Cross-border merger, demerger and conversion

Cross-border merger, demerger and conversion 1920 600 Caspar van der Winden

Cross-border merger, demerger and conversion – New legislation

In February 2022, a draft bill was introduced to implement the EU directive on cross-border conversions, mergers, and divisions of companies. The final bill was submitted to the Dutch Parliament in December of last year. The new legislation proposes several updates and introduces new regulations to the current laws and case law governing the cross-border merger, demerger and conversion.

Cross-border merger

The existing regulation of cross-border mergers has been in place since 2008 and will undergo some changes in the new bill, including the following:

  • Shareholders, employees, and creditors will have up to five working days to submit their comments on the proposed merger to the company before the final resolution to merger is taken.
  • The creditor’s opposition period will be extended from one month to three months, although the cross-border merger may still take place after one month.
  • Shareholders will be able to have the compensation for exit and the share exchange ratio assessed by the chairman of the Enterprise Division of the Dutch Court.
  • The introduction of a Special Negotiation Group or employee representation may be required for a merging company with 80 or more employees, compared to the current requirement of 500 or more employees.
  • The notary will conduct a fraud check in addition to a formal check to verify if the merger is set up for unlawful or fraudulent purposes that aim to avoid or bypass EU or national law or for criminal purposes.

Cross-border demerger or division

The draft bill introduces the concept of cross-border legal demerger or division into Dutch law. This allows for example, a Dutch NV or BV, to transfer a portion of its assets under general title to one or more foreign companies. A demerger or division in which a Dutch NV or BV acts as the acquiring company is also possible. Some key aspects of the proposed regulation include:

  • The regulation is limited to legal demergers within the EU/EEA to a new company (or companies) created as part of the demerger (it cannot be an existing company).
  • The regulation covers (i) a demerger pursuant whereto the existing company will be terminated, (ii) the transfer of a portion of assets to a new company established as part of the demerger, and (iii) the transfer of assets to a new wholly-owned subsidiary established as part of the demerger.
  • Cross-border demergers where shareholders are separated among different acquiring companies and cross-border triangular divisions are not allowed.
  • Shareholders of the Dutch NV or BV who vote against the cross-border demerger will have a right to exit (with compensation).
  • The provisions for cross-border merger generally also apply to a cross-border demerger.

Cross-border conversion

The cross-border conversion of companies is currently not legally regulated in the Netherlands. The new bill provides a regulation for this type of transaction, where a Dutch NV or BV converts into a company governed by the law of another EU/EEA country. A conversion of a foreign company into a Dutch NV or BV is also possible. Key aspects of the proposed regulation include:

  • The regulation is limited to conversions within the EU/EEA.
  • The conversion is subject to the approval of the shareholders, who have the right to vote on the conversion.
  • The assets and liabilities of the converted company will be automatically transferred to the “new” company.
  • The converted company will be dissolved after the conversion, and its shareholders will receive shares in the “new” company.
  • The provisions for cross-border merger generally also apply to a cross-border conversion.


In conclusion, the proposed bill seeks to modernize and streamline the current regulations for a cross-border merger, demerger and conversion of companies. The regulation is important for the international corporate reorganisations practice. It is expected that the new bill will enter into force in the course of 2023 or early 2024.

Turbo Liquidation – New legislation

Turbo Liquidation – New legislation 1920 1000 Caspar van der Winden

Legislative proposal Temporary Act Transparency Turbo-liquidation

A legislative proposal called the Temporary Act Transparency Turbo Liquidation is being considered by the Lower House of Parliament in the Netherlands. This proposal aims to change the current process for dissolving a legal entity that has no assets at the time of dissolution (turbo liquidation). The new legislation would affect Book 2 of the Dutch Civil Code, the Bankruptcy Act, and the Economic Offences Act.

The current law, as outlined in Article 2:19(1)(a) through (f) of the Dutch Civil Code, allows for legal entities to be dissolved through a resolution passed by its general meeting or board of directors. Additionally, if a legal entity no longer has any assets at the time of dissolution, it will automatically cease to exist, and the board of directors must file notice with the Dutch Chamber of Commerce. This process, known as the ‘turbo liquidation procedure,’ has been widely used since its introduction due to its simplicity and speed, as it does not require the appointment of a liquidator or the preparation of accounts and a plan of distribution. However, this feature has also been identified as a potential weakness, as it allows for abuse by a board of directors who may aim to dissolve a legal entity without being held accountable. The proposal is being introduced due to the increased likelihood of turbo liquidations resulting from the economic effects of the COVID-19 pandemic.

The Proposal introduces several changes to the current law surrounding the dissolution of legal entities with no assets.


Firstly, the Proposal would add an accountability requirement in a new Article 2:19b of the Dutch Civil Code. This new article would require that, if a legal entity is dissolved according to Article 2:19(1)(a) DCC and simultaneously ceases to exist as outlined in Article 2:19(4) DCC, the board of directors must file the following documents with the Trade Register within 14 days of the dissolution:

  • A balance sheet and a statement of income and expenditure for the financial year in which the legal entity was dissolved and the previous financial year, if annual accounts have not been filed and published at the time of dissolution.
  • A description of:
    • The cause of the absence of assets at the time of dissolution.
    • The manner in which the assets were realized and distributed, if applicable.
    • The reasons why a creditor or creditors were left wholly or partially unpaid, if applicable.
    • The annual accounts for the preceding financial years, if an obligation to file and publish exists under Article 2:394(3) DCC, and this obligation has not been met yet and an include the auditor’s statement under Article 2:395(5) DCC

Publication duty

Secondly, the proposed Article 2:19b DCC would also require that the board of directors must immediately inform the creditors of the legal entity (if any) after the filings mentioned in Article 2:19b(1) DCC have been made.

Disqualification management

Thirdly, the Proposal includes a new provision that would allow for the disqualification of directors in certain cases. Under the proposed Article 2:19c(1) of the Dutch Civil Code, if a legal entity is dissolved in accordance with Article 2:19(1)(a) or (e) DCC and has ceased to exist simultaneously as outlined in Article 2:19(4) DCC, and one or more creditors have been left wholly or partially unpaid, the court can, at the request of the public prosecution service, impose a director disqualification on the director (including former directors) if the director:

  • Has not filed the required documents as outlined in Article 2:19b(1) DCC, if the legal entity is dissolved in accordance with Article 2:19(1)(a) DCC.
  • Purposefully performed or failed to perform acts on behalf of the legal entity that resulted in significant prejudice to one or more creditors.
  • In the two years preceding the dissolution, has been involved in at least two cases of bankruptcy or termination of a legal entity under Article 2:19(1)(a) or (e) DCC, and is personally to blame for these cases.

Fourthly, the Proposal also proposed amendment to the Bankruptcy Act, that the provisions of the Bankruptcy Act related to the disqualification of directors, will be applied in connection with the possibility of director disqualification.

Right of inspection

The Proposal also addresses the issue of creditors’ access to the records of a dissolved legal entity. Under current law, the books, documents, and other data storage media of a dissolved legal entity must be kept for seven years after the entity has ceased to exist. Creditors of a legal entity that has been dissolved through the turbo liquidation procedure do not have a right to access these records.

To address this, the Proposal proposes to amend Article 2:24(4) of the Dutch Civil Code by adding a new provision that would grant creditors the right to inspect the books, documents, and other data storage media of the dissolved legal entity if the board of directors has not fulfilled their obligations under Article 2:19b(1) DCC, and this authorization granted by the competent court. This would allow creditors to determine whether any irregularities occurred prior to the turbo liquidation procedure and make a better assessment of their legal options for reversing any harm they may have suffered.

Economic offence

The final proposed amendment in the Proposal concerns an alteration to the Economic Offences Act. Specifically, it would make non-compliance with the proposed Article 2:19b(1) DCC punishable under this act.

Coming into force

The Proposal has been introduced due to an anticipated increase in the use of the turbo liquidation procedure, which may lead to more cases of abuse. Therefore, it is deemed necessary to make the amendments to current law as outlined in the Proposal as soon as possible. The different parts of the Proposal may come into effect at different times, as determined by Royal Decree. However, in principle, the amendments will only be effective for a period of two years.

If you are planning to dissolve your entity in the near future, you should consider the implications of the Temporary Act Transparency Turbo Liquidation as it will be more complex and time consuming to dissolve a legal entity without assets as soon as the proposal is adopted.

Bill to improve men-women ratio in boards

Bill to improve men-women ratio in boards

Bill to improve men-women ratio in boards 1920 1000 Corpvision

New bill to improve the men-women ratio in boards

As per January 1, 2022, a new bill to improve the men-women ratio in management boards and supervisory board of listed companies and certain large companies (BVs and NVs) is effective. Basically, two measures have been introduced pursuant to the bill: the ingrowth quota and the target scheme.

Ingrowth quota

A so-called ingrowth quota has become applicable to supervisory boards of listed companies and will result in a more balanced composition of the respective supervisory boards: a supervisory board should consists of at least one third men and at least one third women. Pursuant to the ingrowth quota, an appointment of a new individual as member of a supervisory board will in principle be void if it does not lead to a more balanced composition of the supervisory board. The foregoing also applies to the appointment of non-executive directors of a listed company in case of a one-tier model.

Target scheme

For certain large companies, the bill has introduced an obligation to set appropriate and ambitious objectives in the form of a target scheme. This should result in a more balanced men-women ratio in the management board, supervisory board and key management. Furthermore, such large companies should prepare a plan in order to achieve the targets set forth in the target scheme and report the targets to the Social and Economic Council and in the management report.

The Social and Economic Council has reported earlier that most companies do not yet meet the requirements of a balance composition of their respective boards. In addition, most companies have not yet started with the required preparations. Given the fact that the bill has come into force, it is expected that the board composition will be on the board agenda’s soon.

Dutch implementation of the Trust register

Bill for the Dutch implementation of the Trust register

Bill for the Dutch implementation of the Trust register 1920 1000 Corpvision

On November 23, 2021, the Dutch Senate has approved a legislative proposal for the implementation of the Dutch UBO-register for trusts. The Trust Register is a public register containing information of the ultimate beneficial owners of trusts and similar legal arrangement such as the Dutch mutual funds (FGRs). It is expected that the Trust Register will be implemented later this year. After implementation, trustees will have 3 months to register the UBOs of trusts.

The Trust register is applicable to (i) trusts and (ii) similar legal arrangements. A trust is a legal relationship under which assets have been placed under the control of a trustee, who manages those. The Netherlands has qualified certain funds without legal personality as legal arrangement similar to trusts. The most common example of a fund that falls under the scope of the Trust Register is the Dutch mutual fund (FGR)).

Who should make the registration?

The trustee – of a trust has the obligation to register information in the Trust Register. In case of a Dutch mutual fund, the manager of that fund will generally be the trustee.

Trusts are not subject to the registration requirement in The Netherlands if the trust and its UBOs are registered in a Trust Register of another Member State of the European Union.

Who is an UBO?

An UBO should always be an individual person, unless certain exceptions apply. The following individuals will in any event be considered to be a UBO:

  • the settlor(s);
  • the trustee(s);
  • the protector(s), if applicable;
  • the beneficiaries, or if no individual beneficiaries can be determined, the group of individuals in whose interest the trust in principally established or active; and
  • any other individual who, through direct or indirect ownership interest or through other means, can ultimately exercise control over the trust.


Violation of the registration obligations as set forth above is considered a Dutch economic offence which can be sanctioned by criminal or administrative sanctions.