The alarm bell
rings on cash,not just books.

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.

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.

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.

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.

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.

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.