Poorly written statutes: 3 serious financial consequences

Did you know that in March 2024, almost a quarter of Belgian companies were still operating withnon-compliant statusesto the new Code of Companies and Associations? More precisely, more than two thirds of Belgian companies had not complied with the mandatory modification before the deadline of December 31, 2023, with only 76% of companies having finally modified their statutes at the end of March 2024. This situation, far from being trivial, exposes managers to financial risks that are often underestimated. The deadline of December 31, 2023 having passed, the consequences are worsening for latecomers (be careful, however: automatically converted companies still have a deadline until June 30, 2024). Drawing on his experience since 2005, Maître Innocent TWAGIRAMUNGU provides daily support in Brussels to managers faced with these complex statutory issues.

What to remember

• The regularization fees start at1,480 euros including taxbut can quickly exceed 5,000 euros for complex situations (including lawyer’s fees and multiple modifications)
• Your personal liability may be engaged up to125,000 euros minimumfor small businesses, with no ceiling in the event of serious tax fraud or recurring non-payment of social charges
• Statutory defects can makefail a fundraiseror reduce the valuation of your company during a sale (risks identified during due diligence)
• Automatically converted companies have an additional deadline untilJune 30, 2024to comply

Operational blockages that paralyze your commercial activity

THEpoorly written statutesimmediately create concrete obstacles in the daily management of your business. The first victims of this non-compliance are your banking and financial relationships. Credit institutions are now particularly vigilant regarding thestatutory complianceBelgian companies.

Concretely, your banker can refuse the renewal of a line of credit or block the granting of new financing until your statuses are regularized. This reluctance is explained by the increased legal risk represented by a company that does not comply with the CSA. Professional insurers adopt the same position, making it difficult or even impossible to subscribe or renew insurance.essential insurance policiesto your activity. This situation becomes particularly problematic during development projects: statutory defects constitute legal risks systematically identified in the due diligence process, which can negatively impact the valuation of the company or cause a transaction to fail altogether, with investors requiring a “prior inventory” including the conformity of corporate documents before any fundraising.

When the administration closes its doors to you

Beyond the banking difficulties,poorly written statuteslead to real administrative paralysis. Company court registries systematically refuse the filing of files from non-compliant companies. This situation blocks any legal development of your company: it is impossible to modify your corporate purpose, appoint new administrators or even move your head office.

The Belgian Monitor, an obligatory passage for alllegal publication, becomes inaccessible. Without this official publication, your decisions have no validity against third parties. Imagine having to explain to a potential investor that your capital increase cannot be officially registered due to faulty statutes.

Please note:To avoid these blockages, your statutes must include certain essential legal notices: the name of the company, the clearly defined corporate purpose, the head office, the amount of share capital, the duration of the company (determined or indefinite), the precise decision-making methods and the rules for distributing profits. The absence or imprecision of one of these notices may be enough to block any subsequent modification.

Rectification costs that soar over time

The regularization ofpoorly written statutesrepresents a significant financial investment, particularly when the intervention becomes urgent. Notary fees for a simple statutory modification start at1,480 euros including taxfor an SRL (the basic package having been indexed on January 1, 2024, going from 275 euros to 298 euros), amount to which are added the costs of coordinating the statutes (363 euros) and the costs of publication in the Belgian Official Gazette. Specialized services like Acerta charge 299 euros excluding VAT for filing with the registry and publishing an amendment.

These official rates represent only the visible part of the financial iceberg. The complexity of your statutory situation can quickly increase the bill. A company having accumulated severalnon-conformitieswill have to make multiple simultaneous modifications, multiplying the notary fees accordingly.

The snowball effect of late regularizations

The longer you wait, the more expensive the rectification becomes. The legal advice needed to untangle complex situations represents a significant additional cost. A manager of a Brussels SME recently testified that he had spent more than 5,000 euros to regularize statuses that had been neglected for several years, including lawyer’s fees to analyze the accumulated risks.

The publication costs in the Belgian Official Gazette now amount to 271.89 euros for an electronic constitution and 197.47 euros for a company modification (2025 rates, identical for the paper and electronic versions). These amounts apply to each change, and late companies often have to makeseveral successive publicationsto catch up.

Concrete example:A Brussels SRL in the construction sector, created in 2018, had to urgently carry out full compliance in January 2024 following the refusal of its bank to renew its credit line. The total cost amounted to 4,850 euros: 1,480 euros of notary fees for the main modification, 298 euros of basic indexed package, 363 euros of coordination, 591.41 euros for three publications in the Moniteur (successive modifications), 299 euros excluding tax for filing services at the registry, and 1,500 euros of lawyer’s fees for the prior audit and drafting of the new clauses statutory. This late regularization delayed obtaining the necessary financing for a major project by two months.

The personal responsibility of leaders at stake

The most dreadful consequence ofpoorly written statutesremains the commitment of your personal responsibility as a leader. The Companies and Associations Code has established liability ceilings according to article 2:57 CSA, but these amounts remain substantial: up to125,000 eurosfor managers of small businesses (company not exceeding 50 workers, 11,250,000 euros in turnover and 6,000,000 euros in total balance sheet according to the new criteria identified in 2024).

• For medium-sized companies, this ceiling can reach several hundred thousand euros
• Large companies see their liability ceiling rise to12 million euros
• These ceilings are excluded in the event of serious misconduct or repeat offenses.
• Ceilings are also excluded for certain specific behaviors: serious and organized tax fraud, massive deductions from corporate assets, lack of accounting or seriously irregular accounting, and recurring non-payment of tax and social charges used as a method of financing.

Joint responsibility for tax and social debts

Beyond the theoretical ceilings, thepoorly written statutesmay expose you to unlimited joint and several liability for certain debts. Article 51 of the Code of amicable and forced recovery commits your personal assets for the non-payment of theVAT and withholding tax.

This liability is automatically activated in the event of repeated non-payments: three debts overdue within one year for a monthly payer (or two for a quarterly payer) are sufficient to trigger the presumption of fault. Managers must then prove that the non-payment is due to financial difficulties beyond their control. Creditors also have the action to recover liabilities, allowing them to personally pursue managers whose faulty management, facilitated by inadequate statutes, contributed to the insufficient assets.

A recent case illustrates this reality: an SPRL manager saw hispersonal liability incurredto the tune of 380,000 euros for social debts, the court having found that the faulty statutes had prevented adequate governance of the company.

Practical advice:Companies in difficulty must be particularly vigilant. According to article 5:153 CSA for SRLs, when the net assets become negative, the managers must convene a general meeting within two months to deliberate on the dissolution or continuity measures. Poorly drafted statutes can complicate this mandatory procedure and directly engage your liability in the event of non-compliance with this legal deadline.

Faced with these considerable financial challenges, the expertise of a legal professional becomes essential. For entrepreneurs who want to avoid these pitfalls from the start, alegally supported business creationguarantees statuses that are compliant and adapted to your specific activity. Maître Innocent TWAGIRAMUNGU, with nearly twenty years of experience in corporate law, supports Brussels managers in securing their statutes. His firm offers a complete approach, from statutory audit to compliance, includingrisk preventionof responsibility. Don’t wait for the financial consequences to accumulate: preventive intervention today will save you exponential costs tomorrow.