A turbo liquidation is the dissolution of a legal entity that has no assets at the moment of dissolution. Because there is nothing to liquidate, the entity ceases to exist immediately, without a liquidation phase.
Legal basis
The rule is in Article 2:19 paragraph 4 of the Dutch Civil Code: if the entity has no assets at the time of dissolution, it ceases to exist at that moment, and the board files this with the trade register. Having no assets is not the same as having no debts: a company with outstanding debts and an empty balance sheet can still be dissolved this way, which is what made the route controversial.
The transparency obligations since 2023
The Temporary Act on transparency in turbo liquidation entered into force on 15 November 2023 and has been extended to 15 November 2027. It adds Article 2:19b, requiring the board, within fourteen days of the dissolution, to file with the Chamber of Commerce a balance sheet and a statement of income and expenditure for the financial year of the dissolution, a written explanation of why there are no assets and, where applicable, of how any assets were realised and proceeds distributed, and any annual accounts that are still outstanding. The board must then inform the known creditors in writing that these documents have been filed.
Failure to comply is an economic offence. In addition, at the request of the public prosecutor the court may impose a directorship ban of up to five years on a director who failed to comply and thereby prejudiced creditors.
Where it goes wrong
Directors still treat the route as a quiet way to close a company with debts. Since 2023 that is a poor assumption: the filing is public, creditors are told about it, and the explanation of why there were no assets is exactly the document a creditor uses to test whether assets left the company shortly before dissolution. Where they did, the ordinary directors’ liability rules follow.
Related terms
See also dissolution and liquidation, directors’ liability and the trade register.
Our corporate law practice advises on closing companies and on creditor action after a turbo liquidation.
