Nov. 8 - publication time for financial statements?

While it is commendable that business owners is encouraged to have its financial statements ready for publication as early in the year as possible, it is not correct that there would be a requirement for directors of private limited companies that also hold all the shares ("DGA companies") to publish their financial statements by November 8.

What is the point?

There are numerous publications to the effect that the publication deadline for DGA bv's would have been reduced from 12 months after the end of the fiscal year (previously it was 13 months) to November 8 of each calendar year (10 months + 8 days). For example, the Chamber of Commerce website states:

"If all shareholders are also directors or supervisory directors, signing the financial statements immediately results in adoption. In this case, the 2 months time for adoption expires. For a BV, this means that you file within 10 months and 8 days after the end of the fiscal year. If the fiscal year equals the calendar year, the latest filing date is therefore November 8 (10 months + 8 days)."

(https://www.kvk.nl/inschrijven-en-wijzigen/deponeren/jaarrekening-deponeren/wat-is-de-uiterste-termijn/)

Formatting is not the same as signing financial statements

In itself, it is correct that if the directors sign the financial statements, and the directors are also the shareholders, then the financial statements are immediately adopted. It is also correct that then, after the date of adoption of the financial statements, a period of 8 days applies for publication. However, the error in the Chamber of Commerce's reasoning is that it assumes that the obligation to prepare the financial statements is equivalent to the board signing the financial statements. However, the law does not state that the financial statements must be signed within the 10-month preparation period (5 months + 5-month extension based on special circumstances).

A markup resolution by the board is sufficient

The preparation of financial statements is a decision of the board. No more and no less. Signature is required when the financial statements are available for inspection by shareholders. Therefore, as long as there is no signature, there are no adopted financial statements to be published. Until then, therefore, the general publication period of 12 months runs. There is nothing wrong with directors making a decision to prepare the financial statements without signing them right away. An interesting question is what it means that in practice more and more use is made of the possibility of signing the annual accounts electronically and what consequences this has for the date on which the annual accounts are prepared and made available for inspection by the shareholders, but that is beyond the scope of this publication.

Internal deadlines

On this date last year, I argued that the Supreme Court made it clear years ago that what matters for external liability of directors is the publication period of 13 months referred to in Section 2:394 of the Dutch Civil Code (since shortened to 12 months), and that it does not concern deadlines for internal decision-making such as those relating to the 5-month notice period and the special circumstances strictly necessary for its extension. Even if a DGA director were to sign the financial statements, not realizing that he had thereby also adopted the financial statements as a result of which the 8-day period would have begun to run for publication, I consider it extremely unlikely that the Supreme Court would attach the consequence of personal liability if publication took place within the 12-month period. In fact, the Supreme Court would then revert to the line set out in the Brens/Sarper judgment.

In conclusion

So for DGAs who have not prepared their financial statements by Nov. 8, there is no reason to panic. The same goes for their accountants. All this does not alter the fact that I applaud the fact that financial statements are prepared, adopted and published within 10 months after the end of each fiscal year. Strictly speaking, after all, the preparation period is 5 months after the end of the financial year, and practice shows that although much use is made of the extension option, it is not always easy to explain why there are 'special circumstances'.