Dissolution ends the existence of a Dutch legal entity, but not immediately. Unless there are no assets at all, the entity continues to exist for the purposes of the liquidation, and only ceases to exist once the liquidation is complete.
Legal basis
Article 2:19 of the Dutch Civil Code lists the grounds for dissolution, the usual one being a resolution of the general meeting. Article 2:19 paragraph 5 provides that the entity continues to exist to the extent necessary for the liquidation, and that its name must be followed by the words in liquidatie in all documents.
The liquidators are the directors unless the articles or the resolution appoint others. They realise the assets, pay the creditors, and prepare a plan of distribution. Article 2:23b requires the liquidator to file the plan and the final account for public inspection and to announce this; creditors and entitled parties then have two months in which to object to the court.
How it runs
In practice the sequence is: resolve to dissolve, register the dissolution and the liquidator with the Chamber of Commerce, settle the outstanding obligations, file the plan of distribution and the final account, publish the notice, wait out the objection period, distribute the surplus and file the closure. The books and records must be kept for seven years by a custodian designated for that purpose.
If it becomes apparent during the liquidation that the debts exceed the assets, the liquidator must apply for bankruptcy, unless all known creditors consent to continuing the liquidation outside bankruptcy.
Where it goes wrong
The recurring problem is the liquidation that distributes to the shareholder before the creditors are dealt with. That exposes the liquidator personally. The second is the entity that is dissolved while a claim is still pending or foreseeable; the claimant can ask the court to reopen the liquidation, and the entity revives for that purpose.
Related terms
See also turbo liquidation, directors’ liability and the trade register.
Our corporate lawyers in the Netherlands guide dissolutions and act for creditors who object to a distribution.
