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NEW LAW COMPLETING THE PROCEDURE OF JUDICIAL DISSOLUTION OF COMPANIES

On June 12, 2017, the law of May 17, 2017, amending various laws for the purpose of completing the procedure of judicial dissolution of companies[1] has been published in the Belgian Official Gazette. The purpose of this law is to counteract inactive Belgian companies. The Belgian legislator intends to stabilise the Belgian economic activities by improving and simplifying the procedure of dissolution of “dormant” companies. Resulting from the law of June 12, 2017, Belgian companies should file their annual accounts on time in order to avoid their judicial dissolution.

More specifically, the new law will have the following effects:

  1. Change of the judicial dissolution procedure in case of late filing of the annual accounts

Up till now, the Commercial Court could order the judicial dissolution of an inactive company:

  • Upon request of any interested third party or the public prosecutor; and,
  • Provided that:
    1. The company had not met its obligation to file its annual accounts for three consecutive financial years;
    2. Seven months had passed after the closing date of the third financial year; and
    3. By the time the Commercial Court ordered the judicial dissolution, the situation had not been regularised.

According to the law of May 17, 2017, once a company did  not comply with the legal provisions related to the filing of annual accounts, the judicial dissolution of this company will be possible. Indeed, it will no longer be required that the annual accounts were not filed for three consecutive financial years. The judicial dissolution procedure could immediately be initiated seven months after the closing date of the last financial year for which the annual accounts were not filed.

Additionally – in accordance with the law of May 17, 2017 – not only interested third parties (e.g. competitors or creditors) and the public prosecutor will be entitled to request the judicial dissolution of an inactive company. Indeed, under the new law, the Investigative Services of the Commercial Courts[2] can also initiate this procedure.

If the procedure is initiated by an interested third party or the public prosecutor, the Commercial Court shall grant the company at least three months to regularise the situation.  If the initiative originates from the Investigative Services of the Commercial Court, the latter will have the option to either grant time to the company to regularise its situation or to immediately order the company’s judicial dissolution.

  1. Additional new powers of the Investigative Services of the Commercial Courts

Amongst the new powers allocated to the Investigative Services through the law of May 17, 2017, also appears the power to initiate proceedings to request the dissolution of a company:

  • Which has been unregistered with the Crossroads Bank for Enterprises either because the company is inactive; or
  • Has failed several times to reply to the convening of the Investigative Services; or
  • Its directors do not have the required management skills or professional capacities for carrying out the company’s activities.

Moreover, if the net assets of the company decrease under the minimum legal threshold of paid up capital (i.e. respectively 6,200 EUR for the private limited liability company or the limited liability cooperative company, and,  61,500 EUR for the public limited company), the Investigative Services can transmit the file to the public prosecutor, who can now request the judicial dissolution of the company.

  1. Cooperation of the directors with the liquidator and liability of the directors/managers

According to the law of May 17, 2017, if the directors/managers of a company – being judicially dissolved – do not cooperate with the liquidator, the Commercial Court can prohibit them from becoming or remaining a director/manager or any other office which empowers them to commit a legal entity, for up to three years.

Moreover, the Commercial Court can jointly and severally sentence the directors/managers of a company, which has been judicially dissolved, to pay the costs related to the rectification and drafting of the company’s balance sheets.

In view of the above, we highly recommend companies to comply with the obligation to systematically file their annual accounts in due time. Indeed, by adopting this new law, the Belgian authorities have made the hunt for “dormant” companies and companies in breach of their accounting obligations one of their priorities. Filing annual accounts is a simple formality which can save your company a lot of troubles. So keep this in mind.

Should you have any questions, please do not hesitate to contact us.

Antoine DRUETZ

Partner

[email protected]

Pierre WILLEMART

Partner

[email protected]

Alix  DEGREZ

Associate

[email protected]

 

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[1] In French: “Loi du 17 mai 2017 modifiant diverses lois en vue de compléter la procédure de dissolution judiciaire des sociétés”/In Dutch: “Wet van 17 mei 2017 tot wijziging van diverse wetten met het oog op de aanvulling van de gerechterlijke ontbindingsprocedure van vennootschappen”.

[2] In French: “Chambre d’enquête commerciale”/In Dutch: “Kamer voor handelsonderzoek”.