Personally liable shareholders have a right to file for compulsory settlement proceedings and bankruptcy proceedings.
After insolvency occurs, authorisations of the shareholders’ meeting are limited to recall and appointment of members of the management and supervisory board and the passing of certain decisions necessary for successful restructuring (e.g. if a restructuring plan anticipates a capital injection, etc.).
In a bankruptcy proceeding, shareholders must provide the insolvency administrator with explanations of the bankruptcy debtor’s transactions and other facts and circumstances relevant to the bankruptcy proceeding and for preparing financial statements.
The general meeting of shareholders is exclusively authorised to resolve to distribute the profits that have been determined by the adoption of the annual accounts, as well as to resolve other distributions of assets. Distribution under Dutch Law consists of the following tests:
The general meeting can resolve to make a distribution in as far as the private limited company’s equity exceeds the reserves that have to be maintained by virtue of law and the articles of association. The deciding factor is the actual financial situation of the company at the moment the distribution (payment) is being made.
Once the general meeting has resolved to make a distribution in accordance with Dutch law, such a resolution will not have any effect and payment cannot be made as long as the company’s management has not approved it in a separate resolution.
The management board may only refuse to approve a proposed distribution if the management board knows, or should reasonably know, that the company cannot pursue the payment of its due and payable (short-term) debts after making the proposed distribution. The deciding factor is the financial situation of the company at the moment the distribution is being made.
If, after making the proposed distribution, the company is unable to pursue payment of its due and payable short-term debts, the managing directors who at the time of the distribution knew about, or should have reasonably foreseen, this situation are jointly and severally liable towards the private limited company to make up the deficit caused by the relevant distribution. Also the company can reclaim payment from a shareholder, as beneficiary of the distribution, if the shareholder knew, or should have reasonably foreseen, that the company would get into payment problems: the shareholder is jointly and severally liable to make up the deficit so caused.