Eversheds Sutherland’s insights series: Corporate Alert – the Netherlands Temporary Act Transparency Turbo liquidation

Executive Summary

On 14 March 2023 the Temporary Act Transparency Turbo Liquidation (the Act) was accepted by the Dutch Senate (Eerste Kamer). When the Act enters into force (which will come into force on 15 November 2023), the Act will introduce a change to the process for turbo liquidations. The Act will temporarily be in effect for a period of 2 years.

The turbo liquidation is a quick solution to achieve a legal entity’s dissolution without liquidation of its assets and settlement of its liabilities, intended for entities that ceased their activities and no longer own any assets.

The Act introduces certain filing responsibilities for the management board of an entity making use of the turbo liquidation process.

The Act further amends the current rules in place with respect to imposing an administrative ban on management board members by the Dutch Court.

Key changes to the process for turbo liquidation

1. The Act introduces additional responsibilities for the management board of the entity that makes use of the turbo liquidation process. These additional responsibilities entail certain filing requirements and serve to increase the reliability of the turbo liquidation process.

Pursuant to the Act, the management board of the entity will be required to file the following documents with the trade register of the Dutch Chamber of Commerce (the Trade Register) within 14 days after the entity’s dissolution:

1.1. a balance sheet reflecting the entity’s assets and liabilities during the current financial year and the previous financial year, if the annual accounts over that previous financial year have not been published;

1.2. a declaration clarifying:

a) why the entity did not have any assets or liabilities at the time of its dissolution;

b) (if applicable) how the assets of the entity have been liquidated and how those proceeds have been distributed; and

c) (if applicable) the reason(s) behind leaving the entity’s creditors (partially) unpaid;

1.3. the annual accounts (including – if applicable – an auditor’s opinion) over the financial years prior to the financial year of the entity’s dissolution, in case the entity has not fulfilled its duty to file the annual accounts on a yearly basis.

After the abovementioned filings have been made, the management board is further responsible for immediately informing the entity’s creditors thereof in writing.

Key changes regarding administrative bans on management board members

2. The Act additionally amends the current rules in place with respect to imposing an administrative ban on management board members. The Act introduces the possibility for the Dutch Court – upon request of a public prosecutor – to impose an administrative ban on each of the management board members who were involved in the turbo liquidation while its creditors have been left (partially) unpaid, if:

2.1. the management board member did not comply to the filing requirements mentioned under items 1.1., 1.2. and 1.3.;

2.2. the management board member on behalf of the entity purposefully disadvantaged one or more creditors of the entity with any acts, or by neglecting to act; or

2.3. the management board member in the two years prior to the entity’s dissolution has been involved with at least two different entities’ bankruptcy or with two different entities’ use of the turbo liquidation process while those entities’ creditors remained (partially) unpaid as referred to above under item 2. and for which that management board member is personally to blame.

The administrative ban may be imposed for a maximum of 5 years, during which time the management board member in question will be prohibited from taking a position as management- or supervisory board member of any entity. The appointment of a management- or supervisory board member while an irrevocable administrative ban has been imposed on that person, is null and void.

Should you have any questions or in case you require any assistance in this regard, please do feel free to contact us.