Businesses in financial difficulty: Accounting professionals’ responsibility when they conclude that their clients have financial prob-lems

Needless to say, a company director is primarily responsible for acting correctly and diligently if the company is in financial difficulty. The statutory obligations imposed on the company director can be found in not only the Code of Companies and Associations but also insolvency legislation under Book XX of the Code of Economic Law. For a detailed explanation of these obligations, please see our previous newsletters.

Obligation to notify – The role of an accounting professional cannot be underestimated. When the external accountant, the external certified accountant, the external certified bookkeeper-tax advisor, or the company auditor performs his or her duties and concludes that there are relevant and corresponding facts that jeopardize the company’s economic activity, he or she must also bear a significant level of responsibility.

Article XX.23 of the Code of Economic Law refers to a company’s “economic activity”. This term implies that it can concern a specific business unit without the entire company being affected by the financial problem at stake.

Obligation to notify in writing In such circumstances, any of the accounting professionals mentioned above must notify the company in question comprehensively in writing about the situation by, if appropriate, addressing the company’s governing body.

In principle, the accounting professional does not have to propose specific remedial measures to the company under this obligation to notify. However, the law does stipulate that the Chamber for Businesses in Financial Difficulty contacts the accounting professional officially and seeks information about the remedial measures proposed, among other things. It is therefore appropriate to bear this in mind when engaging in any correspondence exchange with the business concerned.

Sanction – In principle, Book XX does not mention any sanctions for non-compliance with this provision, since the ordinary rules on liability apply. In concrete terms, this means that the accounting professional could indeed be held liable for not complying with this obligation if, for example, the business’s creditors allege this.

No watchdog – Case-law on this type of liability is limited, as the Antwerp Court of Appeal held that the Code of Economic Law does not impose on the accounting professional the duty to investigate in a systematic and/or organized way. It is not intended that one must act as if he were a watchdog and keep a close watch on the business throughout its continuity. This duty to inform applies only if the information is newsworthy. The law does not intend that a debtor, who is perfectly aware of imminent discontinuity and who has already taken the appropriate measures, be informed.

Possibility to notify voluntarily – If the business does not take the necessary measures within one month from the date of notification to guarantee the continuity of the economic activity for a minimum period of 12 months, the accounting professional could voluntarily inform the president of the Enterprise Court about it. This here is therefore an optional duty to notify. In such scenario, the provisions that sanction any violation of professional secrecy do not apply.

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