- Corporate Law and M&A
- Leo Peeters - Alain De Jonge
- CAC , Company and Associations Code , company , NV/SA , public limited company , CV/SC , cooperative company , private limited company , partnership , BV/SRL
On 28 February 2019, the Chamber approved New Companies and Associations (CCA) Introduction Law which is due to come into force on 1 May 2019.
The purpose of this reform is to simplify and modernize our corporate law.
The government hopes to make Belgium more attractive, and thus more competitive, as a country for establishing companies. Our neighbouring countries have done the same.
What are the practical implications for existing companies, associations and foundations, and those still to be constituted or transformed?
The CCA abolishes a number of company forms, and integrates them into the remaining company forms.
Seven company forms will continue to exist, including the following main forms: the partnership, the BV/SRL (private limited liability company), the NV/SA (public limited liability company) and the CV/SC (cooperative company).
All other company forms will be abolished and integrated into the closest corresponding company form. These are:
The BV/SRL (private limited liability company) will become the standard legal entity, or the legal entity by default.
The NV/SA (public limited liability company) will remain the company form for larger companies and listed companies.
The CV/SC (cooperative company) will return to the original idea of the cooperative.
The partnership is the basic company form without legal personality, with the VOF/SNC and the CommV/SC as variants with legal personality.
Companies can also be recognized as agricultural, recognized cooperative or social enterprise.
The European companies, namely the SE (European Company), the SCE (European Cooperative Company), and the EEIG (European Economic Partnership) continue to exist because they are regulated at European level.
1.1.1 The BV/SRL (private limited liability company) will become the most flexible company form, with ample scope for adaptation of contracts
Belgian entrepreneurs often decided against a BVBA/SARL (private limited liability company), because certain interesting aspects of a NV/SA (public limited company) were not available to it, e.g. a preferential dividend, authorised capital, interim dividend, issuance of profit-share shares, certificates, warrants and convertible bonds.
From now on, these possibilities will also be available to the BV/SRL (private limited company). Partners will be able, as it were, to tailor the BV/SRL (private limited company) to fit their enterprise.
It is also a company form which is easy to use in an international context.
1.1.2 The BV/SRL (private limited liability company) ceases to be a company with share capital
A minimum capital is no longer required for the formation of a BV/SRL (private limited liability company).
The terms capital, minimum capital and capital protection will be abolished. A contribution must still be made, but the item "capital" will disappear from the annual accounts and will be replaced by the term "assets". These assets must enable the company to finance its activities and pay its creditors.
Due to the disappearance of provisions for the protection of capital, new mechanisms have been created and existing protections for creditors have been strengthened.
They are the following measures:
Another new feature of the BV/SRL is that the shares can be sold freely where previously the approval of the other shareholders was required. To prevent unexpected sales by the shareholders, transfer restrictions must be provided for in the articles of association.
The NV/SA (public limited liability company) is reserved for very large companies and listed companies.
However, it is also possible for a BV/SRL (private limited liability company) to become a listed company. And conversely, it is still possible for most existing NV/SA's (public limited liability companies) to continue operating in that form, even if their size is not as large as foreseen in the new legislation.
The CCA provides simplified legislation regarding the NV/SA (public limited liability company).
Thus, for instance, the redemption of own shares becomes much simpler, although it is linked to more stringent rules aimed at creating equal treatment of shareholders, and greater transparency at the resale of redeemed shares.
This form is reserved for genuine cooperative purposes and requires three founders, but, apart from that, this form must actually follow the rules for the BV/SRL (private limited liability company).
The "non-real" CV/SC (cooperative companies) (now often used as CVBA/SCRL (cooperative limited liability companies) by liberal professionals (doctors, dentists, accounting professionals)) would be pushed towards the BV/SRL (private limited liability company).
It should be emphasized that a CVBA/SCRL that does not transform in time can be dissolved by the court.
The BV/SRL (private limited company) and the NV/SA (public limited liability company) can be formed and managed by one person. This person may be either a natural person or a legal entity.
A cooperative company is still required to have three founders and partners; and a partnership, two founders and partners.
The CCA thoroughly overhauls the rules of management for the BV/SRL (private limited liability company) and the NV/SA (public limited liability company):
The NV/SA (public limited liability company) can organise its management in 3 different ways:
The existing arrangement for the BV/SRL (private limited liability company) continues to apply. It is to be managed by one or more directors holding full powers, but, equally, a collegial body could be set up.
All companies and associations still have the possibility to foresee a day-to-day management.
Under the current law, directors can be removed with immediate effect (ad nutum). Under the new legislation, this can be deviated from by providing protection against removal by a notice period and/or compensation instead of a notice period.
Directors with a conflict of interest must abstain from deliberations and votes.
Directors’ liability:
From now on, the BV/SRL (private limited company) and the NV/SA (public limited liability company) will have greater freedom to organise the voting rights of their shareholders as they see fit.
The sole mandatory rule is that there must still be at least one vote per share;
However, this rule can be deviated from:
Although it was previously obligatory for a shareholder to make a contribution in cash or in kind, in order to become a shareholder, the CAC makes it possible to contribute labour or know-how in exchange for a share of the profits.
Companies and associations are both governed by the CCA.
Under the CCA, the non-profit organisations remain intact, despite previous reports that the name would change into "non-profit distributing associations".
An additional criterion has been imposed that the NPO should have one or more "altruistic aims".
This means that henceforth the association may perform unlimited economic activities, provided it distributes no profits to its members or directors, unless the latter form part of the beneficiaries of the altruistic aim of the association (e.g. as may be the case for an association for people with a specific illness, which is managed partly by people suffering from this illness).
Under the CCA, the real seat doctrine is replaced by the incorporation doctrine. This means that from now on a legal entity will be governed by the company and association law of its registered office under the articles of association, even if it has its headquarters in a different country.
The introduction of the CCA will require most companies and associations to adapt, no later than 1 January 2024, their articles of association, and in certain cases the shareholders' agreements and the management and directors' agreements to, amongst others, the following changes:
This is only a limited overview of the most important changes. This list must be adjusted according to each company and association, their articles of association and organization.
To find out when your company and/or association must comply with the CCA, we refer to our relevant article that you can consult by clicking here.
Please bear in mind that if an amendment is made to the articles of association after 1 May 2019, the entire articles of association must be immediately adapted to the new CCA.
Please do not hesitate to contact us for further information or assistance concerning this.