The central register: monitoring board bans through a newly established public database

 

 

On 1st of August 2023, the new legislation regarding the Central Register of Board Bans (hereafter: “Central Register”) came into force. The establishment of the Central Register was introduced by the Law of May 4th, 2023 (hereafter: “Law”), under the incentive of the European regulator to promote good governance and fight economic crime. In light of these developments, EY Law’s Non-Profit and Trade Associations team presents a brief overview of the scope of application and new obligations applicable to your (international) non-profit association or foundation.

 

 

Boards bans are not new as they date already since 1934. More specifically, it prohibits a person to serve in any capacity as a manager, director, statutory auditor, executive director, member of a supervisory committee, board of directors or supervisory board, liquidator, or representative of a branch office of a foreign entity (hereafter collectively referred to as “Officers”) for a specified time period ranging from 3 to 10 years following disqualification as a director due to bankruptcy or gross negligence in managing a legal entity. With the Law, the Central Register ensures that potentially existing board bans are checked, monitored, and tracked by the competent authorities prior to the publication of the (re-)election/(re-)appointment of these persons.

 

 

According to European regulation, each Member State must maintain a central register in the form of an online database in order to actively prevent banned directors from assuming new mandates. Managed by the Belgian Ministry of Justice, the Central Register encompasses both criminal and civil bans. Registration procedures will be automated through a link with the Central Criminal Records Office. 

 

 

The Law also introduces new obligations regarding the (re-)election/(re-)appointment of Officers. When filing a deed of (re-)election/(re-)appointment of an Officer, the competent body of the legal entity must attach a signed declaration on honour stating that the person concerned is not subject to a board ban. Failing this, the clerk’s office of the Enterprise Court which receives the deed to be filed will have to send a communication to the competent Indictment Division (in French “Chambre des Mise En Accusation”/In Dutch: “Afdeling Inbeschuldigingstelling”) concerning the absence of this declaration. The latter may, if necessary, check whether the person is not covered by such a prohibition, via the European registry interconnection system. It is therefore essential to make sure to file this declaration, to prevent any delay or complications with the submission. In case it is later discovered that the person concerned did receive a board ban, the clerk’s office will reject the publication. Most important, if the statement is submitted, but provides false information, directors may be held liable and prosecuted for forgery, which would harm the Association's reputation.

 

It seems clear that these new obligations entailed by the Law will further overburden the already cumbersome administrative and publication formalities. Should you require our assistance with the declaration of absence of a ban as director in your organisation or your administrative and publication formalities, please do not hesitate EY Law’s Non-Profit and Trade Associations team.