The end of May is upon us again: the financial statements must be prepared. The statutory deadlines can be unclear, but what exactly is preparation, signing, adoption and disclosure of financial statements, when should this take place and by which body? Moreover, recent case law affects this topic. This blog looks at the deadlines for the B.V. and the N.V.
Financial statements must be prepared within five months of the end of the financial year. A financial year lasts 12 months and generally runs from 1 January to 31 December, assuming no broken or extended financial year. Thus, the deadline for preparing the annual accounts is generally 31 May.
That date for preparation of financial statements is often not met. The law provides for an extension; due to special circumstances, the five-month deadline can be extended by the general meeting by up to five months. The general meeting must decide on this extension. The final, extended date for preparing the annual accounts is then 31 October.
Prepared financial statements must be signed by the directors (and any supervisory directors). There is no link between the statutory deadline for preparation and signing. The Court of Appeal of 's Hertogenbosch ruled on 13 September 2022 that an entrepreneur who, for example, prepared his annual accounts in October can sign them independently of the statutory period for preparation.
The moment of signing is very relevant. After all: the prepared and signed annual accounts are ideally adopted by the general meeting. The law does not give a deadline for this adoption. However, the law does stipulate that the company must disclose the annual accounts eight days after their adoption by filing them with the Chamber of Commerce. The filing must always take place no later than 12 months after the end of the financial year, i.e. no later than 31 December, regardless of whether they have been adopted.
But what if, in the case of a company, all shareholders are also directors? The law says that the signing of the annual accounts is then equivalent to their adoption. Note that filing must then take place within 8 days of signing the annual accounts. As no deadline is prescribed for signing, in practice the company has until 31 December to sign and file its annual accounts. However, if they are signed earlier, they must also be filed earlier.
The deadline of 31 December has been accepted in case law and literature as the maximum deadline for filing, even if all directors are also shareholders. Not unimportantly: if the annual accounts are not adopted by the general meeting, the management board must still file the annual accounts no later than 31 December, stating that these are the non-adopted annual accounts. The board remains responsible for that timely filing.
Failure to disclose financial statements on time obviously has consequences. It is an economic offence under the Economic Offences Act. The company can be fined for this. A more important consequence is the legal presumption of improper performance of duties. In any bankruptcy, each director is jointly and severally liable in the event of improper management, if it is also plausible that this improper management was a major cause of the bankruptcy. The law has an irrebuttable presumption that failure to file financial statements on time constitutes mismanagement. The legal presumption that this improper management was also a major cause of the bankruptcy will have to be rebutted by the board. In other words, the board is 2-0 behind against a trustee in bankruptcy.
The law does not regulate that a general meeting can be held digitally if not provided for in the articles of association. The Temporary Covid-19 Justice and Security Act changed this in connection with the pandemic; digital meetings became possible regardless of the articles of association. From 1 February 2023, this law partially expired. As a result, companies with outdated articles of association again fall under the regime of a mandatory physical general meeting.
The expected 'Digital General Meeting of Private Entities Act' should change that. Until then, shareholders will have to interact at a general meeting, unless the articles of association allow digital meetings.
As a reminder, we have put the deadlines in a table for a clear timeline regarding financial statements and related deadlines. This is based on a non-extended and non-broken financial year.
The deadlines for preparing, signing, adopting and disclosing financial statements can be confusing. If there is still any doubt after reading this blog, you can always contact one of our Team M&A specialists.