On 27 July 2021 the consultation period with regard to the preliminary draft of the Temporary act transparency turbo liquidation (the 'Act') ended. It has been proposed that the Act will be introduced for a period of 2 years.
Dutch law provides for a turbo liquidation procedure in case a company has no assets. In case the company has assets, a normal liquidation procedure has to be executed. By executing a turbo liquidation procedure, the company immediately ceases to exist after the general meeting has adopted the resolution to dissolve the company. No winding-up/liquidation of the company is required since it has no assets which need to be liquidated. Hence, in order to execute a turbo liquidation procedure, the company cannot have any assets. Please take into high consideration that a potential risk of director's liability could rise in case any assets come up after deregistration of the company with the Dutch trade register. This is also the case if the turbo liquidation procedure has been abusively executed by the directors of the company to avoid the normal liquidation procedure (for example in case the company has still liabilities).
Due to the Covid-19 pandemic it is the expectation that many entities will be dissolved by way of turbo liquidation. The Act introduces the obligation for the management board of a legal entity to file certain documents regarding financial accountability with the Dutch trade register within 10 working days after the deregistration of the legal entity in the trade register.
Also, the court will have the possibility to impose, at the request of the public prosecutor, an administrative ban on directors who were involved in a turbo liquidation in which the aforementioned obligations were not complied with. Such ban may be imposed for a maximum of 5 years.
Following the Joint Committee on Company Law such legislation should not be temporary but should acquire a structural character.
In case you have any questions regarding the Act, the normal or the turbo liquidation procedure or your corporate governance? Please contact us: Carmen.firstname.lastname@example.org.