29,000 companies risk being deleted from the KBO

The Treasury of the FPS Finance recently announced that it will be deleting no fewer than 29,000 companies from the Crossroads Bank for Enterprises (“CBE”) (in two phases). These deletions are visible to all government services and citizens who consult the CBE and are also published in the Belgian Official Gazette. Could this apply to your company and what are the possible consequences? We would like to explain it in this article.

Extension of ex officio deletion in the Crossroads Bank for Enterprises

The Act of 5 November 2023 (“containing various provisions regarding the economy”) amended Article III.42 of the Code of Economic Law (“ WER ”) with effect from 21 December 2023. This article regulates the specific grounds on which the management service of the CBE may proceed ex officio to deregister a company from the CBE. There were already two procedures for ex officio deregistration.

• The first concerns a standard procedure for deletion in the event of incorrect or missing data in a registration that has not been corrected by the entity concerned following a request from the management service (Article III.40 WER).
• The second procedure already contained five specific grounds for ex officio deletion in order to be able to remove so-called “dormant companies” (in Article III.42 of the Code of Civil Procedure).

Two new specific grounds for ex officio deletion have now been added to this article, including non-compliance with UBO obligations.

Failure to comply with UBO register formalities

Under the new law, the KBO management service can officially delete a company if it does not (or no longer) comply with the UBO obligations in one of the following three ways:

• An administrative fine was imposed for failure to correctly comply with Article 1:35 of the Companies and Associations Code (“ WVV ”) regarding the collection of “adequate, accurate and up-to-date information on the ultimate beneficial owners and registration thereof in the UBO register” and the company concerned has not corrected or passed on the data after 60 calendar days;
• The company does not comply with the obligation of Article 1:35 WVV as mentioned above and, moreover, has not published anything in the annexes to the Belgian Official Gazette or in the Belgian Official Gazette for seven years.
• The company has not complied with the obligation to annually confirm its data in the UBO register for more than 1 year.

Consequences of ex officio deletion

Since the deletion is an administrative measure, it has no impact on the legal personality of the company. Nevertheless, the deletion does have significant other consequences, such as:

• A ban on carrying out economic activities, with criminal sanctions as a (possible) consequence;
• Third parties will be informed of the situation by publication in the Belgian Official Gazette. Furthermore, the deletion itself is also visible in the KBO (and can therefore have important commercial consequences). Compliance with the UBO obligations is particularly important in your banking relationships. Banks can postpone certain transactions or even decide to terminate the relationship with your company;
• All legal actions brought by the company shall be inadmissible.

Solution

You can have the UBO formalities fulfilled by your trusted advisor. In addition, you can simplify the annual confirmation and the update of the UBO register in the event of changes by linking your UBO register to the Belgian Official Gazette and/or to the electronic eStox share register. The link to the Belgian Official Gazette ensures that the information that is already available there does not have to be added twice to the UBO register. When the link is made with eStox and automatic processing is enabled, all changes of shareholders with a UBO obligation are immediately registered in the UBO register. Once the UBO register has been fully arranged, the deletion is automatically deleted according to the FPS Finance. The FPS Finance indicated that this currently takes up to 10 days.

Our PKF BOFIDI Legal experts are happy to help you

Do you have any questions about the deletion of KBO? You can always contact our legal experts. This article was written by Irene Tromp, specialized in corporate and business law.