Deadline for Annual Accounts 2023 Set to Expire

Directors of a Dutch company that have not yet prepared and/or adopted the annual accounts of the financial year 2023, please pay attention! It is time to take action, as the deadlines for preparing, adopting and filing the annual accounts are rapidly approaching. To mitigate liability risks, negative consequences or sanctions, it is important to observe the following applicable rules from a Dutch law perspective: 

• Within five months from the end of the financial year, the board of directors prepares the annual accounts and submits the annual accounts to the shareholders. If there is a works council, the annual accounts also need to be sent to the works council.
• The general meeting of shareholders (the General Meeting) may grant the board a maximum five-month extension for the preparation of the annual accounts in case of special circumstances.
• After the preparation of the annual accounts by the board, the General Meeting has to adopt the annual accounts.
• The annual accounts need to be signed by the board – if one or more members of the board have not signed the annual accounts this must be motivated.
• The annual accounts cannot be adopted if the General Meeting has not been able to take note of the auditor's statement, which was supposed to be attached to the annual accounts, unless a lawful reason is communicated in the other information for the absence of the statement.
• The adopted annual accounts must be filed with the Chamber of Commerce within eight days after such adoption.
• When the annual accounts have not been adopted within two months after the annual accounts have been prepared, the prepared annual accounts must be filed immediately with the Chamber of Commerce (the annual accounts must include a note that the annual accounts have not been adopted) – note that the annual accounts once adopted need to be filed as well within eight days after such adoption.
• In any case the annual accounts (adopted or not) need to be filed within twelve months after the end of the financial year to mitigate risks and consequences for the (shadow) directors: 
  • Failure to file the annual accounts within twelve months after the end of the financial year may increase the risk for the (shadow) directors board and de facto policy makers to be held liable for the bankruptcy deficit if the company is declared bankrupt.
  • Failure to file and publish the annual accounts could further lead to a sanction, since this qualifies as an economic offense as stipulated in the Economic Offences Act (Wet op de economische delicten).
  • Commercial risks could for instance include that procurement will become more difficult for the company if the market learns that the annual accounts of the company have not been filed in time.

Obviously, it would be best to file the adopted annual accounts 2023, but it could happen that this is not feasible for instance if there are discussions on the contents of the auditor’s report and that the annual accounts cannot be adopted if the General Meeting has not been able to take note of the auditor’s report.

To mitigate the risks and negative consequences associated with non-filing, the board should file the prepared but non-adopted annual accounts 2023 (the draft annual accounts) filed with the Chamber of Commerce ultimately in December 2024. Please note that the annual accounts need to be prepared by the board. The board needs (to resolve) to prepare the annual accounts if it has not done so yet.

Please note that a consequence of the annual accounts not being adopted is that it has not been formally established what the result of the legal entity for the relevant financial year was, nor has it been established what the interpretation is of the (specific, for capital protection purposes important) balance sheet items. As a result, no appropriation of profit can take place. This may have consequences for the ability to dividend or to repurchase shares. Also, no discharge can be granted to directors and supervisory directors of the legal entity for the contents of the annual accounts. After all, the generally applied basis for discharge – annual accounts prepared by the management board that have been validly adopted - is lacking.

This alert is intended to provide information on a high-level basis. It does not aim to provide any legal advice and should not be taken as such. This alert has been prepared with the utmost care, but no guarantee can be given as to its accuracy and its completeness. Should you require tailor-made advice as to the rules on annual accounts, please reach out. We are happy to assist you.