Lack of creditor protection within a private limited liability company in the event of a capital decrease is discriminatory
The Constitutional Court recently ruled that the difference between the protection mechanism for creditors of a private limited liability company and creditors of a public limited liability company in the event of a capital decrease is not reasonable justified and is therefore discriminatory.
Background
In the past only creditors having a fixed, non-disputed debt receivable which did not yet expire, could claim a security in the event their debtor would effectuate a capital decrease.
The Law of 22 November 2013 (Belgian Official Gazette 16 December 2013, 98849) modified the Belgian Companies’ Code and specified that creditors of a disputed debt receivable can also claim a security in the event of capital decrease of their debtor.
It was, however, somewhat remarkable that this novelty only concerned capital decreases within public limited liability companies (article 613 of the Belgian Companies’ Code) and was not implemented in other limited liability company types such as the private limited liability company (article 317 of the Belgian Companies’ Code) or the cooperative limited liability company (article 426 of the Belgian Companies’ Code).
Constitutional Court
The chairman of the Commercial Court of Antwerp submitted a prejudicial question to the Constitutional Court to verify whether the difference between the protection mechanism for creditors of a private limited liability company and creditors of a public limited liability company in the event of a capital decrease constitute a violation of articles 10 and 11 of the Constitution.
As expected, the Constitutional Court ruled in its judgment of 9 June 2016 that there is no reasonably justification for the aforementioned difference and that therefore the gap in the legislation is discriminatory and violates articles 10 and 11 of the Constitution.
The prejudicial question and the judgment of 9 June 2016 only related to the private limited liability company. The legislator will therefore have to adapt the Belgian Companies’ Code (for example with respect to the cooperative limited liability company) as soon as possible.