Dutch public limited companies (NV) and private limited companies (BV) have the obligation to prepare annual accounts and have to file a copy of the accounts with the Trade register of the Chamber of Commerce. The Dutch Civil Code requires all public and private limited companies prepare and present to the shareholders: the annual report, the directors report and other information (e.g. auditors’ report, certain legal matters, a statement of post-balance sheet events which materially affect the financial position).
The Dutch accounting rules are regulated by law. Dutch Generally Accepted Accounting Principles (Dutch GAAP) are mainly based on EU directives. Dutch GAAP still differs from International Financial Reporting Standards (IFRS) but is brought in line with IFRS on a continuing basis.
The annual accounts should provide sufficient information to allow the reader to form a realistic opinion about the company’s capital and results and insofar as is consistent with the nature of the annual accounts, its solvency and liquidity.
Medium and large sized companies are required by law to have their annual accounts audited. A company is considered to be small, medium or large sized if it meets two of the three following criteria during two consecutive financial years and on a consolidated basis: balance sheet total, net turnover and average number of employees. If an audit is not required (small sized company) a voluntary audit is possible.
For more information please contact Mr. Dennis Akkerman. He can be contacted by e-mail:firstname.lastname@example.org or by phone: + 31 591 612 377.
On 1 July 2013 a number of important amendments to the Dutch company law policy has taken effect. The primary aim is to make stronger the corporate governance of listed and unlisted companies by decrease shareholder activism and promoting the dialogue between shareholders and the management board.
Dutch corporate law has gradually changed. Due to national and European government action it has increasingly become more detailed and complex. A large part of the law is considered to be mandatory. The aim of this paper is to clarify the scope of mandatory corporate law by examining the limits it places on modifications in by-laws and agreements between shareholders.
Amount of mandatory corporate law and the freedom of the individual guaranteed by private law. On the one hand, the freedom of the individual to contract and set up organizations is limited by mandatory corporate law. From the opposite point of view, it is mandatory corporate law which is limited by private law. In that respect, the mandatory effect of corporate law is lessened if shareholder agreements are allowed to circumvent corporate law. On the other hand, mandatory corporate law may be used to ensure the freedom of the individual.
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Under Dutch Corporate Law it is stipulated that a minority shareholder is protected by the principle of reasonableness and fairness in a joint venture situation. The Dutch Supreme Court has recently ruled that not just only a minority shareholder but also an equal joint partner in a joint venture company may appeal to this protection.
In this particular case, the joint venture started with two shareholders (A and B) each holding 50% of the share capital. Later in time, a third party (C) joined the company and was given 7% of the issued share capital, reducing A and B pro rata and therefore maintaining their equality of power. After a while the business relation between A and B got worse and worse as a result of which A decided to buy the 7% shares of C and therefore obtaining control without informing B as an equal joint partner. In spite of the fact that the shareholders agreement stated that a transfer between shareholders was free of any obligation towards the other shareholder (B), the Supreme Court disapproved the passive role of the Board of the Company in the specific matter. According to the Supreme Court the Board should have informed the equal joint partner B, especially due to the fact that B has now become a minority shareholder as a result of the transfer of shares between A and C.
The principle of reasonableness and fairness is incorporated in Section 2:8 of the Dutch Civil Code and oblige all parties involved to act towards each other in accordance with reasonableness and fairness.
In the course of doing business in The Netherlands (commercial) transactions are governed by contract. Although contracting parties are free to agree to the terms they wish, there are specific restrictions to such as reasonableness and fairness and for example good faith which are commonly unknown outside The Netherlands. Parties interested in doing business in The Netherlands should be aware of these restrictions.
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