Book 2 BW provides deadlines for the preparation and filing of financial statements of private companies.
The board must prepare financial statements no later than five months after the end of the fiscal year. The general meeting may extend this period for up to five months. This makes the deadline for preparing financial statements 10 months after the end of the fiscal year. Thus, for a fiscal year equal to the calendar year, the financial statements must be prepared by Oct. 31. The premise is that the financial statements are then adopted by the general meeting, but the law does not give an explicit deadline for this.
The publication of the annual accounts is subject to strict deadlines: the annual accounts must be filed with the trade register of the Chamber of Commerce within eight days of their adoption, but in any case (i.e. even if no adoption has taken place) no later than 12 months after the end of the financial year.
Simplified adopted financial statements
Despite these clear deadlines, however, there has been discussion for years about the deadline for filing simplified adopted financial statements. That is, in the situation where all shareholders are also directors of the PLC. Indeed, since the flexibilization of the PLC law as of October 1, 2012, the signing of the financial statements in that case immediately counts as the moment of adoption. As a result, the deadline for filing financial statements for BVs where all shareholders are also directors would (currently) be 10 months and 8 days. Therefore, the deadline for filing is (mostly) Nov. 8 in practice. This shortened filing period was generally seen as an unintended side effect, but repair legislation announced at the time never materialized.
In a recent ruling on this issue, the Den Bosch Court of Appeal (Sept. 13, 2022, ECLI:NL:GHSHE:2022:3141) ruled that the act of preparing the financial statements and signing them are different legal acts. The Court considers in r.o. 3.28:
“However, contrary to what [de N.V.] implicitly argues, signing the financial statements is not part of preparing the financial statements. The function of signing the financial statements is to express the board’s agreement with the contents of the prepared financial statements and as such is an independent legal act. The legislature expressed this by regulating the obligation to sign in a separate paragraph. A deadline for signing has not been set by the legislature and it can therefore be done even after the deadline for preparing the financial statements has expired. This implies that the period for the preparation of the annual accounts for legal entities to which Article 2:210(1) of the Civil Code applies, as stipulated in Article 2:210(5) of the Civil Code, is not also the period within which the annual accounts must be signed and adopted.“
This ruling implies the possibility of not yet signing the financial statements prepared (on time). In that case, the financial statements prepared but not signed (and therefore not yet adopted) need not then be published by November 8. Thus, in the ruling quoted above, the Court found that the “ordinary” publication deadline of 12 months after the end of the fiscal year applied.
Until the Supreme Court has ruled definitively on this possibility or until the legislature has ruled on it, there is no absolute certainty about the final publication date. If only because of the major consequences associated with the late filing of financial statements (in the event of bankruptcy, this irrefutably establishes the existence of manifestly improper management), it is expected that many directors will adhere to the November 8 publication date for defensive reasons. This also seems sensible. Why run an easily avoidable risk as a driver?
This contribution was written by mr. Jeroen van der Pouw Crane, affiliated with the Corporate and Insolvency Law practice groups.
