Since the Act of 13 April 1995, the judicial dissolution (i.e. court-ordered winding-up) already existed for non-active (so-called “dormant”) companies. They could be wound up at the request of the public prosecutor or any interested party if they failed to file their annual accounts for three consecutive financial years.
A new Bill of law*, which has just been passed by the Chamber of Representatives, extends the possibilities to seek the judicial dissolution of companies and provides for some substantial changes amongst others in the related Companies Code provisions. In this framework, the role of the chambers in charge of business investigation, as referred to in article 84 of the Judicial Code, is also being enlarged, as they will now be able to directly send files of defaulting companies to the Commercial Court (the “Court”). Those business investigation chambers being part of the Court, are made up of one professional judge and two “consular” judges. Up till now, one of their primary tasks was, according to the Business Continuity Act of 31 January 2009, to identify companies in difficulties and to prompt them to take adequate action to restore their situation and ensure their going concern.
When?
The dissolution can now be ruled by the Court not only upon a request made by any interested party or by the public prosecutor but also following a notification by a business investigation chamber if and when a company fails to file its annual accounts for one financial year.
In this hypothesis, the winding-up procedure cannot be started until after the end of a period of seven months following the company’s year-end date.
A business investigation chamber may also decide to apply this procedure to companies that are apparently still in going concern but (i) which were de-registered ex officio in the Crossroads Bank for Enterprises, (ii) which failed twice to appear before a business investigation chamber or (iii) whose directors would not have the basic management skills or professional qualifications required to carry on the company’s activity.
Additionally, should a company fall within the scope of the so-called “alarm” procedure” (i.e. when its net assets have fallen below EUR 6.200 (or EUR 61.500 for NVs/SAs, or EUR 2.500 for companies with a social purpose, i.e. vennootschappen met een sociaal oogmerk/sociétés à finalité sociale), the public prosecutor (and not only any interested party) can now apply to the Court to have the company wound up, and the Court may now grant a binding deadline for the situation to be regularised.
Role of the Court
Depending on the party filing the request and on the grounds of the case, the Court may or has to grant the company concerned a regularisation period, which in some cases will be three months as a minimum, to sort out its situation, or even longer, since the new Act intends to allow active companies acting in good faith to remedy their situation.
The Court may also immediately order that the company be wound up and put into liquidation when the file has been referred to it by a business investigation chamber. In the latter case, the Court may either immediately close the liquidation or determine the liquidation procedure and possibly appoint one or more liquidators unless no interested party has made a request to that effect (i) by the time of the winding-up or (ii) within one year from the time the winding-up was published in the Belgian Official Gazette.
Consequences?
No liquidator appointed:
After one year, debts of the company being wound up are deemed uncollectible by law, possible assets are transferred to the State by law, and the liquidation is deemed to be closed. Assets that would appear after the closing of the liquidation would be transferred to the State Consignation Bank.
One or more liquidators appointed:
Directors of a company involved in such a procedure are requested to cooperate actively with the liquidator, be it to facilitate the verification of the company’s books, to provide the liquidator with any useful and required information, and/or to close the books and to submit the company’s (annual) accounts (in discontinuity).
For lack of collaboration without legitimate cause, the Court can impose the directors a prohibition to hold office as a company director for up to three years. They could also be ordered jointly and severally to pay the costs related to the preparation of the accounts.
Entry into force?
The above changes will enter into force on the date of publication of the new Act in the Belgian Official Gazette.
For any questions, please get in touch with your local PwC contact, Jorgen Broothaers or Philippe Vanclooster.
* “Bill of Law dd. 4 May 2017 amending various Acts aimed at completing the judicial dissolution procedure of companies”
