15.2.3 Doesn’t the current legal provision for the turbo-liquidation and its effect in practice actually present more opportunities for private company fraudsters?

The present research has shown that the current legal provision for the turbo-liquidation and its effect in practice actually offers opportunities for private company fraudsters. As no winding-up proceedings need to be pursued following a dissolution under Book 2, Section 19(4) of the Dutch Civil Code, the turbo-liquidation is seen as a cheap and quick way to dissolve a private company. This is also the reason why the turbo-liquidation is regularly recommended as a method of dissolution. However, precisely because this method of dissolution seems so attractive, both the board and the general meeting of a private company will try to ensure that no assets exist in the company any longer when there is an intention to proceed with dissolution. This working towards the turbo-liquidation regularly leads to fraudulent acts, which results in prejudice to creditors and improper administration.

It is also likely, when it is assumed – in accordance with the literal wording of the Act – that a company with liabilities alone can be dissolved by means of the turboliquidation, that private company fraudsters will take advantage of this as indicated above. By letting a private company undergo the turbo-liquidation in order to avert potential insolvency, private company fraudsters keep out of harm’s way as regards the measures proposed by the Minister to prevent insolvency fraud, which strikes me as an unwanted effect of his attempt to combat fraud.

It is also remarkable that the turbo-liquidation is not published, except in the commercial register. As a result of this creditors will not always be aware of the fact that the company has ceased to exist. In this context I refer to another curiosity when a turbo-liquidated company is restored: this restoration does not need to be entered in the commercial register. The result of this is that those who have not initiated the windingup proceedings may be unaware of the restoration and therefore the possibility of instituting legal proceedings against the company, as a result of which fraudsters are as it were limited in their directors’ liability risks.