A dividend was paid and the company — Dutch-language file

# A dividend was paid and the company cannot meet its debts when the file is in Dutch and your board is not

A distribution that leaves a company unable to pay debts as they fall due opens three routes: negotiate repayment from the shareholder now, commission an independent check of the distribution test that was actually performed, or wait for a creditor to act and let someone else test it for you. The route that fits depends on what the Dutch-language board file actually shows, not on what the board remembers approving.

What happens if you do nothing

If no one acts, the exposure does not disappear, it moves to whoever notices it first. A creditor who cannot be paid can petition for the company's bankruptcy, and a trustee appointed in that case has both the standing and the reason to examine the distribution and pursue repayment from the shareholder and, separately, a personal claim against directors who approved it. Once that happens, the file is read by someone with no reason to read it in your favour, and the fact that your board could not follow the Dutch original becomes your board's problem to explain, not the trustee's problem to overlook. Doing nothing converts a negotiable issue into a litigated one, on someone else's timetable.

The routes

Route	What it takes	Time	Cost driver	What it gives you
Negotiated repayment from the shareholder	Board resolution, a repayment agreement, shareholder cooperation	Weeks, if the shareholder agrees	Negotiation and drafting, not court fees	A closed position before a creditor moves
Independent review of the distribution test	Full board file in translation, the balance sheet and liquidity figures actually used	One to three weeks for the review itself	Volume of documents to translate and assess	A documented basis for the board's position, or an early warning there is none
Wait for a creditor or trustee to act	Nothing from you; a creditor's petition or a bankruptcy filing	Outside your control once triggered	Dutch court fees on the creditor's or trustee's side, defence cost on yours	The matter is decided for you, in public, on a file you no longer control

What decides between them

Three facts decide it, not preference. Whether the shareholder who received the distribution is still reachable and solvent enough to repay; whether the board file, once translated, actually shows a distribution test that was performed rather than a resolution that was merely signed; and whether a creditor has already indicated it intends to act. A minority shareholder dispute over a related drag-along clause with a Dutch-language file is a useful comparison: the same board can face two Dutch-file problems on unconnected transactions at once, and neither waits for the other to be resolved first. Where the file shows the test was done and reasoned, negotiation from strength is available. Where it does not, a wrongful-act liability claim against a director becomes the more realistic exposure, and the analysis shifts from cost control to loss control.

The deadline that runs

Two clocks run at once, and neither pauses for translation. A shareholder who received an unjustified distribution can be required to repay it, and a director who approved a distribution the company could not sustain can face a personal claim for the shortfall. Both claims are subject to the ordinary limitation periods for civil claims under Dutch law, running from the moment the person entitled to claim knew of both the loss and the party liable for it. Waiting for the Dutch file to be fully understood does not extend that period. If the file has not yet been read in a language your board follows, treat the clock as already running and work backwards from it, not forwards.

Evidence to secure now

Before anything is negotiated or filed, four items need to exist in a language the board can actually assess: the resolution approving the distribution, the balance sheet and liquidity figures used to justify it at the time, any management or auditor commentary attached to those figures, and a record of who on the board signed and on what information. Where the paying entity sits inside a wider structure, tracing who ultimately benefited from the distribution, including through a beneficial ownership check where the shareholder is itself a corporate vehicle, narrows who repayment can realistically be sought from. None of this is optional groundwork: it is what a court or trustee will ask for first.

Cost drivers

The cost of each route is driven by volume, not by rate. Translation and review of the board file scales with how many documents exist and how contested the underlying figures are, not with a fixed fee. A negotiated repayment adds the cost of drafting and, where the shareholder sits abroad, of making the agreement enforceable in more than one jurisdiction. Litigation, whether brought by you against a shareholder or by a trustee against your board, adds Dutch court fees calculated on the amount claimed. A related question, whether a distribution or a share transfer around it carries its own VAT exposure as in a VAT challenge on a related share sale, follows a separate cost line entirely. None of these figures are published in advance because none of them are fixed in advance: they follow from what the file, once read, turns out to contain.

What we would do in the first week

Get the Dutch file translated in full, not summarised, and have it reviewed against the distribution test the board is supposed to have applied. Establish whether the shareholder who received the distribution is still solvent and reachable. Check whether any creditor has already sent a formal demand or signalled an intention to file. Where representation before a Dutch court becomes necessary, that is conducted with Dutch-qualified counsel of record; the first week's work does not replace that step, it decides whether it becomes necessary at all.

What this does not cover

It does not cover the position of a listed issuer, where separate disclosure duties apply to a distribution decision.
It does not cover cross-border insolvency recognition once a Dutch trustee is appointed and the shareholder or director sits outside the Netherlands.
It does not cover the criminal standard applicable to directors, which is a separate line of analysis from civil repayment and liability.
It does not set out what a specific court will decide on a specific set of figures: that follows only from the file itself, once translated and read.

Questions

Does translating the board file change what the distribution test legally required?

No. Translation changes what your board can now assess, not what the test required at the time the distribution was approved. The legal standard is fixed by the facts and figures used then; translation only lets you see whether those facts and figures were adequate.

Can the shareholder be required to repay even if the distribution resolution was validly signed?

Yes, in principle. A validly signed resolution does not cure a distribution the company could not sustain. Whether repayment can be required turns on what the shareholder knew or should have known at the time, a separate question from whether the paperwork was in order.

Does it matter that the board does not read Dutch?

It matters for your evidence, not for the legal standard. A board's inability to read the file it approved does not change what the test required; it changes how quickly you can establish, now, whether the test was actually met.

About this analysis

Sanne de Wit — structures, holding and tax. Advises on distribution mechanics, shareholder repayment exposure and the tax and structural consequences that follow a contested payout inside a Dutch corporate group.

A dividend was paid and the company cannot meet its debts when the file is in Dutch and your board is not