The alarm bell procedure in Belgium: what happens when a BV or NV runs into negative equity
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The short answer
The alarm bell procedure (alarmbelprocedure) obliges the board of a Belgian company in financial difficulty to convene the general meeting within two months to choose between dissolution and specific recovery measures. In a BV or CV it applies when net assets threaten to become or have become negative, or when the board can no longer be sure the company will pay its debts over the next twelve months (articles 5:153 and 6:119). In an NV it applies when losses push net assets below half of the capital, and again below a quarter (article 7:228). Unless it proposes dissolution, the board must explain its recovery plan in a special report. If the meeting is not convened, damage to third parties is presumed to result from it. The decision need not be published, so suppliers find the warning in the filed accounts.
The rules below come from the Code of Companies and Associations and the Code of Economic Law on Justel, read on 1 October 2026. This is general information for sales and credit teams, not legal advice.
What the procedure is for
The Code of Companies and Associations, in force since 1 May 2019 and for all existing companies since 1 January 2020, gives each capital company a section headed "Alarmbelprocedure". When the balance sheet or cash outlook turns bad, shareholders must be told in time and choose between stopping and a concrete plan. The trigger differs by legal form, because a BV has no capital since the 2019 reform while an NV still needs at least 61,500 euros; see the Belgian legal forms explained.
The triggers per legal form
Legal form | Article | When the alarm bell rings |
|---|---|---|
BV (private limited company) | 5:153 | Net assets threaten to become, or have become, negative; or it is no longer certain the company can pay its debts as they fall due for at least the next twelve months |
CV (cooperative company) | 6:119 | Same two tests as the BV |
NV (public limited company) | 7:228 | As a result of losses, net assets fall below half of the capital; the procedure is repeated below a quarter |
NV (public limited company) | 7:229 | Net assets fall below 61,500 euros: any interested party or the public prosecutor can ask the court to dissolve the company |
The second BV test looks at cash, not the balance sheet: a BV with positive equity can still have to ring the bell.
Step by step: two months, a report, a vote
The situation is established. The clock starts when the board established the situation, or should have under the law or the articles of association.
The meeting is convened. It must be held within two months of that date, unless the articles are stricter.
The board writes a special report. Unless it proposes dissolution, it sets out the measures it proposes to safeguard continuity. The report is mentioned in the agenda; in an NV it must be available at the registered office fifteen days before the meeting. Without the report, the meeting's decision is void.
The shareholders vote on dissolution or on the announced measures. In an NV below a quarter of its capital, dissolution passes with a quarter of the votes cast, abstentions not counted.
Twelve months of respite. In a BV or CV, the board need not convene the meeting again for the same reason during the twelve months after the first convocation. The NV article has no such rule.
Director liability
Presumed causation. If the meeting was not convened as required, damage suffered by third parties is presumed to result from that failure, unless the directors prove otherwise. A supplier who kept delivering after the trigger point does not have to prove the link.
Joint liability. Directors are jointly and severally liable, towards the company and third parties, for damage resulting from breaches of the Code (article 2:56).
A cap, with exceptions. Article 2:57 caps director liability by company size, from 125,000 euros for the smallest companies to 12 million euros for the largest. The cap does not apply to a serious fault, fraud, or a light fault that occurs habitually rather than by accident.
After a bankruptcy. Under article XX.227 of the Code of Economic Law, the curator can hold directors personally liable for the shortfall if they knew or should have known there was clearly no reasonable prospect of avoiding bankruptcy and did not act prudently.
What happens after the meeting
The shareholders can vote to continue with the measures in the report, typically new money from shareholders, a capital increase, shareholder loans, a debt settlement or cost cuts. If creditors need to be bound to a plan, the company can ask the court for protection; judicial reorganisation in Belgium explains what that means for a supplier.
Or they vote to dissolve. That requires an amendment of the articles, a board report and a statement of assets and liabilities no more than three months old, checked by an auditor or certified accountant (article 2:71). The company then goes into liquidation; what it means when a company is in liquidation covers your open invoices.
Negative equity: what it means in the accounts
Equity is the first figure on the liabilities side of the Belgian balance sheet, code 10/15 in the National Bank's filing models. It adds up what the shareholders put in (capital in an NV, contributions in a BV), the reserves and the result carried forward (code 14). When accumulated losses exceed the rest, equity turns negative: on book value, the company owes more than it owns.
The Code speaks of net assets. In its distribution rules (articles 5:142 and 7:212) it defines them as total assets minus provisions and debts, and minus formation expenses and research and development costs not yet written off. Usually that is close to equity.
Negative equity is not bankruptcy. A company is bankrupt when it has durably stopped paying and its credit is shaken (article XX.99 of the Code of Economic Law). A subsidiary funded by its parent can show negative equity for years and still pay every invoice. For a supplier it still means three things: no buffer is left to absorb a bad year, a BV with negative net assets may not pay out dividends (article 5:142), and if the company stopped today, the assets on its books would not cover all creditors.
How a supplier can spot it
Equity in the filed accounts. Read code 10/15 over several years. For an NV, set it against the capital (code 10): below half, below a quarter or below 61,500 euros are the legal thresholds. How to look up Belgian annual accounts shows where to find them for free.
The going concern paragraph. When the balance sheet shows a loss carried forward, or the income statement a loss two years running, the board must justify valuing the company as a going concern (article 3:6). Small unlisted companies must put this in the notes to the accounts (article 3:4).
The Official Gazette. Article 2:8, which lists what companies must file for publication, does not mention the alarm bell decision, so a decision to continue may never appear. You may see the consequences: a capital increase or other amendment of the articles, directors resigning, or a dissolution and a liquidator. How to search the Official Gazette.
The timing gap. Accounts must be approved within six months of the year end and filed within seven (articles 3:1 and 3:10), so the bell can ring between two filings. Combine the accounts with the signals in how to spot a customer in financial trouble and the ratios in the company financial health check.
In Bizzy, the Financials tab of each Belgian legal entity puts equity, capital and the debt ratio side by side over four filed years, with the year-on-year change and the filed PDF from the National Bank, and the Documents tab lists its Official Gazette publications by type. An NV below half its capital, or a BV whose equity has crossed zero, shows up in one row.
What equity is made of, heading by heading: equity in Belgian accounts.
Frequently asked questions
What is the alarm bell procedure in Belgium? A rule in the Code of Companies and Associations: the board of a company in financial difficulty must convene the general meeting within two months, with a special report, to decide on dissolution or recovery measures.
When does the alarm bell procedure apply to a BV? When net assets threaten to become or have become negative, or when it is no longer certain the company can pay its debts as they fall due over the next twelve months (article 5:153).
What does negative equity mean? Accumulated losses have used up everything the shareholders put in, so debts exceed assets. It shows under code 10/15 in the filed accounts.
Is a company with negative equity bankrupt? No. Bankruptcy requires that the company has durably stopped paying and its credit is shaken. Negative equity is a warning sign that triggers the alarm bell procedure, not a legal status.
Photo: the belfry and aldermen's house of Aalst, Jaronax, CC BY-SA 4.0, via Wikimedia Commons