On Monday 4 June 2018, the draft law for the new Belgian Companies Code was submitted to Parliament. The proposal seeks to fundamentally modernize Belgian company law.
Considering the broad and sweeping nature of the changes, the new code will affect every Belgian company and any foreign company with business in Belgium in various ways.
Eight proposed changes to keep in mind
- The transformation of the BVBA/SPRL into a light vehicle company (BV/SRL) with a flexible legislative framework without capital requirements and with enhanced flexibility for share transfers.
- The introduction of multiple voting shares through an amendment of the articles of association: in an unlisted company, the freedom to tailor these multiple-voting rights will be quasi-unrestricted, whereas in a listed company, it will only be possible to attach double voting rights to shares subject to them having been held by the same shareholder for two years.
- The introduction of a cap on damages regarding director's liability (linked to the size of the company), which will cover most types of liability.
- The abolishment of several company forms (e.g. CommVA/SCA, CVOA/SCRI): existing companies incorporated in a to-be abolished form will have to convert into another corporate form before 2024 or will be converted by law. However, the rules on mandatory law that apply to these entities' most logical new corporate form will already apply as from the first of January 2020.
- The redefinition of the CVBA/SCRL as a legal form for companies with a specific cooperative purpose: companies that do not meet the new requirements will have to convert before 2024.
- The abandonment of the real seat theory in favor of the incorporation theory: the new code will apply to companies incorporated in Belgium, regardless of the location of their real seat or their centre of main activities/interests.
- The redefinition of the association: associations will be distinguished from companies based on the distribution of their profits (such is not allowed for associations) instead of being based on the nature or scope of their activities (i.e., associations will be allowed to pursue a profitable activity).
- The abolishment of the legal distinction between commercial and civil companies.
The Belgian government hopes Parliament will adopt the proposal by the fall of 2018. The new code, as it stands today, would enter into force on the first of January 2019. Companies incorporated after the new code's entry into force will immediately be governed by the new code. Companies incorporated before its entry into force:
- will be governed by the new code as from 1 January 2020 (with the possibility of an earlier opt-in);
- will have to change their articles of association to comply with the new code in the event of any amendment to their articles association after the new code's entry into force (and this no later than the first of January 2024).