Article 2:10 of the Dutch Civil Code (Burgerlijk Wetboek) contains the duty to keep accounts (administratieplicht). The board of every legal entity must keep records of its financial position and of everything relating to its activities, in such a way that its rights and obligations can be known at any time. The records must be kept for 7 years.
Table of contents
What must the records contain?
Everything needed to understand the financial position: the books, invoices, contracts, bank statements and records of receivables, debts and security rights. The requirements depend on the nature and size of the business. The test is whether an outsider, such as a bankruptcy trustee, can quickly gain insight into the rights and obligations of the company.
What are the deadlines?
The board must draw up and put on paper a balance sheet and a statement of income and expenditure within 6 months after the end of each financial year. This duty applies in addition to the rules for preparing and filing annual accounts in Title 9 of Book 2. The books and records must be retained for 7 years and may be transferred to another data carrier, provided they can be made readable within a reasonable time.
What happens if the duty is breached?
In bankruptcy, a breach of Article 2:10 means by law that the board has performed its duties improperly, and this is presumed to be an important cause of the bankruptcy (Article 2:248 Dutch Civil Code). Directors can then be personally liable for the deficit. Failure to hand over proper records to the trustee can also lead to criminal liability and to a civil director disqualification under the Bankruptcy Act.
Why does good record-keeping matter outside bankruptcy?
A company without proper records is in a weaker position in debt collection, in due diligence before an acquisition and in disputes with co-shareholders about the figures. Make sure the records give a current picture of receivables, debts and security at any moment.
Frequently asked questions
Can I outsource the accounts?
Yes, but the board remains responsible for them.
Does the duty apply to foundations and associations?
Yes. Article 2:10 applies to all legal entities.
Related terms
- Article 2:394 Dutch Civil Code (filing of annual accounts)
- Article 2:248 Dutch Civil Code (director liability in bankruptcy)
- Retention periods
- Annual accounts and filing
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