Director: practical guides and steps

A director manages a company or non-profit and represents it towards third parties. Under the Companies Code, the title notably replaces that of manager in the SRL. These guides serve directors in office, those about to take up a mandate and the partners who appoint them.

The role of a director

A director may carry out every act useful to the company's purpose. Only the powers the law reserves for the general meeting fall outside that scope. Directors act alone or within a collegial body, depending on the articles. A legal entity can also hold the mandate, through a permanent representative. Moreover, most company directors fall under the social status of the self-employed. The general meeting decides whether the mandate carries pay. The articles also set the term of office and the representation rules.

Appointing, replacing or dismissing

The general meeting normally makes the appointment, unless the articles already name the person. Every appointment, resignation or dismissal must then appear in the Belgian Official Gazette. Without publication, the company cannot rely on the change against third parties. They may therefore still treat the former officer as its representative.

Our guide to changing company officers details the formalities, deadlines and documents.

A liability to take seriously

The mandate commits you. First, a director answers to the company for management errors. Directors also answer to third parties for breaches of the Companies Code or the articles. In addition, certain unpaid tax and social security debts can fall on them personally.

The Companies Code caps that liability according to company size. However, the caps do not apply to serious fault, repeated minor fault or fraudulent intent. Our guide to director liability also covers the insurance that protects company officers.

When the company struggles

Financial trouble increases the board's duties. If an SRL's net assets risk turning negative, the board must convene the general meeting. Belgian practice calls this the alarm bell procedure. Keeping the board informed of cash tensions also shows diligence.

Continuing a loss-making activity with no reasonable prospect of recovery can also create liability in a bankruptcy. So act early. For example, judicial reorganisation offers a stay to negotiate with creditors. If the situation stays hopeless, our guide to bankruptcy explains the process and its consequences for managers.

Good habits for a director

• Record major decisions in written minutes.
• Track cash and tax debts every month.
• Publish every board change without delay.
• Check the cover of a liability insurance policy for officers.
• Record in writing any disagreement with a board decision.

A well-run mandate protects both the company and your own assets. The text of the Companies Code and company publications are available on the FPS Justice eJustice website.