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#Audit #Accountancy #Company Form #General Partnership (VOF)

Dissolution and liquidation of a VOF or CommV

Wednesday 25/11/2020
Ontbinding en vereffening van de VOF

After 25 years in business, you decide to cease your company activities. You are retiring or moving into a different career direction, making your company redundant. In such cases, there is usually no other option but to dissolve and liquidate the company. Your accountant can certainly assist you with this process.

The rules pertaining to the dissolution and liquidation of a VOF and/or CommV have recently been amended. Irrespective of whether the company was incorporated under the old or new company legislation (in force since 1 January 2020), the procedure to be followed is the same in both cases.

Ordinary procedure: dissolution and liquidation of a VOF and/or CommV

The procedure always involves the following three stages:

Dissolution of the company:

The dissolution of a company requires the following two documents to be drawn up:

  • The directors must explain the proposal to dissolve the company in the management board report, which must include the motivation for and consequences of the dissolution.
  • A statement of assets and liabilities must be attached to the management board report. This statement must be drawn up intermittently and not finalised more than three months prior to the general meeting (which must decide on the proposal to dissolve the company).

Once these documents have been drawn up, the extraordinary general meeting can be convened. It may then decide to dissolve the company and appoint a liquidator. Once the decision of the general meeting has been published in the Belgian Official Gazette, the company is officially in liquidation.

Liquidation activities:

The liquidator can now execute his/her task. The company's assets can be sold and debts can be repaid. However, any accounting obligations (VAT return, filing of annual accounts, corporation tax return, etc.) shall still apply.

Finalisation of the liquidation process

Once the assets have been sold and debts repaid, the liquidator can draw up their distribution plan. The following three options apply:

  • The liquidation is non-deficit: all debts have been paid;
  • The liquidation is in deficit, but it concerns debts to the shareholders who agree to the distribution plan;
  • The liquidation is in deficit: the proceeds from the sale of assets are not sufficient to pay all debts. The distribution plan must then be submitted to the Commercial Tribunal, which must approve the plan.

Once the distribution plan has been drawn up, an extraordinary general meeting may decide to finalise the liquidation. This meeting does not have to be held in the presence of a notary. Once the resolution of the extraordinary general meeting has been published in the Belgian Official Gazette, the company has been definitively liquidated.

Alternative procedure: one-day procedure

You can also opt for an alternative procedure, in which the dissolution and liquidation are executed in a single deed. For this, the following conditions must be met in cumulative order:

  • The general meeting has not appointed a liquidator;
  • All debts owed to shareholders and third parties have been repaid, the necessary funds have been consigned or a written confirmation is available that the claim no longer needs to be paid;
  • All shareholders agree to the dissolution and liquidation;
  • If there are residual assets, they should be distributed among the shareholders;
  • The necessary reports have been drawn up.

The report shall consist of the following three documents:

  • The directors shall explain the proposal to dissolve the company in their report to the management board, which shall include the motivation for and consequences of the dissolution.
  • A statement of assets and liabilities must be attached to the management board report. This statement must be drawn up intermittently and shall not be finalised more than three months prior to the general meeting (which must decide on the proposal to dissolve the company).
  • If a statutory auditor has been appointed by the company, or if there is no statutory auditor, the management board must appoint a company auditor or an external auditor who shall report on this statement of assets and liabilities. Their audit report, intended for the shareholders of the company, shall indicate, among other things, whether the statement provides a true reflection of the status of the company.

In the absence of the necessary reports, the decision of the extraordinary general meeting to dissolve the company shall be null and void. 

Finally, the extraordinary general meeting may decide on the dissolution and liquidation of the company. This does not have to be executed in the presence of a notary. However, the decision must be published in the Belgian Official Gazette.

Summary

The two procedures can be summarised as follows:

Dissolution and liquidation of a VOF and/or CommV in 2 deeds

  • Statement of assets and liabilities (not older than 3 months), which can still contain debts; 
  • No need for an auditor's or external auditor's report;
  • Private (not in the presence of a notary) dissolution and liquidation report from the extraordinary general meeting;
  • Filing at the Business Registry and publication in the Belgian Official Gazette;
  • Appointment of a liquidator; 
  • Drawing up of a distribution plan;
  • Agreement on the distribution plan (agreement is required from the shareholders and in some cases also from third party creditors and/or the Commercial Tribunal); 
  • Private (not in the presence of a notary) report on the closure of the extraordinary general meeting;
  • Filing at the Business Registry and publication in the Belgian Official Gazette.

Dissolution and liquidation of a VOF and/or CommV in 1 deed

  • Statement of assets and liabilities (not older than 3 months), which may still contain debts; 
  • An auditor’s or external auditor’s report;
  • Private (not in the presence of a notary) dissolution and liquidation report from the extraordinary general meeting;
  • Filing at the Business Registry and publication in the Belgian Official Gazette.

In practice

In practice, the one-day procedure is frequently used. It has a number of advantages: it is simpler, there is no need to appoint a liquidator, the general meeting only has to convene once and there is only one publication in the Belgian Official Gazette. Moreover, your company auditor or external auditor will have made a judgement on the status of your company’s assets and liabilities. This means that you can always be safe in the knowledge that your company’s dissolution and liquidation procedure was implemented in accordance with best practice.

Moore Audit - your service provider

As your service provider, we can fully support you through this process. This may include the following: drawing up the necessary reports, supervision of the liquidation and dissolution process, completion of the necessary legal formalities (withholding tax return, corporation tax return, forms for publications in the Belgian Official Gazette etc.). 

Do you have any further questions, or would you like specific advice? If so, please do not hesitate to contact our experts for bespoke advice. Feel free to contact us.

Contact one of our experts
Koen van Eupen
Koen Van Eupen
Partner - Audit
Pieterjan Boeykens
Pieterjan Boeykens
Manager Audit