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Requirement to keep records

The board of a legal entity is obliged to keep adequate records. Those records must show the legal entity’s assets The assets of a Dutch company reflect the value of all that the company possesses
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and everything concerning the legal entity’s activities. The records must be consistent with the activities carried out by the legal entity. In this context, the board must also keep the physical and digital records – the “books, records and other data carriers” in such a way that the rights and obligations of the legal entity can be known at all times.

The duty to keep records is not only important for determining the board’s obligation towards the legal entity. The requirement to keep records is also very important in the context of directors’ and officers’ liability in bankruptcy. Under Sections 2:138 and 2:248 of the Civil Code, non-compliance with the duty to keep records in a BV or an NV irrevocably establishes manifestly improper management, which is presumed to be a major cause of the bankruptcy. Barring evidence to the contrary – the burden of proof and the duty to present evidence is complex – the director can be ordered to pay the entire deficit in bankruptcy on that ground.

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