The government’s proposal for a new Belgian Companies Code is a hot topic in the Belgian legal and business world.  Among the most publicized changes are a cap on directors’ liability for all company types and the abolition of the share capital for the private limited liability company (now BVBA/SPRL but to be renamed BV/SRL).  No doubt good news for directors and shareholders but what does this mean for restructuring practice and creditors generally?

Cap on directors’ liability

The New Companies Code introduces a cap on the liability of all directors and daily managers for a fixed amount.  The cap varies from EUR 250,000 to EUR 12,000,000 depending mostly on turnover and balance sheet total.  It is an aggregate cap that applies for all directors together and that is to be shared between all creditors.  The cap applies in case of proven negligence or even gross negligence, but it will not apply in case of fraudulent intent or intent to cause harm.  Although parties cannot exclude the cap by contract, it applies only to directors’ liability and not to contractual guarantees or other credit support provided by directors.

It remains to be seen whether the proposed cap will have an effect on the risk appetite of directors, especially if these directors benefit from D&O liability insurance up to the amount of the cap.

On 13 July 2017, the Belgian parliament adopted an Act compiling the existing Belgian insolvency legislation into one insolvency code (the “Insolvency Code”).  The Insolvency Code will become law as from its ratification by the King and publication in the Belgian State Gazette, both of which being no more than administrative formalities.  The Insolvency Code will apply to any insolvency proceeding opened on or after 1 May 2018. The vast majority of the changes resulting…