Management report
The board's report on the course of business, results, risks and expectations (bestuursverslag). Mandatory for medium-sized and large Dutch legal entities (art. 2:391 DCC); small and micro entities are exempt.
What does management report mean?
The board's report on the course of business, results, risks and expectations (bestuursverslag). Mandatory for medium-sized and large Dutch legal entities (art. 2:391 DCC); small and micro entities are exempt.
This report accompanies the annual accounts and discusses policy, results, risks and the expected course of business. It does not replace the numerical notes. Exemptions for smaller legal entities apply separately.
How does it work?
Art. 2:391(1) DCC requires a true and fair view of the position on the balance sheet date, the development during the financial year and the results, with a balanced analysis that fits the size and complexity of the entity and a description of the principal risks and uncertainties. Paragraph 2 adds the expected course of business: investments, financing, staffing, and research and development.
The management report is not part of the annual accounts (art. 2:361(1) DCC) and is not adopted. The board makes it available for inspection by the shareholders within the same period as the annual accounts (art. 2:210(1) DCC). The accountant checks whether it has been prepared in accordance with the law, is consistent with the annual accounts and contains no material misstatements (art. 2:393(3) DCC).
Example
A medium-sized technical wholesaler (BV, turnover € 21 million, 62 employees) writes four pages for 2025. Development: turnover +9% from two new distribution contracts, gross margin from 24,1% to 22,8% due to higher purchase prices, result after tax € 610.000. Risks: 38% of purchasing comes from one supplier and the € 2 million credit facility expires in November 2026. Outlook 2026: € 450.000 investment in a warehouse system from own funds and two extra field sales staff. As a medium-sized legal entity it may omit non-financial performance indicators (art. 2:397(8) DCC).
In the annual accounts
Separate management report for medium-sized and large entities; micro and small are in principle exempt.
Difference from the annual report
In everyday speech the annual report is the whole volume: management report, annual accounts and other information together. The management report is only the part in which the board accounts in words. The annual accounts are adopted and audited; the management report is made available for inspection and checked for consistency.
Common mistakes
- Confusing the management report with the notes
- Stating prospects as certainties
What should you watch for?
- Micro and small entities are exempt (art. 2:395a(6) DCC and art. 2:396(7) DCC). A group company that applies the 403 exemption (group exemption) does not have to prepare one either (art. 2:403(3) DCC).
- Make turnover, result and number of employees match the annual accounts exactly. The report may not conflict with them (art. 2:391(4) DCC), and the accountant mentions a shortcoming in his report.
- Write down expectations together with the assumptions. What would seriously harm important interests may be omitted from the expected course of business (paragraph 2). The structure is set out in Preparing a management report.
Legal basis and source
art. 2:391 and 2:396 DCC
Frequently asked questions
Does a small BV have to prepare a management report?
No. Art. 2:396(7) DCC declares article 391 not applicable to small legal entities; for micro entities the same follows from art. 2:395a(6) DCC. It may be prepared voluntarily.
Does the management report have to be filed?
It is made public at the same time as the annual accounts. That can be done by filing with the Business Register, or by keeping it available for inspection at the entity's office and providing a copy at cost on request. The entity reports this second route to the Business Register (art. 2:394(4) DCC).
In which language is the management report drawn up?
In Dutch, unless the general meeting has resolved to use another language (art. 2:391(1) DCC).
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Preparing Dutch annual accounts?
Your first set of annual accounts is free, for every size class. Create an account and prepare the annual accounts of your Dutch company under Title 9 of Book 2 of the Dutch Civil Code.
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