Accounting Directive Implementation Act, what are the consequences?

The EU Directive regarding the annual financial statements, consolidated financial statements and related reports of certain types of undertakings (the "Directive") was implemented in Dutch law on 1 November 2015 ("Accounting Directive Implementation Act"). What are the most notable consequences of the implementation of this Act?

Management report
The term annual report was deemed to be confusing, therefore the term annual report (jaarverslag) is changed into "management report" (bestuursverslag).
Furthermore, article 2:393 paragraph 3 of the Dutch Civil Code is amended in such a way that the accountant must also investigate whether the management report - viewed in light of the knowledge and understanding of the entity obtained during the investigation of the annual accounts - contains material inaccuracies.

Deadline for filing
Based on article 30 of the Directive, the annual accounts must be published within a reasonable period of time being not more than 12 months after the end of financial year. The newly prescribed term of extension of the drawing up of the annual accounts has as a consequence that the final publication term for filing with the trade register of the Chamber of Commerce is shortened from 13 months to 12 months (irrespective of whether the annual accounts have been adopted or not). This applies for both B.V.'s and N.V.'s (except for listed N.V.'s which have a non-extendable term of 4 months).
The standard deadline for preparing the annual accounts has not changed, only the period with which the preparation can be postponed has been shortened from 6 months to 5 months.
For associations, foundations, cooperatives and mutual insurance associations the extension period for preparation of annual accounts has also been shortened by 1 month, making extension possible with 4 months (instead of 5 months) and resulting in a final publication term of 12 months (irrespective of whether the annual accounts have been adopted or not).

Size criteria
As a result of the implementation of the Directive, the criteria for entities to qualify as small, medium and large entities under title 9 Book 2 of the Dutch Civil Code, and therefore making it possible for these entities to apply certain exemptions from requirements such as auditing annual accounts, preparing a profit and loss account or preparing more limited financial statements, have changed as follows:

Small sized entities:
Entities qualify as small entities which, on 2 consecutive balance sheet dates, and without any interruption thereafter, at 2 successive balance sheet dates, have met 2 or 3 of the following requirements:
a. the value of the assets according to the balance sheet with explanatory notes amounts, based on the acquisition price and production price, not more than EUR 6,000,000 (instead of EUR 4,400,000);
b. the net turnover for the financial year does not exceed EUR 12,000,000 (instead of EUR 8,800,000);
c. the average number of employees for the financial year is less than 50 (unchanged).

Medium sized entities:
Entities qualify as medium sized entities which, on 2 consecutive balance sheet dates, and without any interruption thereafter, at 2 successive balance sheet dates, have met 2 or 3 of the following requirements:
a. the value of the assets according to the balance sheet with explanatory notes amounts, based on the acquisition price and production price, not more than EUR 20,000,000 (instead of EUR 17,500,000);
b. the net turnover for the financial year does not exceed EUR 40,000,000 (instead of EUR 35,000,000).
c. the average number of employees for the financial year is less than 250 (unchanged).

Micro-enterprises:
Furthermore a new category has been added being "micro-enterprises". Micro-enterprises are entities which, on 2 consecutive balance sheet dates, and without any interruption thereafter, at 2 successive balance sheet dates, have met 2 or 3 of the following requirements:
a. the value of the assets according to the balance sheet with explanatory notes amounts, based on the acquisition price and production price, not more than EUR 350,000;
b. the net turnover for the financial year does not exceed EUR 700,000;
c. the average number of employees for the financial year is less than 10.

The exemptions which inter alia apply to these micro-enterprises are that the explanatory notes to the annual accounts do not need to be prepared and the format of the annual accounts can be limited to a concise balance sheet and concise profit and loss account and only the balance sheet needs to be filed with the trade register of the Chamber of Commerce.

Report payment governments
The Directive contains an obligation for enterprises which are active within the extractive industry or logging of primeval forests to publish a report regarding payments to governments of the countries in which they perform their activities. The Act introduces a new chapter 8a, in which chapter the principles are laid down to determine by governmental decree which enterprises must prepare such a report and what such a report must contain.

Applicability
The new provisions will be applicable to the financial years which commence on or after 1 January 2016, although entities can chose to voluntarily apply the new provisions in financial years which commenced before 1 January 2016. In doing so, these entities can take advantages of the exemptions which the directive offers to small and medium sized entities at an earlier date. When changing the articles of association the new provisions should be taken into account already from the enactment of the Act.