The seperator share after withdrawal or exclusion
The Companies and Associations Code (CAC) makes it possible to include a
withdrawal and exclusion option in the articles of association of a private
limited company (BV). The Accounting Standards Commission (CBN) has now provided
an explanation of the accounting treatment for the BV in case a shareholder
withdraws or is excluded.
Withdrawal and exclusion from the BV
The withdrawal and exclusion scheme is an optional scheme in a BV. This means
that a withdrawal or exclusion from the company's assets is only permitted if
the articles of association provide for this possibility.
The CAC does contain a number of modalities that will apply if there is a
withdrawal or exclusion regulation in the articles of association.
The voluntary withdrawal of a founding shareholder is only possible with effect
from the third financial year after the incorporation, regardless of what the
articles of association may provide.
Other rules regarding voluntary withdrawal are:
that shareholders can only withdraw during the first six months of the
that a shareholder withdraws with all his shares, whereby these shares are
that the withdrawal takes effect on the last day of the sixth month of the
financial year, whereby the amount of the separation share must be paid out at
the latest one month afterwards;
that the amount of the separator share per share equals the amount actually paid
up for that share and not yet repaid, with a maximum of the net asset value of
the share as shown in the most recently approved annual accounts.
It is possible to deviate from these 4 rules via the articles of association.
The distribution of the amount of the separator share is regarded as a
distribution to which the distribution tests apply: the net asset test of
Article 5:142 of the CAC and the liquidity test of Article 5:143 of the CAC. It
is not possible to deviate from this in the articles of association.
The board of directors must report to the ordinary general meeting on the
withdrawal requests submitted during the previous financial year.
Withdrawal by force of law or due to the loss of the statutory capacity
The articles of association of a BV may also contain an arrangement whereby it
is assumed that a shareholder has withdrawn by force of law in the event of:
death, bankruptcy, apparent insolvency, liquidation or declaration of
incompetence of a shareholder; or
no longer meeting the statutory requirements to become a shareholder.
The withdrawal is then deemed to take place at the time that circumstance occurs
and the same legal provisions apply as for a voluntary withdrawal, with the
exception of the periods. Attention! If the statutes do not provide anything,
this is not possible.
The exclusion of a shareholder from the assets of the BV takes place at the
initiative of the administrative body. Exclusion is only possible if the
articles of association of the BV explicitly provide for the possibility of
exclusion, for a legal reason or for other reasons stated in the articles of
In order to exclude a shareholder, the administrative body must communicate a
reasoned proposal for exclusion to the shareholder concerned. The shareholder
concerned is requested to submit his comments in writing to the general meeting
within one month after receiving the proposal for exclusion. The shareholder can
ask to be heard.
Only the general meeting is authorized to decide on the exclusion and the
exclusion must be motivated. The administrative body will then inform the
shareholder of the motivated decision of the general meeting within fifteen days
and register the exclusion in the share register, stating the date of exclusion
and the amounts that will be paid to the shareholder concerned.
The exclusions and the ensuing amendments to the articles of association
because there is a change in the number of shares are established before the
end of the financial year in which the company exits, by means of an authentic
deed executed at the request of the board of directors.
The shares of the excluded shareholder will be annulled.
Accounting processing of the seperator share
Unless the articles of association provide otherwise, the excluded shareholder
is entitled to payment of a seperator share per share equal to the amount
actually paid up for that share and not yet paid back, subject to a maximum of
the net asset value of such share as shown. from the most recently approved
The benefit tests also apply here.
The board of directors determines on which components of the equity the amounts
for the payment of the separation share are charged for accounting purposes. In
doing so, the administrative body must, among other things, take into account
the components of the equity capital that are unavailable by law or under the
articles of association.
Insofar as the repayment of the separator share is charged on the contribution
outside of capital, the following must be booked at the time of withdrawal or
11 Contribution outside capital XXX
to 48 Miscellaneous debts XXX
If the repayment of the separator share is charged to the reserves, this is
entered in the appropriation of the result. At the time of the decision to
withdraw or exclude and, where appropriate, when withdrawing from the reserves,
the following entries are made:
697 Other rights holders XXX
Miscellaneous debts XXX
133 Available reserves XXX
to 792 Withdrawal from
The effective payment of the seperator share must be suspended if the
distribution tests prevent a full distribution. The suspension lasts until the
payment tests allow the effective payment. The Commission is of the opinion that
the BV should include this inability to pay out in the notes to its annual