There’s less than 14 days remaining to convene the Annual General Meeting (AGM), read why and how to in our latest blog post collaboration with #AMSAdvocaten.
- Dutch public limited liability companies (NVs) and private limited liability companies (BVs) are required to file their annual accounts;
- Annual accounts generally consist of a balance sheet, an income statement, and notes to the annual accounts;
- The executive board prepares the annual accounts within five to ten months after the end of the financial year;
- If the annual accounts cannot be prepared within five months, then a request has to be submitted to the AGM for postponement for a period of five months;
- Profit can only be distributed after the annual accounts have been adopted by the AGM;
- After adoption by the AGM, the annual accounts have to be filed with the Trade Register of the Chamber of Commerce (Kamer van Koophandel) within eight days;
- The annual accounts have to be filed with the Trade Register no later than twelve months after the end of the financial year;
- If the annual accounts are not filed timely, one of the consequences is that the board can be held liable for the company’s liabilities in the event of bankruptcy;
- Not filing the annual accounts timely is also an economic crime for which a fine of € 22,500 can be imposed.
CONTENTS OF THE ANNUAL ACCOUNTS
In principle, annual accounts consist of:
- The balance sheet and the notes to the balance sheet;
- The income statement and the notes to the income statement;
- And, if applicable, the consolidated annual accounts (combined financial statements of a group of companies).
PREPARING THE ANNUAL ACCOUNTS
Before the annual accounts can be filed, these must be prepared by the executive board of the NV or the BV within five months after the end of the company’s financial year. The AGM can decide to extend this term once by five months in the event of special circumstances. The ultimate preparation period is therefore ten months after the end of the financial year. If the financial year starts on 1 January, the board must have prepared the annual accounts before 31 May or before 31 October.
A shareholders’ resolution is required for the extension of the preparation period. It is important to take into account that the convocation notice period for a general meeting is eight days for a BV. Therefore, convocation must take place no later than 23 May. The convocation notice period for an NV (not listed) is fifteen days and therefore the convocation must take place no later than 16 May. If the convocation does not take place timely, in principle, this means that the resolution to extend the preparation period is not a legally valid decision.
The board is responsible for the preparation of the annual accounts. Even if there is only one executive board member who actually prepares the annual accounts, the whole executive board remains responsible nevertheless.
The annual accounts must be signed by all executive board members who are currently in office. If the company has a supervisory board, the supervisory board members must also sign the annual accounts. The signing of the annual accounts indicates that the board members have approved the annual accounts. If a signature is lacking, for example due to illness, the reason for this must be stated. When a board member does not agree with the contents of the annual accounts, he or she can disculpate himself/herself from liability by not signing.
Once the annual accounts have been prepared, the AGM is required to adopt the annual accounts. This means that the AGM must approve the prepared annual accounts. When the annual accounts have been adopted, the result of a financial year is final and a profit appropriation decision can be taken. If the annual accounts have not been adopted by the AGM, profit cannot be distributed.
There is no statutory period for the adoption of the annual accounts; however, the law does stipulate that if the annual accounts have not been adopted within two months after the ultimate preparation period (five or ten months), the (unadopted) annual accounts must still be filed. To file adopted annual accounts timely, in the event of a financial year that coincides with a calendar year, the annual accounts have to be filed before 31 July or before 31 December.
As adoption takes place by means of a shareholders’ resolution, here again the notice period for the convocation of the shareholders’ meeting must be taken into account. For a BV, the shareholders’ meeting must be convened no later than 23 July (in the event of a preparation period without postponement) or 23 December (in the event of a preparation period with postponement). For an NV (not listed), the shareholders’ meeting for an adoption resolution must be convened no later than 16 July or 16 December.
However, the AGM is not obliged to adopt the annual accounts, it can also decide that that board has to revise the annual accounts. The AGM cannot revise the annual accounts itself.
NVs and BVs must publish their annual accounts within eight days after adoption by the AGM. In the event of a financial year that coincides with the calendar year, this means that the ultimate date to file adopted annual accounts timely is 8 August (in the event of a preparation period with postponement) or 31 December (in the event of a preparation period with postponement).
You should take into account that for a company in which the shareholders are the same as the board members, the annual accounts are also adopted by preparation and signing. After adoption, the annual accounts therefore have to be filed within eight days.
Publication takes place by filing the annual accounts with the Trade Register of the Chamber of Commerce (Kamer van Koophandel).
CONSEQUENCES OF NOT FILING TIMELY
If the annual accounts are not filed timely, the board members can be held jointly and severally liable for the liabilities of the company in the event of bankruptcy, unless this constitutes a minor omission.
When annuals accounts are not filed timely, it implies that the board has apparently not fulfilled its task properly which results in joint and several liability in the event of bankruptcy. This applies up to a period of three years after the not timely filing of the annual accounts. Therefore, a far-reaching consequence. This does not apply if the board members can prove that it is plausible that other circumstances led to the bankruptcy and therefore was not due to the board apparently not fulfilling their task properly.
In addition to the liability of board members, failure to file (on time) the annual accounts, is punishable as an economic offense, which can lead to a fine of € 22,500.