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What does the new company legislation mean for your company?

Thursday 11/06/2020
Wat betekent het vernieuwde vennootschapsrecht voor uw onderneming

The new Belgian Code of Companies and Associations Code (BCC) makes company law simpler and more flexible.

  • When do you need to amend your company’s articles of association at the very latest?
  • In the meantime, do the rules of the new company legislation apply, even if you have not yet amended your articles of association?
  • How much capital do you need to set up a bv?

There is a great deal of uncertainty among many companies about when exactly they need to amend their articles of association and which rules apply to their company in the interim period.

The Belgian Code of Companies and Associations took effect on 1 May 2019, but that does not mean that you have to amend your articles of association in a hurry. Was your company established before 1 May 2019? If so, a phased introduction will apply, giving your company sufficient time to adapt to the new rules and the new articles of association.

Specifically, you still have until 1 January 2024 to bring the articles of association into line with the new code, but remember that the next time you amend the articles of association, you will be obliged to amend them in line with the new legislation!

Even if you have not yet amended your company's articles of association, you must take into account mandatory rules applicable to all companies since 1 January 2020.

Following are the most important from a long list of mandatory provisions:

You must change the name and abbreviation of your company type

The limited liability company (bvba) is no longer, long live the bv. The new limited liability company (bv) is the new standard legal entity in company law and replaces the bvba. Large companies, particularly listed companies, will continue to opt for a public limited company (nv). Several other types of company (CVOA, ESV, LV, Comm.VA...) will be abolished.

You must observe the new conflict of interest rules

In practical terms, conflicts of interest will be controlled even more strictly. Directors with a conflict of interest must abstain from deliberating and voting in both companies and associations. Anyone who violates this rule will be sanctioned more severely. In the event of a conflict of interest, the decision will be taken by the directors who have no conflicting interests. In the exceptional case where all directors struggle with a conflict of interest, the general meeting shall take a decision. The exception for a sole director who is also a sole shareholder, as is the case in many smaller companies, is also retained in the new code.

You no longer have to deposit a minimum capital when incorporating your company

A bvba required a minimum capital of 18,550 euro. A bv is 'capital free’. However, there is still a requirement for sufficient financial capital and a more extensive financial plan. Please note that the initial capital at incorporation must be sufficient to carry out your activities for at least two years - in that sense, 'capital free' is rather short-sighted. More realistically, it refers ‘to tailored to actual needs’. As a founder, you are jointly and severally liable for your company’s commitments for a period of two years.

You are subject to a double balance sheet test

In order to protect creditors, the Belgian Code of Companies and Associations provides for a double balance sheet test for distributions from the assets of a private limited company. This test is applied to all forms of distribution: dividends, repurchasing of own shares, restitution of contributions, compensation in the event of exclusion or resignation. The double test includes a liquidity test and a net assets test.

You cannot take on several roles in the administrative body

You can no longer be a director in your own name and at the same time be a permanent representative of a company director. This heralds the end for a number of company directors with dual roles. In a bv, one or more fully authorised directors remains the norm, but a collegial body is also possible. It is important that the directors should be self-employed and not employees. The permanent representative must be a natural person and can only be a member of the management body in one capacity.

In addition to the above, there are several mandatory provisions concerning the liquidation, the distribution of profits in a bv, the acquisition of shares, profit-sharing and other certificates... in a bv, etc.

The following are important rules of thumb to determine which rules apply if you have not yet amended your articles of association:

  • If your articles of association are more flexible than the WVV stipulates, there is no problem.
  • If your articles of association replicate the old legislation and are stricter than the WVV, you should apply the old and the new rules cumulatively.
  • If your articles of association deviate from the mandatory rules of the WVV, the WVV applies.
  • If your articles of association do not cover a specific issue, the WVV applies.
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Bert Lutin
Bert Lutin
Partner Tax & Legal Services