Paying a bv dividend: when should a director seek legal advice?

1. Identify the proposed distribution

Record to whom, when and on what basis money or assets will be distributed. Distinguish dividend, loan repayment and other payments to those involved. A bank description is not a complete legal assessment. Give advisers the exact proposed act and documents.

Note the requesting person and other arrangements: different share rights, finance terms or earlier promises. Keep articles and resolutions. Examine the correct payment on its proper legal basis before transferring money that may later require different treatment.

2. Separate balance-sheet test, resolution and board approval

NBA describes a balance-sheet and distribution test. Examine room above statutory and articles-required reserves. A distribution resolution has no effect until board approval. Ask how the steps are implemented and recorded for your articles and payment.

Write out roles even for someone both shareholder and director. Explain the capacity in which each decision was made. Keep supporting evidence, not only a payment instruction. Assess absent or conflicting resolutions before continuing merely by habit.

3. Assess ability to pay after distribution

NBA says the test centres on whether directors know or should reasonably foresee that the bv cannot continue paying debts as they fall due afterwards. Profit is not the same as payment capacity. Request current cash-flow and obligation information needed for assessment.

Expose uncertainties: doubtful customer debts, expiring finance, taxes and committed major expenses. Separate fixed amounts from expectations. Financial and legal assessments should share assumptions. Optimistic forecasts are less useful when key risks remain only oral outside the file.

4. Define accountant and board roles

NBA stresses the board’s responsibility for whether the distribution is permitted. An accountant can support figures and liquidity forecasts without taking over the board decision. Ask work performed, data and assumptions. General approving remarks do not replace the board’s own assessment.

Arrange updating information before actual payment. A key customer or financing may change between preparation and payment. Inform advisers. Records should show facts available at the relevant time. Earlier discussion of another amount or financial state does not automatically explain the present payment.

5. Address disagreement before money leaves

If a shareholder wants payment while directors hesitate, seek targeted analysis of powers, information and interests. Give the lawyer financial evidence and agreements. Dividend conflict can connect with control or exit, but should not be treated solely as personal argument.

Flag payment date and pressure. Ask what response or discussion is needed and what is missing. This page does not say every hesitation is justified or shareholders can never have claims. Assess the specific position. Legal dispute and continuing payment ability are connected but different questions.

6. Coordinate tax return and payment separately

For dividends subject to filing, Belastingdienst gives one month from making the dividend available for filing and payment. It also identifies non-withholding situations without a return requirement, and invitations requiring a return. Establish your actual position; assume neither universal exemption nor universal filing for every shareholder payment.

Agree with the tax adviser who checks date, amount, withholding and return. Keep confirmations with the distribution file. A correct return alone does not establish corporate-law propriety. Board approval likewise does not settle every tax obligation of bv and recipient. Keep both in the completion list.

7. Fictional example: paper profit and doubtful major customer

Suppose a bv records profit but a major customer has not paid. Shareholders want immediate distribution and important finance expires soon. Directors have only old annual figures and a bank statement. This fictional example calculates no permitted dividend and decides no liability.

Collect current customer-debt, financing and expected payment data. Advisers can assess assumptions and legal steps. Record which amount was considered when. Profit in last accounts alone does not answer post-distribution payment capacity.

8. Checklist for dividend discussions

Say whether the issue is proposed payment or an earlier distribution. Identify debt concerns and time pressure. Agree financial forecasting, legal assessment and tax responsibilities and information required before board approval.

• Articles, share rights and proposed resolution.
• Current finances, reserves and obligations.
• Liquidity forecast with assumptions, uncertainty and finance terms.
• Board papers and advice with defined responsibilities.
• Timing for availability, payment and any return and tax remittance.