How To Close A Company In The Netherlands

If the Company does not have any assets or liabilities at the moment of its liquidation (it is a so-called "empty Company"), it ceases to exist at the very moment of the resolution of the general meeting of shareholders to dissolve the Company. In such case there will be no process of winding up, and consequently no liquidators have to be appointed.

The board of directors must register the end of the Company with the Trade Register .

The Company's books and records will remain stored with the custodian for a period of seven years (see Option 2 – Standard Procedure under 1).

TIMESCALES

1. Shareholders' resolution (period for convocation unless unanimous decision by all shareholders).
2. Registration with the Trade Register (1 to 3 weeks).

The liquidation of a Dutch limited liability corporation (hereinafter "the Company") comprises two stages: the dissolution of the Company and the winding up of its assets and liabilities. The dissolution "reduces" the legal existence of the Company; it continues to exist only insofar as is required for the purpose of the liquidation of its assets and liabilities and it cannot transact any business other than is necessary for the winding up. The winding up consists of the settlement of the accounts and the realization of the non-financial assets for the purpose of making a final distribution to the shareholders and other possible parties so entitled by virtue of the Articles of Association.

PROCEDURE

STEP 1 The liquidation procedure starts with a resolution of the general meeting of shareholders to dissolve the Company and to liquidate its assets ; to appoint the liquidators ; and to appoint a custodian for the corporate books and records .

• • Dutch law contains specific provisions regarding the convocation of the meeting, the right to vote and majority and quorum requirements . Further requirements of such nature may be found in the Articles of Association.
  • The period for convocation of the general meeting of shareholders should be at least two weeks. If this period is not observed, no valid resolutions may be taken unless the whole of the issued share capital is represented at the meeting and the decision is taken unanimously . The resolution to dissolve the Company may also be taken without convening a shareholder's meeting by way of a shareholders' resolution unanimously agreed to in writing by all shareholders .
  • If the Company has a board of supervisory directors (obligatory in case of a so-called "large Company") the resolution to dissolve the Company should be approved by this board .
  • Failing any statutory provision stating otherwise, the liquidators will be the same as the former directors . If the general meeting of shareholders wants only one or some of these directors, or another (legal) person, to act as liquidator, it should include this decision in the resolution mentioned under 1. In such case the Trade Register should be notified of the resignation of directors not acting as liquidators . Please note that in case of a "large Company" the procedure to appoint only one or some of the former directors or another (legal) person as liquidator may be more complicated . Finally, the Articles of Association may contain specific provisions regarding the appointment of directors, which should also be followed in case of appointment of a liquidator that is not a former director.
  • The custodian to be appointed may be any person or legal entity, anywhere in the world. However, please note that the Dutch tax authorities should have access to the books if they so wish, which means that the books and records should be made available to them on their request.

STEP 2 The above resolution is to be registered with the Trade Register . The Trade Register should specifically be notified of the date of the resolution, the date of the commencement of the dissolution of the Company, the date of the commencement of the winding-up of same and the change in function of the directors to liquidators.

• • From the moment of the dissolution, the words "in liquidatie" should be added to all publications, letters and announcements of or by the Company .

STEP 3 As of the moment of the dissolution, the period of winding-up commences. The liquidators are in charge of the winding-up, which comprises the settlement of all debts of the Company and the realization of its non-financial assets. Please note that the non-financial assets do not always have to be realized. In some cases the beneficiaries of the final balance may agree to a distribution in kind.

• • The liquidators have the same powers, obligations and liabilities as the former directors ; they decide autonomously upon the way in which the assets are liquidated, although their legal acts are subject to the same constraints (possible statutory limitations or conditions, approval by other or Corporate bodies) as the legal acts of the directors before the dissolution.
  • If the assets of the Company are not sufficient to settle all of the debts, the liquidators should apply for the bankruptcy of the Company, unless all creditors agree to the continuation of the winding-up outside bankruptcy.
  • The liquidators prepare a final accounting of the liquidation, as well as a so-called "plan van verdeling" (plan of distribution), indicating the distribution of the balance of the liquidated Company to the parties entitled thereto (shareholders and other parties that according to the Articles of Association are entitled to a part of the balance). If there is only one interested party (a sole shareholder) the plan of distribution will not be necessary .
  • The final accounting and the plan of distribution must be deposited at the Trade Register at which the Company is registered, as well as at the Company's office, if such office still exists ;
  • The liquidators must publish a notice in a nationally distributed daily newspaper, stating where the final accounting and the plan of distribution have been deposited for public inspection ;
  • Upon publication of such notice in the newspaper, a two months' period commences, during which any interested person may institute opposition to the final accounting and/or the plan of distribution ;
  • Upon termination of the two months' period, the distribution may take place (unless objections were raised).

STEP 4 Upon termination of the winding-up procedure, the Company's books and records must remain stored with the custodian (see item 1) for a period of seven years .

STEP 5 The Trade Register must be notified with respect to the termination of the liquidation procedure and the appointment of the custodian of the corporate books and records .

• • Should it appear afterwards that there still remains an asset to be liquidated, or a creditor or beneficiary that has not yet been taken into account, the liquidation may be "reopened" by a decision of the Court. In such case the Company "revives", but solely for the purpose of re-liquidating the balance; to the extent that the beneficiaries have received too much, the liquidator is authorised to reclaim the balance already distributed .

TIME SCALES FOR STANDARD PROCEDURE

The estimated time that a specific step takes is written between brackets

1. Shareholders' resolution (period for convocation unless unanimous decision by all shareholders).
2. Registration with the Trade Register (1 to 3 weeks).
3. Realization of assets and settlement of debts.

a. Preparation of final accounting and plan of distribution.
b. Deposit of final accounting and plan of distribution with the Trade Register.
c. Notice of deposit in a nationally distributed daily newspaper.
d. Distribution to beneficiaries.

4. Notice of completion with the Trade Register (1 to 3 weeks)

The standard liquidation procedure may be accelerated if the liquidator is willing, after steps 1 and 2 have been taken and after the (then known) debts of the Company have been settled, to distribute the remaining assets of the Company among the beneficiaries by way of a so-called distribution in advance . Such distribution in advance may be attractive from a fiscal point of view, for instance because the distribution will then still fall within the current book year.

Since the possibility exists that the assets distributed in advance may have to be (partly or wholly) recovered to effect a redistribution (see below), an "accelerated liquidation" is only warranted if:

a. the liquidator has reason to assume that all creditors are known to him;
b. the beneficiaries of the final balance of the Company are few in number;
c. the liquidator ensures, for instance by way of a guarantee, that the beneficiaries receiving the distribution in advance will restitute (part of) same if a creditor still comes up or opposition is still (successfully) instituted.

Although in practice there remains nothing to be liquidated, steps 3a, b, and c and step 4 should still be followed. Ideally, this will be a mere formality, but it should be taken into account that an unknown creditor may still come up as a result of the announcement in the daily newspaper (step 3c above) or opposition may still be instituted during the two months' period following the publication. In such case the assets distributed in advance may have to be (partly or wholly) recovered to effect a redistribution. Should such recovery not be possible and should one or more creditors thus remain unsatisfied, the liquidator(s) will be personally liable for the loss(es) so occurred.

A distribution in advance is also possible after the two months' period had commences in which case an approval of a judge is obliged.

TIMESCALES

1. Shareholders' resolution (period for convocation 2 weeks, unless unanimous decision by all shareholders).
2. Registration with the Trade Register (1 to 3 weeks).
3. Distribution in advance.

a. Preparation of final accounting and plan of distribution.
b. Deposit of final accounting and plan of distribution with the Trade Register.
c. Notice of deposit in a nationally distributed daily newspaper.

4. Notice of completion with the Trade Register (1 to 3 weeks)

• • Bankruptcies/involuntary liquidations are reported in The Netherlands Government Gazette (Nederlandse Staats Courant) and in one or more newspapers. The involuntary liquidation will also be noted in the Trade Register.
  • Once a bankruptcy order is filed, debtors lose control of their assets and a court appointed trustees in bankruptcy is then the only person to take action
  • The receiver will establish what the debts and receivables are and only once this has been confirmed can the involuntary liquidation be closed, whether following payment to the creditors or otherwise
  • The receiver will then request the bankruptcy judge to declare the involuntary liquidation closed
  • The judge will then forward this to the Court. If the court agrees, the involuntary liquidation will be declared closed. As a rule, the insolvent company will be wound and then cease to exist

For all options it is important to take care to protect the assets of the business, to conform with the liquidator's wishes and to act responsibly. Please contact us for further information and advice as to how to proceed.