15.3.1 Recommendations for legal practice

To prevent a restoration of the turbo-liquidated company (and therefore the risk of personal liability), I recommend that – before proceeding with the turbo-liquidation – a thorough investigation is made into assets that may be expected and assets already existing in the company. At the time of the dissolution resolution the company may not have either any assets or any liabilities, but nor may they be expected in the near future.

Even if a thorough investigation is made into the assets that may be expected and assets that a private company already has before proceeding with the turbo-liquidation of that company, it cannot be ruled out that a company is nonetheless restored because an asset subsequently comes to light. To limit the risk of personal liability for the directors and shareholders as much as possible, I recommend that the directors prepare annual accounts or a simplified balance for the shortened financial year before the turbo-liquidation. These annual accounts can in fact play an important part when the board of a turbo-liquidated company is blamed in reopening proceedings under Book 2, Section 23c(1) of the Dutch Civil Code for assets being present at the time of the dissolution and therefore it wrongfully proceeded with the turbo-liquidation.

When a private company is dissolved under Book 2, Section 19(4) of the Dutch Civil Code, while assets still existed at the time of dissolution, a remarkable situation arises. It is then that both paragraphs 4 and 5 of Book 2, Section 19 of the Dutch Civil Code apply, as a result of which the company has ceased to exist, but continues to exist nonetheless. This is susceptible to intrinsic contradiction and raises an important question for the company’s creditors: do they have to instigate a claim to reopen the winding-up proceedings under Book 2, Section 23c(1) of the Dutch Civil Code in order to restore the company and to be able to institute legal proceedings against it or is this not required because the company continues to exist under Book 2, Section 19(5) of the Dutch Civil Code?

Two views have developed with regard to this problem. In the first vision, Book 2, Section 19(5) of the Dutch Civil Code prevails over Book 2, Section 23c(1) of the Dutch Civil Code (the doctrine of essentia), with legal uncertainty as a drawback. In the second view, Book 2, Section 23c(1) of the Dutch Civil Code prevails over Book 2, Section 19(5) of the Dutch Civil Code (the doctrine of resuscito), whereby the creditors are disadvantaged.

In my view the solution to this problem can be found in a middle path (the doctrine of solutio), in which a distinction must be made between, on the one hand, the situation in which the board was unaware and could not reasonably have been aware of the asset existing at the time of dissolution and, on the other, the situation in which the board was aware of it or reasonably should have been. In the first situation the doctrine of resuscito will prevail, so that the company is regarded as no longer existing and the only possibility of restoration exists in proceedings under Book 2, Section 23c(1) of the Dutch Civil Code. In the second situation the doctrine of essentia will prevail, so that the company has never ceased to exist. This middle path provides a balance between the provision of legal certainty and the protection of creditors. With this in mind I recommend the doctrine of solutio as regards issues relating to application of Book 2, Section 19(5) or Book 2, Section 23c(1) of the Dutch Civil Code when there has been wrongful proceeding to the turbo-liquidation.