Poperinge · Holding and consultancy since 2011

The alarm bell
rings on cash,not just books.

Most directors know the net assets trigger. Fewer know the second one: when it is no longer certain the company can pay its debts over the coming twelve months. A healthy-looking balance sheet can still ring it, and the board then has two months.

  • 2011since
  • 2months to act
  • 12months ahead
  • Bothtests apply
THE ALARM BELL · WHAT IT ASKS Two tests, not one 50 % complete Net assets, and liquidity Twelve months ahead Two months to convene A written special report First conversation Free, no obligation Next step « We reply within 2 business days »
What we do

Four things, two tests first

Net assets and liquidity get tested together, because the second one rings on companies that look fine on paper.

How it works

How we work

Test the position on net assets and on the twelve-month cash horizon together, identify the date a clock actually started, get the reasoned report and the meeting done inside two months, and keep the record that shows it happened.

Free first conversation

Where the business is, told plainly.

Both tests applied

Balance sheet, and twelve months of cash.

The clock identified

From when it started, not when it was noticed.

Advisers brought in

Lawyer and accountant, before decisions land.

Working together

Ways to work with us

Quoted per engagement in euro after a first conversation. Legal and accounting work is done by those professionals and billed by them.

A position review

Where a business stands, on both tests.

  • Net assets tested
  • Twelve-month cash horizon
  • Trigger date identified
  • Written findings
  • Options including the hard ones
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What we will not do

Said up front, because the liability is personal.

  • No legal advice
  • No accounting or tax advice
  • No distribution signed off blind
  • No promise a business survives
  • No investment services
Read why

Every engagement is quoted after a free consultation. No subscription.

A typical week Mon Review Tue Test Wed Report Thu Convene Fri Decide
How we work

The trigger most directors have never been shown

GREJONCO SRL was created on 1 February 2011 and is registered with the Crossroads Bank for Enterprises under number 0833.433.502, with its registered office at 29 Pezelstraat in Poperinge, West Flanders. The registered activities are business and management consultancy and the activities of a holding company, and the company has had one director throughout.

Belgian company law gives the board of a limited liability company an alarm bell with two triggers. The first is the one everyone knows: net assets negative, or threatening to become so. The second is about liquidity, and it rings when it is no longer certain the company can pay its debts as they fall due over at least the next twelve months. That second test is the one that catches people, because a company can present a reasonable balance sheet and still meet it. Once either is met, the board has two months from when the situation was established, or ought to have been, to convene a general meeting and put a reasoned special report proposing either dissolution or measures to restore the position. The consequence of saying nothing is what gives the provision its teeth: damage suffered by third parties is then presumed to result from the failure to convene, which means a director is disproving causation rather than a claimant proving it. The same twelve-month liquidity question governs distributions, where directors are jointly liable for getting it wrong. And for a sole director there is nobody else in the room to notice the date.

See how we work

Frequently asked

The questions we get most

What exactly is the alarm bell procedure?

A duty on the board of a Belgian limited liability company to act when the company's position deteriorates past a defined point. There are two triggers: net assets negative or threatening to become negative, and separately a liquidity trigger where it is no longer certain the company can pay its debts as they fall due over at least the next twelve months. Once either is met, the board has two months to convene the general meeting with a reasoned report proposing dissolution or recovery measures.

Our balance sheet looks fine. Can the alarm bell still ring?

Yes, and that is the point most often missed. The liquidity trigger is not a balance sheet test. It asks whether it remains certain that debts can be paid as they fall due across the coming twelve months. A company with respectable net assets but a known payment it cannot meet in eight months' time can be squarely within it. Looking only at the accounts is how boards discover the clock has been running for a while.

What happens if the board simply does nothing?

The damage suffered by third parties is presumed to result from the failure to convene the general meeting. That presumption is the whole mechanism: instead of a creditor having to prove that the director's inaction caused their loss, the director has to show it did not. It transforms the evidential position in a dispute, and it is the reason the two months should be treated as a hard deadline rather than guidance.

Can we still pay a dividend?

Only if it passes both tests. A Belgian limited liability company has no capital in the former sense, so a distribution is subject to a net assets test and a liquidity test asking whether the company will remain able to pay its debts as they fall due over at least the following twelve months. Directors are jointly and severally liable for a distribution made in breach of the liquidity test, which puts it among the few company law failures that reach a director's own money.

Does the liability cap protect me?

Less than most directors assume. The Code caps directors' liability by reference to company size, but the cap does not apply to minor fault that occurs repeatedly rather than occasionally, to serious fault, to fraudulent intent or intent to harm, nor to certain tax and social security debts which have their own regimes. Treating the cap as a general shelter is a mistake, and the exceptions describe exactly the situations in which a claim is most likely to be brought.

I am the only director. Does that change anything?

In law, no. In practice, considerably. Every one of these duties assumes someone notices a date, prepares a report and records a decision, and a sole director has no colleague to catch the step that gets missed. So the discipline has to be deliberate rather than social: the tests reviewed on a schedule, conflicts declared and minuted even when there is nobody to declare them to, and the record kept because it may have to be produced years later.

Want to know where a business actually stands?

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