflect the statutory periods, is advised.
If you have any questions or appreciate receiving more information on this alert, please contact your regular contact at WLP-Law or any of the undersigned:
For Legal matters
Neill André de la Porte at firstname.lastname@example.org.
Maarten P.P. van Buuren at email@example.com.
This alert is intended to highlight issues for general reference only. It is not comprehensive nor does it constitute legal, tax or financial advice. Any information contained herein is subject to change at our discretion. This information should not be relied upon in any specific factual or legal situation and does not cover all laws or regulations that may be applicable. You should seek professional advice before making use of any of the information. WLP-Law gives no warranty as to the accuracy or completeness of this information. No liability whatsoever is accepted by WLP-Law in this respect. This alert relates to Netherlands law only.
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