# What changed: the distribution test in recent case law
A distribution by a Dutch BV is now tested on two fronts: the balance sheet test, run against the company's own accounts, and a forward-looking distribution test that the board itself must carry out. Under the applicable Dutch rules, recent case law has raised what counts as adequate substantiation for the second test, so a board resolution that merely records approval no longer suffices. Directors approving any distribution must run and document the test before the resolution, not after.
Why this arises here
Since the BV was freed from a minimum capital requirement, the balance sheet test and the distribution test have carried the weight of protecting creditors that capital used to carry. A director who approves a distribution knowing, or who ought reasonably to have foreseen, that the company will become unable to pay its debts as they fall due, becomes personally liable to the company for the shortfall, and in some cases directly to individual creditors. This liability question sits squarely inside corporate law and governance, because it turns on how the board's internal process is run and recorded, not on the shareholders' decision alone. Where the distribution is paired with a change in the shareholder register, the same file often touches how a notary is involved in transferring shares, since both processes are frequently executed on the same day.
The mechanics in short
The balance sheet test looks backward: it asks whether the company's equity, after the distribution, still covers its reserves required by law or the articles. The distribution test looks forward: the board must assess whether the company will remain able to pay its debts as they fall due for a period after the distribution that is reasonable to foresee at the moment of the decision. A resolution passed without that forward assessment being run and minuted does not satisfy the test, even where the balance sheet test is comfortably met. Liability for a director who signs off without running the test properly is joint and several among the board, subject to a defence for a director who can show they objected and took steps to prevent the distribution. The same forward-looking scrutiny has also been extended, in practice, to distributions structured as a share buy-back or a capital reduction, which is one of the points where the line has moved. Where a distribution is challenged by a liquidator or a creditor before a Dutch court, the board's contemporaneous documentation, not its later account, is what decides the outcome.
The pattern in the tracked case law
What is tracked on this page is not a single ruling but a direction: courts have progressively treated the distribution test as an independent board duty, separate from the shareholders' resolution, and have looked more closely at what the board minutes actually show at the moment the decision was taken. Non-executive and interim directors have not been treated as exempt from the same standard of foresight. This has been under revision in the case law rather than settled by a single change, so check the current position before you rely on it. The same tightening of scrutiny has run alongside separate developments in cross-border screening, including how the scope of the VIFO Act has been read in practice, where the common thread is that boards are now expected to document a judgement, not just record a decision.
What to check before you approve a distribution
Confirm the entity is a BV incorporated in the Netherlands, since a different regime applies to an NV. Confirm the board minutes name the specific test run, the period considered, and the outcome, and that this was recorded before the resolution rather than reconstructed afterwards. Check whether any director recorded an objection, since that record is the only defence available to that director individually. Where the distribution takes the form of a buy-back or a reduction of capital, check that it has been treated as a distribution for this purpose rather than assumed to fall outside it.
| Aspect | Position before | Position now |
|---|---|---|
| Substantiation | A written note that shareholders resolved to distribute | A documented board test naming the period considered and the conclusion reached |
| Timing | The test could be reconstructed informally after the resolution | The test must be run and recorded before the resolution is passed |
| Scope | Read narrowly, mainly ordinary dividends | Read to include buy-backs and capital reductions structured as a distribution |
| Standard for directors | Liability attached mainly to gross disregard | Extended to a director who ought reasonably to have foreseen the shortfall |
What this does not cover
- The distribution test for an NV, which sits under a separate statutory route.
- The mechanics of the balance sheet test itself, beyond its role alongside the distribution test.
- The tax treatment of a distribution, which is a separate question from the corporate test.
- The liability of a shareholder who received a distribution knowing of the risk, which runs on a different basis from director liability.
- Any figure, period or threshold not held in a confirmed source: none is given here, and none should be assumed.
Questions
Does the distribution test apply to a share buy-back?
Where a buy-back is structured so that it functions as a distribution to the selling shareholder, recent case law treats it as one for this purpose. The board must run the same forward-looking test as for an ordinary dividend, and document it before the transaction completes.
Who is liable if the board approved a distribution without properly running the test?
The directors who approved it are liable jointly and severally to the company for the resulting shortfall, unless a director can show they objected and took steps to stop it. A shareholder who received the distribution knowing of the risk can face a separate claim on a different basis.
About this material
Written by Sanne de Wit, who covers structures, holding arrangements and tax within the practice. This page tracks how the distribution test is being applied by the courts and is reviewed as that case law develops.
For a Dutch group with a foreign parent, the same question of whether a distribution was properly tested often surfaces together with beneficial ownership checks such as the beneficial ownership register position for a Danish holding entity, and with governance failures flagged after the fact, including where the annual accounts were filed late on a director's watch.
This page sits within corporate governance and structuring for Dutch entities. Where the question is whether a specific distribution, past or planned, would survive this test, the underlying position is set out in a structure report, which documents the entity's filed accounts and register position without pricing any advisory step.
Last legal review: 2026-09-15