Two recent judgments of the Belgian Supreme Court contain important clarifications concerning the mechanism of the dissolution of companies with insufficient net assets.
Pursuant to article 634 of the Belgian Companies Code (“the BCC”), any interested person may ask the court to wind up a public company (“société anonyme”/”naamloze vennootschap”) if the net assets of the company fall below € 61.500, i.e. the minimum amount of capital to be paid up when the company is created. Instead of ordering the dissolution, the judge may grant the company a sufficient time to regularise its situation.
In its judgment of 17 October 2014 , the Supreme Court states that the minimum requirement in terms of net assets relates to the economic public order. The purpose of article 634 BCC is to protect the general public’s interest. The subsistence of companies with net assets below the minimum capital may, according to the Court, “severely put business relations at risk”.
This statement has important consequences and puts an end to a long-standing debate among legal scholars. For example, it is now clear that the public prosecutor is an interested person in the sense of article 634 BCC and may thus apply for the dissolution of any company with insufficient net assets. If the claim is dismissed, the usual provisions on the costs of proceedings do not apply to the public prosecutor, for he acts in the general interest.
While this first decision seems to consider article 634 BCC as a fundamental rule of the Belgian economic order, the Court mitigates this point of view (or at least some of its potential consequences) in a second judgment of 2 April 2015 . The Court rules that although any interested person may file a claim for dissolution, this claim may, under some circumstances, be rejected for being abusive.
The case at hand was part of a larger dispute between two companies, one of which distributed the products of the other. The distribution contract was terminated and an arbitration procedure was launched whereby the distributor claimed for damages following the termination. In essence, the licensor was blocking the normal functioning of the arbitration proceedings while at the same time applying for the dissolution of the distributor, with the hope to be faced with a liquidator with whom he would later negotiate a (more favourable) settlement. The Court of Appeal ruled that the licensor’s behaviour constituted an abuse of rights, making his interest to file for the dissolution of the distributor illegitimate. The Supreme Court validated this reasoning, based on the general principle that no one is allowed to abuse of his rights.
Capital and net assets legally remain keystones of Belgian company law, despite a growing tendency to the contrary, especially among the specialised scholars. Companies with insufficient net assets should beware not only of their (minority) shareholders and of their creditors, but also of the public prosecutor, of competitors and of any other person with whom there are involved in some kind of contentious or unfriendly relationship. However, abuse of rights may come as a useful defence.