The Belgian parliament adopted the new Companies and Associations Code (the "Code") on 28 February 2019. The Code replaces the current Companies Code and the Law of 27 June 1921 on non-profit associations and foundations and applies to companies, non-profit associations and foundations. The Code inter alia reduces the number of company forms, and replaces the BVBA/SPRL by the BV/SRL.

This AKD Alert on the Code summarizes the key changes it introduces and provides information on its entry into force and the impact of the legislative changes on your organisation.

Key changes

• Reduction in the number of company forms, with the intention to make the BV/SRL (which replaces the BVBA/SPRL) the default company form in Belgian corporate law.  The most important Belgian company forms with legal personality that remain are:

      - the private limited liability company (BV/SRL), which replaces the BVBA/SPRL;

      - the public limited liability company (NV/SA);

      - the cooperative company (CV/SC);

      - the partnership (VOF/SNC);

      - the limited partnership (CommV/SComm).

• High degree of flexibility for the BV/SRL, including the possibility:

      - to issue various categories of securities (except profit shares);

      - to provide for multiple voting rights and preferred shares;

      - to provide less stringent transfer restrictions for shares;

      - to list the shares of a BV/SRL.

• Abolition of the share capital requirement for the BV/SRL, allowing for contribution of work and knowhow and with new rules for:

      - the distribution of profits, requiring a net asset and liquidity test;

      - the so-called alarm bell procedure in the event of sustained losses.

• The main changes with respect to the NV/SA are more flexibility in terms of governance (including the abolition of the ad nutum revocation of a director's mandate) and the possibility:

      - to only have one shareholder;

      - to provide for multiple voting rights.

• Possibility to provide for shares with double voting rights for loyal shareholders in listed companies.
• Possibility for non-profit associations to carry out commercial activities, although profit distribution - the main difference with a company - remains forbidden.
• Specified cap on directors' liability depending on the company's or association's size.
• Adoption of the corporate seat principle, meaning that Belgian company law will apply to any company or association that has its corporate seat under the articles of association in Belgium.

Entry into force

• The Code will enter into force on 1 May 2019 and applies in its entirety to companies and associations formed as of that date.
• The Code's mandatory provisions will apply to existing companies and associations as from 1 January 2020. These will have to amend their articles of association by 1 January 2024 at the latest. Existing companies may, however, also opt in and amend their articles of association prior to 1 January 2020.
• Abolished company forms (such as the Comm.VA/SCA) or cooperative companies that no longer meet the requirements of the Code will have to be converted into another type of company.

What is the impact on your organisation?

Companies and associations will need to amend their articles of association and shareholders' agreements in order to comply with the Code. Our team is at your disposal to assist you with any questions you may have on the Code, and to assess the impact of the Code on your organisation. We can also provide tailor-made corporate advice for your organisation going forward.

Contact

For additional information, please contact Hubert André-Dumont, Timothy Speelman or Nathalie Locht.