The new Belgian Code of Company Law enters into force on January 1st 2020. A lot of thought went into setting up the right new boundaries regarding liability of company directors.
A maximum liability amount was fixed regarding the sums which need to be paid by directors who are found liable. The amount depends on the financial results and the company turnover.
This cap is the same for all directors combined concerned by the same accusation.
At the beginning, it was planned not to fix a cap only in the case of intentional wrongdoings (and in the case of several well specified situations).
But there were some last minute changes made to the law according to which the liability cap does only apply in the case of occasional and minor wrongdoings. This obviously disables the whole mechanism of liability limitation as it is commonly known that directors usually don’t get condemned for insignificant mistakes.
It is less well known that the new Belgian Code does in fact tighten director liability on multiple occasions, in particular regarding the following subjects:
- The extension of joint and several liability regarding decisions and negligence’s by collegial director boards;
- The complexification of the alarm bell procedure and the liability of directors in case of shortcomings at the liquidity test;
- The tightening of rules regarding conflicts of interest;
- The special liabilities in case of bankruptcy are moved from the Corporate Law dispositions to the insolvency law dispositions. The legislator puts in place additional compensations for receivers in order to create an incentive for them to pursue potential liability claims more intensively;
- The introduction of a new liability ground for wrongful trading;
The new Belgian Company Code does undeniably allow more flexibility within the companies. At the same time the dispositions regarding director liability to be derived both from the Code of Company Law and the insolvency rules require caution.