Dissolution of a legal entity
To end a legal entity such as a bv, nv, cooperative, association, foundation, or mutual insurance company you have to dissolve it first. How does that work?
What is dissolution?
Dissolution is one of the steps you have to take to end a legal entity. Dissolution means that all activities of the legal entity cease. A dissolved legal entity may then continue to exist temporarily to pay possible debts and sell (liquidate) its assets. Usually, dissolving a legal entity requires a resolution of dissolution (from shareholders or the board members) Exactly how the process of dissolution works depends on the situation.
Different ways to dissolve legal entities
In most cases, a formal decision is required to dissolve a legal entity. Who is allowed to make that decision depends on the type of legal entity.
- Public or private limited company (nv or bv): the general shareholders' meeting takes the decision.
- Association (vereniging), cooperative (coöperatie) or mutual insurance company (onderlinge waarborgmaatschappij): the members' meeting takes the decision.
- Foundation (stichting): the board takes the decision.
The dissolution of a legal entity takes effect the moment you make this decision, or at a future time. It cannot take effect before you officially make this decision.
In some cases, no decision is required to dissolve an association, cooperative, or mutual insurance company. These must be dissolved immediately if they no longer have members.
In some cases, the articles of association state that the legal entity must be dissolved in the event of a specific situation. For example, if the purpose of a foundation has been achieved.
Under certain conditions, the Netherlands Chamber of Commerce KVK must dissolve empty legal entities. KVK does this if the legal entity does not comply with a number of rules. For example, there has been no director for more than a year and the legal entity has not proved to be reachable. Read more about when and how KVK dissolves a legal entity.
Report the dissolution to KVK
You do this using form 17a (pdf), which you can download from the KVK website. To fill in the form, you need to know how many debts and assets the legal entity has.
Read more about determining your situation and filling in form 17a Dissolving a legal entity.
What happens after dissolution?
Does your company or organisation still have money or other assets? Then the legal entity goes into liquidation The legal entity continues to exist until the capital has been liquidated. You pay the debts, distribute the profits, and sell the goods and stock. There are rules you must follow for this process. After liquidation, you report the end of the legal entity to KVK.
Read more about what you have to do if you go into liquidation.
If the legal entity has more debts than assets, you can file for bankruptcy. Or you agree with creditors that you will liquidate without bankruptcy.
If you no longer have any assets in your company or organisation at the time you decide to dissolve it, then the legal entity ceases to exist at the time of dissolution. You do not then have to liquidate. This quick way of ending your company is called fast-track liquidation, also known as turbo liquidation. After the dissolution decision you report the dissolution to KVK:
- Do you want to deregister another legal person without assets? You can do so using form 17a Report the dissolution of a legal person.
The legal entity must submit extra documents to KVK in case of turbo liquidation. These documents should provide more clarity on the how and why of the liquidation.
Read more about the rules and risks of terminating your legal entity via fast-track liquidation.
Be aware of the consequences of dissolution
Dissolving your business may affect your bank account, financing, insurance, pension fund, or municipal permits. For example, if you are deregistered from KVK, you can no longer access your business bank account. If you really need to, you have to file a request at court. This takes time and costs extra money. So before you deregister from KVK, consider what you need and what it could mean for you.
Owners' association
To dissolve an owners' association (Vereniging van Eigenaars, VvE) you need to go to a notary. The notary draws up an official document (deed) stating that the association ceases to exist. You send the deed together with the form for dissolving a legal entity to KVK. The rules of the Temporary act transparency fast-track liquidation do not apply here.
Partnerships
Different rules apply to the termination of partnerships such as a general partnership (vof), professional partnership (maatschap) or limited partnership (cv). Partnerships are not legal entities, but you do have to dissolve them before you can deregister them at KVK. The most common way to do so is to have all partners make a signed statement that they end their involvement in the partnership. Use form 17a (registering the dissolution of a partnership).
Ending a sole proprietorship
A sole proprietorship is not a legal entity. You do not have to dissolve it. Read what to do if you want to end your sole proprietorship.
Questions relating to this article?
Please contact the Netherlands Chamber of Commerce, KVK