Turbo liquidation – new legislation adopted

The Dutch Senate has passed a new bill on March 14, 2023, called the “Temporary Act Transparency Turbo Liquidation” which regulates the accelerated dissolution of a legal entity, such as an public company (NV), private company with limited liability (BV), or foundation, when it no longer has any assets. This is also known as the turbo liquidation. Concerns exist about this practice, especially when a legal entity still has debts, making it difficult for creditors to take legal action.

Financial Accountability

To improve trust in turbo liquidations, the bill includes an obligation for the board to provide financial accountability and make it public by filing it with the Dutch trade registry. Creditors must be informed of this and have the right to inspect the administration of the dissolved legal entity if there are suspicions that the accountability obligation has not been met.

Disqualification management

Additionally, the new legislation allows for civil penalties to be imposed on board members who violate the accountability filing requirements, intentionally disadvantage creditors leading up to the dissolution, or repeatedly participate in dissolutions without any assets or bankruptcy for which they are personally at fault.

The law will come into effect on a date to be determined by royal decree. Please find here a previous post on the new legislation.