Update: Expedited Liquidation Transparency (Interim Measures) Act

Xander Blokzijl | 26 April 2023 | Reading time: about 3 minutes

On 14 March 2023, the Senate adopted the Legislative Proposal on the Temporary Expedited Liquidation Transparency (Interim Measures) Act (Tijdelijke Wet Transparantie Turboliquidatie). This act will enter into force at a time to be determined by royal decree. Although the exact time is not yet known, this act can be expected to enter into force on 1 September 2023.

This legislation is an adaptation of the current law on winding up legal entities and aims to prevent abuse of the expedited liquidation procedure. Expedited liquidation is a quick and inexpensive way to dissolve a legal entity if the legal entity runs out of assets. The background to this option is to allow inactive legal entities to be dissolved cheaply and efficiently. However, the disadvantage of expedited liquidation is that it seems to have been abused in recent years, with creditors missing out because the legal entity transferred its assets to another party just before dissolution.

New obligations for directors at an expedited liquidation

With the introduction of the Expedited Liquidation Transparency (Interim Measures) Act, new obligations will be imposed on the directors of a legal entity that is dissolved through expedited liquidation. After dissolving the legal entity, they must file the following documents within 14 days:

• A balance sheet and a statement of income and expenditure in respect of the financial year in which the legal entity was dissolved and the previous financial year if, at the time of dissolution, financial statements for that year have not yet been made public.
• A description of the cause of the absence of financial statements, the manner in which the income was realised and the manner in which the proceeds were distributed (if applicable) and the reasons why one or more creditors remained (partially) unpaid (if applicable).
• The financial statements in respect of the previous financial years for which there was already a publication requirement.

The board must then inform the creditors of the dissolved legal entity in writing about the filing of the above documents so that they can take note of their contents in a timely manner.

Director disqualification

If one or more creditors remain unpaid in whole or in part, the Public Prosecutor’s Office may request the court to impose a director disqualification on a director if the latter:

• Failed to comply with the above filing obligation;
• Deliberately disadvantaged one or more creditors in the run-up to the dissolution;
• Has been involved at least twice before in a bankruptcy or a dissolution without assets, leaving behind debts of a legal entity and can be blamed personally.

The director disqualification means that the person concerned may no longer be a director or supervisory director of a legal entity for a certain period of time. This may affect the director’s personal and business activities.

Do you have any questions? Please contact Xander Blokzijl.

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