As mentioned in our newsletter of March 1, 2019, the Belgian Parliament has finally approved the law "introducing the Companies and Associations Code and containing various provisions" on February 28, 2019 (BCCA).

In our newsletter of March 8, 2019, we discussed the main principles as well as the transitional regime of the BCCA. This newsletter discusses the new regime of the private limited liability company (besloten vennootschap (BV) / société à responsabilité limitée (SRL)) (BV/SRL).

The BV/SRL replaces the current BVBA/SPRL. The BV/SRL is expected to become the new 'by-default' Belgian company type, showcasing the flexibility that is one of the cornerstones of the reform of Belgian company law.

The BV/SRL: No capital required…

Whereas the BVBA/SPRL needs to have a registered share capital of at least EUR 18,550, the the BV/SRL does not have a registered share capital. In the same vein, the BV is no longer obliged to create a legal reserve fund through accumulation of its profits.

Parties incorporating a BV/SRL need to consider whether the equity part of the BV/SRL balance sheet is sufficient in view of the planned activities of the BV/SRL and the other funding sources (including debt) of the BV/SRL. This requires a more detailed and extensive financial plan than under the former company code. Insufficient funding can, as before, lead to founders’ liability for losses incurred by third parties. However the BCCA allows that under certain conditions some parties to the deed of incorporation can be qualified as “mere subscribers”, who do not run a liability risk as a founder. This was previously only possible in the NV.

Shareholder contributions are part of the equity of the BV/SRL and are represented by shares in the BV/SRL. Subscriptions to shares can be done in cash, in kind and in industry (e.g. services to be performed by the shareholder). Specific rules and reporting obligations apply in order to safeguard the valuation of contributions in kind and the impact of the inability of the contributing shareholder to perform its obligations under the contribution in industry (e.g. as a consequence of death, illness or other causes). Notably, the rules on the so-called ‘quasi-contribution’ (e.g. when the company, within two years of its formation, acquires assets from its founders through a sale) are abolished for the BV/SRL.

There will no longer be a direct link between the value of the contribution and the rights attached to the shares:

  • The BV/SRL needs to issue at least one share with voting rights. In principle, each share has one vote but the articles of association can deviate from this principle and provide for shares without voting rights or shares with multiple voting rights.
  • In principle, each share gives right to an equal part of the profits or the liquidation balance. Again, the articles of associate can deviate from this principle and provide varying dividend or profit rights for different classes of shares. The rule that each share needs to participate in the profits or the liquidation balance however remains so no share can be excluded entirely from profits (the remainder of the so-called Clause Léonine).

In addition to shares, the BV/SRL will also be able to issue all categories and forms of securities that are not prohibited by law, such as convertible bonds, bonds, profit certificates, subscription rights and certificates. All those securities can be issued in dematerialized form and/or offered to the public, except for shares which can only be issued dematerialized if the BV/SRL is listed.

… but with protection of the company’s equity position

With no more registered share capital to protect creditors, the equity of the BV/SRL is protected in other ways. The BCCA introduces a new regime for distributions with a double distribution test:

  1. Net assets test: no distribution can occur if the net assets of the company are negative or would become negative as a consequence of such distribution. If the company has non-distributable reserves, these can also not be distributed.
  2. Liquidity test: The board must ascertain that the company can, in light of reasonably foreseeable developments, continue to repay its debts maturing during a period of at least 12 months as from the date of distribution.

This double distribution test also impacts the rules on share buy-backs, financial assistance and the alarm bell procedure. The BCCA introduces the power for the board of the BV/SRL to pay out interim dividends. Again, this can only occur within the limits of the net asset and liquidity test. Freedom to transfer shares

The transfer of shares of a BVBA/SPRL requires, subject to certain exceptions, the approval of at least half of the shareholders owning at least 75 percent of the shares, after deduction of the shares to be transferred. In the BV/SRL, the articles of association can provide for a different mechanism or simply do without this restriction altogether. This flexibility will make it much easier to structure share transfers through contractual tag-along and drag-along, right of first offer or right of first refusal structures.

If the shareholders agree certain transfer restrictions, these can be made public (in the articles of association). A transfer of shares in breach of transfer restrictions that are made public is not opposable to the company and this irrespective of the good or bad faith of the transferee.

The BCCA also introduces a flexible exit and exclusion mechanism of shareholders using the company’s own funds. This mechanism is similar to the system that currently exists within the cooperative company. The new system will make it easier to exclude certain shareholders in certain circumstances such as good leaver/bad leaver situations. In the same vein, a squeeze-out by a 95% shareholder is now also possible in the BV/SRL.


The legislator also significantly amended the governance of the BV/SRL as compared to the BVBA/SPRL.

Directors and not managers

The BV/SRL is managed by one or more directors, who cannot be qualified as employees for purposes of labor law, that can form a collegial board and that are natural or legal persons.

Directors are appointed by the general meeting of shareholders. Directors can be appointed in the articles of association.

Directors can be dismissed by the meeting of shareholders at all times without giving reason or without giving notice, unless when they have additional protection granted in the articles of association or the decision of the meeting of shareholders appointing the relevant director.

Directors that have been appointed in the articles of association can only be dismissed by a decision of the shareholders amending the articles of association or for cause.

Powers of the directors

Every director has the power to do all things that are necessary or useful for the fulfilment of the company’s purpose, other than the powers that are reserved to the shareholders’ meeting by law. The articles of association can limit these powers but such limitation is not opposable to third parties.

The directors and the board need to respect the conflict of interest procedure that is provided by the new legal framework.

Every director, or in the event the board is collegial in nature, the board, can validly represent the company. The articles of association can give the power to represent the company to one or more directors acting alone or together. The articles of association can limit these powers of representation but such limitation is not opposable to third parties.

The board can delegate daily management to one or more daily managers that can form a collegial board. The nomination and dismissal procedure and their powers are set out in the articles of association. The directors are responsible to supervise the daily managers. The daily management is opposable to third parties if validly published. Limitations to the powers of representation of the daily managers are not opposable to third parties.

The BV/SRL is bound by the acts of the board, the daily managers (within their powers) and the directors that have the power to represent the company in accordance with the law even if they act outside the company’s purpose, unless the company evidences that the third party was aware, or should have been aware in view of the circumstances, of the fact that the act was outside the company’s purpose. The mere publication of the articles of association is again not sufficient proof that the third party was aware.

Listing of the BV/SRL

Under the current code, the shares (or other securities) of a BVBA / SPRL cannot be listed on a public market. The BCCA explicitly allows the BV/SRL to “go public” and have its shares (or other securities) listed on an exchange. In such case, an additional set of rules must be complied with.