The consequences of non-compliance with transparency obligations: obligation to file annual accounts and UBO obligations

Non-filing of annual accounts

Both companies and associations are required to file their annual accounts each year with the competent authorities. The filing must take place:

• No later than seven months after the end of the financial year; and
• Within thirty days after approval by the general meeting.

This obligation applies regardless of the actual activities of the legal entity and remains in force as long as it legally exists, including inactive entities and legal entities in liquidation.

Consequences of non-filing or late filing

Failure to comply or late compliance with the filing obligation may give rise to various legal consequences:

Surcharge: increased filing costs

In the event of late filing, a surcharge is automatically applied. A refund can only be requested in cases of force majeure, within a period of 18 months following the end of the financial year.

Directors’ liability

Directors risk personal and joint liability for damages resulting from the non-filing. In this context, the burden of proof is reversed: it is up to the directors to demonstrate that the damage suffered was not caused by the non-filing.

Criminal and tax sanctions

Non-filing may be subject to criminal prosecution and may result in fines and, in exceptional cases, imprisonment. In addition, the tax authorities may impose administrative fines ranging from 25 to 250 euros per month of delay, on top of the increased filing costs.

Judicial dissolution and removal from the CBE

The enterprise court may, at the request of the Public Prosecutor or any interested party, proceed with the judicial dissolution of the legal entity. Unlike the previous regime, a single financial year without filing may now suffice if no regularisation occurs.
If no annual accounts are filed for three consecutive financial years, an automatic removal from the CBE may also follow.

The company continues to exist legally even after this administrative removal. This removal can be lifted by filing the missing annual accounts.

Failure to comply with UBO obligations

The UBO register aims to ensure transparency regarding the ultimate beneficial owners of companies and associations. The legal entities concerned are required to provide accurate, complete and up-to-date information and to confirm it at least annually.

Sanctions in case of non-compliance

Administrative fines

In the event of non-, late or incorrect communication of UBO data, administrative fines may be imposed, ranging from 250 euros to 50,000 euros. These sanctions may also be imposed on the ultimate beneficial owners themselves if they fail to provide their data to the legal entity.

Administrative removal from the CBE

In certain cases, the company or association may be removed ex officio from the CBE, including when:

• no UBO information has been provided for several years and, in addition, no publication has been made in the Belgian Official Gazette (Annexes) over the past seven years. According to the legislator, this situation allows for the removal of dormant legal entities that no longer show any signs of activity. This situation concerns entities subject to a publication obligation in the Belgian Official Gazette, thereby excluding partnerships.
• no regularisation occurs within sixty days following the imposition of an administrative fine; or
• the annual confirmation obligation is not complied with.

A removal does not terminate the legal personality, but it does prevent the normal exercise of rights. Continuing activities despite removal may be subject to criminal sanctions. In addition, claims brought by the legal entity are automatically declared inadmissible.

The removal is published in the Belgian Official Gazette, which may have adverse consequences for the activities of the entity and its relations with third parties, including credit institutions.

Regularisation

Following full and proper compliance with the UBO obligations, the legal entity may request the lifting of the removal. This lifting is also published in the Annexes to the Belgian Official Gazette.

Conclusion

The filing of annual accounts and compliance with UBO obligations constitute essential pillars of Belgian transparency law. The legislator attaches a strict set of sanctions to these obligations, with potentially far-reaching consequences for both the legal entity and its directors. Timely and correct compliance is therefore crucial to avoid financial, legal and reputational risks.