Director Liability in Belgium: Risks and Protection

The Director Liability Regime

The Belgian Code of Companies and Associations (CCA) profoundly reformed the director liability regime in Belgium. Articles 2:56 to 2:58 of the CCA define a clear framework with, for the first time, liability caps.

Types of Liability

Directors of Belgian companies can be held liable at several levels:

Civil Liability

Management Fault

Directors are responsible for faults committed in the exercise of their mission. The CCA distinguishes:

• Occasional minor faults: the "prudent director" standard applies
• Serious faults: violation of the articles of association or the CCA
• Intentional faults: fraudulent acts

Joint and Several Liability

In a collegiate body (board of directors), decisions are made collectively. Directors are jointly and severally liable for decisions taken, unless:

• The director proves they did not participate in the faulty decision
• They recorded their opposition and notified the board
• They reported the fault to the general meeting

Liability Caps (Article 2:57 CCA)

A major CCA innovation, the caps limit director liability based on company size:

Exceptions: these caps do not apply in cases of:

• Intentional fault or serious tax fraud
• Habitual minor fault
• Third-party liability (tort)

Criminal Liability

Directors may face criminal prosecution for:

• Misuse of company assets: using assets for personal purposes
• Forgery: falsification of documents
• Bankruptcy offenses: intentional aggravation of insolvency
• Tax offenses: tax fraud, failure to file
• Environmental and social offenses

Means of Protection

1. D&O Insurance (Directors & Officers)

D&O insurance covers defense costs and indemnities owed by directors. It is strongly recommended and often taken out by the company itself.

2. Discharge

The general meeting may grant discharge to directors for their management during the fiscal year. Discharge covers management acts known to shareholders but does not protect against:

• Concealed faults
• Third-party claims
• Criminal liability

3. Exoneration Clause

The CCA allows statutory clauses limiting director liability, within the limits of legal caps.

4. Good Governance

The best protection remains good governance:

• Making informed and documented decisions
• Following conflict of interest procedures
• Keeping detailed minutes
• Surrounding yourself with competent advisors

Conclusion

Are you a director looking to protect yourself? LegalBelgique advises you on the best protection strategies: D&O insurance, statutory clauses, governance procedures. Secure your mandate today.