The Bottom Line
- A government investigation or seizure of business records does not automatically absolve a company of its statutory obligation to file annual accounts on time.
- Companies facing circumstances that make compliance impossible must proactively seek available legal remedies, such as an official exemption, to avoid liability.
- This Dutch court ruling underscores that passivity is not a valid defense; directors are expected to exhaust all legal avenues to meet their compliance duties or face potential criminal conviction.
The Details
A Dutch company found itself in what seemed like an impossible situation. It failed to file its 2020 annual accounts with the Chamber of Commerce, a clear violation of corporate law. However, it presented a compelling defense: its entire administration had been seized by the FIOD (the Dutch Fiscal Information and Investigation Service) in 2018 as part of a separate investigation and had not yet been returned. Without its records, the company argued, it was physically impossible to prepare the financial statements. A lower court initially agreed, accepting this “force majeure” argument and dismissing the case.
However, the Amsterdam Court of Appeal took a much stricter view, overturning the lower court’s decision. The appellate judges acknowledged that preparing the accounts was indeed impossible due to the seizure. The critical question for the court, however, was not whether the company could file, but whether it could have taken reasonable steps to avoid violating the law. The court concluded that such a step was available, but the company failed to take it.
The court’s reasoning hinged on a specific provision in Dutch law that allows companies to request an official exemption from their filing obligations due to “special circumstances.” A government seizure of records is precisely the kind of situation for which this exemption is designed. By failing to even apply for this legal remedy, the company could not successfully claim that the violation was beyond its control. The court determined that the obligation on the company was not just to file, but to remain compliant. When one path to compliance (filing) was blocked, the company had a duty to pursue the alternative path (seeking an exemption). This failure to act led directly to the conviction, a conditional fine, and an order to file the accounts within nine months.
Source
Source: Gerechtshof Amsterdam (Amsterdam Court of Appeal)
