The Continuity of Enterprises Act imposes a number of new requirements on accounting professionals aimed at curbing misuses and improving the procedures for judicial reorganisation.
According to Belgian commercial law, the Continuity of Enterprises Act can grant business owners or companies judicial reorganisation if they are temporarily unable to pay their debts or if difficulties exist that endanger the company's continuity.
What is changing
The rules of procedure have been tightened and agricultural corporations are also eligible. Use is also made of more intensive prevention measures and the detection of companies in difficulty. To combat misuse, the admissibility conditions have been made stricter and the process of informing creditors has been improved. The stricter conditions raise the threshold for admittance to the procedure.
Regarding this, a major role has been reserved for accounting professions. The law requires external (tax) accountants, tax consultants and company auditors who discover facts that could undermine the continuity of the company to report these to the company's administrative bodies.
If, one month after the observations, the company still has taken no action to guarantee continuity for at least twelve months, the accountancy professional may report this to the commercial court. To make the process more efficient, the commercial court may communicate directly with the accountancy professional. The task of accountancy professionals is not limited to providing information. They may also be requested to make specific recommendations.
Thus a proactive role is given to an accountancy professional assisting a company in difficulty. The law does not foresee concrete sanctions, but accountancy professionals are liable – also with respect to third parties – if they do not comply with these obligations.
The amended act also requires that an accounting statement – drawn up under the supervision of a certified external (tax) accountant, bookkeeper or company auditor – be attached to the request for judicial reorganisation. And that the budget with an estimate of income and expenditures for the duration of the suspension of payments be drawn up with the assistance of a certified external (tax) accountant or company auditor.