The deadline for companies set at January, 1 2024 approaches

1. Which companies are concerned?

All BVBA/SPRL (private limited liability companies), including the EBVBA/SPRLU (single person BVBA/SPRL) and the start-up BVBA/SPRL, must be converted into a BV/SRL (private limited liability company).

Cooperative companies (CVBA/SCRL) that do not (or no longer) comply with the cooperative identity must also be converted. The BV/SRL qualifies for this type of company (the old CVBA/SCRL), but other forms are possible, as well.

The  partnership limited by shares (Comm.V.A./Soc Comm A), the cooperative unlimited liability company (CVOA), the agricultural company and the silent and temporary trading companies have disappeared since 1 January 2020. These companies, if still in existence, must also be converted.

2. What are the formalities?

At the latest before January,1 2024, a conversion must take place by means of an amendment to the articles of association. If the articles of association are changed before that date, this conversion must be done at that time. 

If the articles of association are not amended in time, the company, whose form has been discontinued, will automatically be converted into the legal form which matches the best with the old form.

This may seem convenient but beware, in some cases, such forced conversion could not be appropriate and could even lead to unpleasant situations.

For instance, a CVBA can find itself in a legal quandary after an automatic conversion.  Some CVBA’s/SCRL mustbecome a BV/SRL and others may remain a CV/SC. If this is not properly regulated in the articles of association, such company will have an uncertain status.

A partnership limited by shares with several directors may only have one director left after the (automatic) conversion, effectively rendering them unmanageable. The articles of association may  deviate from this rule.

Moreover, even with an automatic conversion, the company is not relieved from the necessary formalities. The director must  take the initiative to effectively amend the articles of association and convene a general meeting within six months after the deadline, i.e. by 30 June 2024 at the latest.

If these steps are not taken, the director(s) risk of being held personally and jointly liable for all damages suffered by the company or third parties due to the failure to comply with this obligation.

3. Bring the articles of association into line with the law

Even existing companies that do not immediately need to be converted are also advised to  bring their articles of association in line with the CAC.

As of 1 January 2020, all mandatory provisions of the CAC apply, even if the articles of association do not mention these. Moreover, the law stipulated that these mandatory provisions must be included in the articles of association.

Statutory provisions that conflict with these mandatory provisions will be deemed not written from that day onwards.  The supplementary provisions of the CAC become applicable only insofar as they are not excluded by the articles of association.

You would therefore do well to review and amend the articles of association to the extent that conflicts with mandatory provisions are avoided and unwanted additional provisions are excluded.

But you are legally obliged to include these mandatory provisions in your articles of association.  This must also be done following an amendment to the articles of association or before 1 January 2024.

4. Make this mandatory amendment to the articles of association an opportunity

The CAC offers a lot of freedom to arrange a lot of things differently than before. It is now possible to provide in the articles of association matters related to your company's specific situation.

Moreover, the fact is that nothing stands still and everything evolves, including your company.

When your articles of association were drafted, the legislation and the situation of your company at that time were taken into account.

With the new law as well as the situation your company is in now, you can take advantage of this update of the articles of association to also look at that and adapt the articles of association to today's situation and rules.

With regard to the current situation of your company, you can ask yourself the following questions, among others:

• Who is involved in my company? Business partners, children, partners, relatives, friends, ...?
• Is it important to provide different types of shares, with or without voting rights or with multiple voting rights?
• How are dividend rights regulated?
• Is my company ready for succession, e.g. to sell it?
• Should I draw up a shareholders’ agreement, an inheritance agreement?

In addition, the legislation provides for the following new features, among others, which may be important:

For the BV/SRL:

•  The possibility of creating different classes of shares;  different voting and profit rights can be  granted to the shares of different classes, although each share must always give the right to profit;
• A more flexible arrangement to make  shares freely transferable in case one of the shareholders wishes to sell its shares. However, this must be clearly provided for in the articles of association. Otherwise, the old rule applies, which was much stricter, i.e. the shares can only be transferred provided the other shareholders agree;
• A BV/SRL, unlike the former BVBA/SPRL, no longer needs a share capital. As a result, as long as you ensure that sufficient funds remain in the company to maintain the activities, existing share capital can be made available.  

A NV/SA can, unlike before, operate with only one director. Through the articles of association, this director can build in his own protection in case of dismissal or can also appoint a successor in case of his death.

•      Shareholders only to meet the minimum number of shareholders required, and to whom one share was given, are not needed any longer.                                              

     Seeds of Law will gladly assist you in drafting/updating your articles of association tailored to your company, its specific situation, all parties involved and the agreements they have made in that context.

Please do not hesitate to contact us at +32 (0)2 747 40 07 or at info@seeds.law.