THE BOTTOM LINE
- Obstacles are not excuses: Facing a significant external obstacle, such as a government seizure of your financial records, does not automatically absolve your company from its legal duty to file annual accounts.
- Proactive steps are mandatory: If you cannot meet a compliance deadline, you must actively seek legal remedies. The court found that failing to apply for a formal exemption from the filing obligation nullified a force majeure defense.
- Directors’ duties are broader than you think: This ruling underscores that corporate leadership must anticipate compliance breaches and exhaust all available legal avenues to mitigate them; otherwise, the company can face criminal prosecution.
THE DETAILS
The case before the Amsterdam Court of Appeal involved a Dutch company prosecuted for the late filing of its 2020 annual accounts. The company presented what seemed like an airtight defense: its entire administration had been seized years earlier by the FIOD (the Dutch fiscal investigation service) as part of a separate criminal probe and had not been returned in time. The company argued it was a clear case of force majeure—it was physically impossible to prepare and file accounts it didn’t possess. A lower court initially agreed, acquitting the company. However, the Public Prosecutor appealed, leading to a significant reversal.
The Court of Appeal’s reasoning provides a critical lesson for any business leader. While the court acknowledged the practical impossibility of filing, it focused on what the company could have done. Under Dutch law, a company facing exceptional circumstances can apply for a formal exemption from its filing obligations. The court noted that a government seizure of records is a well-established ground for granting such an exemption. The company, aware long before the deadline that it could not comply, made no such application.
By failing to pursue this available legal remedy, the company undermined its own defense. The court determined that the company had not done everything reasonably within its power to avoid committing the offense. An exemption would have temporarily suspended the legal duty to file, meaning no offense would have been committed. Because the company neglected this proactive step, its claim of being powerless was rejected. The court overturned the acquittal, found the company guilty, and imposed a conditional fine and an order to file the overdue accounts.
SOURCE
Source: Gerechtshof Amsterdam
