THE NETHERLANDS ANTILLES APPROACH TO ACCOUNTING PRINCIPLES
US GAAP, Dutch GAAP, IAS, IAS Plus, IFRS?
Under Netherlands Antilles law, the management board of each legal entity is required to keep books for the financial condition of such entity in such a manner that the rights and obligations can be ascertained therefrom at any time: the adequate bookkeeping obligation. Violation of this obligation may result in liability.
Unless the legal entity is a foundation, the management board must draw up the annual accounts and an annual report. Except for the companies limited by shares (NV), the private limited companies (BV) and the co-operatives/mutual insurance associations, no specific requirements exist as to the setup of these financial statements.
As far as the NV and BV are concerned, the annual accounts must be prepared in accordance with generally accepted accounting principles (e.g. US GAAP, Dutch GAAP) and must provide such information as will enable the reader to form a sound judgment on the net assets and the results and, to the extent the nature of the annual accounts so permit, in respect of the solvency and liquidity of the company.
As far as the large NV is concerned, the annual accounts must be prepared in accordance with the adopted principles of the International Accounting Standards Board (IASB) and must provide such information as will enable the reader to form a sound judgment on the net assets and the results and, to the extent the nature of the annual accounts so permit, in respect of the solvency and liquidity of the company. However, the NV may prepare the annual accounts in accordance with other internationally accepted principles (US GAAP, Dutch GAAP), provided the notes show well-founded reasons therefore and according to which principles the annual accounts were prepared. Being a large NV has other consequences too (audit and publication requirements).
Whether an NV is large is determined on the basis of certain statutory criteria such as the value of the assets and the turnover. Both an NV and BV not meeting those criteria, may voluntarily opt for the applicability of the large regime.
The United States and the European Union have adopted very different approaches on the issue of accounting principles. For example: the European Union requires that all listed companies (both European and non-European) report in accordance with the IFRS (International Financial Reporting Standards, laid down by the IASB), but the US is still forcing all non-US companies listed in the US to reconcile their results to US GAAP. Netherlands Antilles law allows a company incorporated in the Netherlands Antilles but listed in a foreign country to apply the auditing and auditor standards of such country.
The Netherlands Antilles is not an accounting standards setter but follower. Who follows?
Karel Frielink
Attorney (lawyer) / Partner
