Within the meaning of article 2:403 of the Dutch Civil Code ('DCC') a company may apply for a group exemption, if it meets certain conditions. A group exemption means that legal entities, belonging to a group, can use an exemption from the presentation requirements, audit and filing. In practice, it has been noted that these conditions are not always followed correctly.
In order to apply for the group exemption, the following conditions must be met:
Filing of the declaration of joint and several liability
The declaration of joint and several liability within the meaning of article 2:403 paragraph 1 sub f of the DCC must be issued by the parent company, the highest company, of the corporate group. By issuing this statement, the parent company accepts the liability of its (direct or indirect) subsidiary and will be liable for debts arising from legal acts of this subsidiary. The statement must be filed one time with the trade register of the Dutch Chamber of Commerce.
Filing of the declaration of consent
The declaration of consent within the meaning of article 2:403 paragraph 1 sub b of the DCC must be issued by the shareholder of the company applying for the group exemption. This declaration must be filed with the trade register of the Dutch Chamber of Commerce on an annual basis.
Filing of the consolidated annual accounts of the parent company
The company applying for the group exemption must also file the consolidated annual accounts including the auditor's report and a consolidated management report of the parent company. This filing must be done for each company, applying for the group exemption on an annual basis.
Practice learns that mistakes are often made regarding the conditions described above. For example, a declaration has been issued incorrectly, or the consolidated annual accounts have never been filed or have been filed for one company instead of for each involved company separately.
Also, important to note is that as soon as the group structure changes and a company cannot make use of the group exemption anymore according to the DCC, the declaration of joint and several liability must always be revoked and will not automatically become null and avoid.