Date of reorganisation

Can a corporate reorganisation be backdated or deemed to have already taken place, for example from the start of the financial year?

Backdating legal effects is not authorised under Belgian law. However, certain corporate restructurings, such as mergers and (partial) demergers, are typically performed with a retroactive effect from an accounting perspective. This means that the restructuring will be deemed to have taken place on an anterior date in the accounts of the relevant entities. That date will generally be the date of the financial statements that are used for the restructuring.

Such retroactivity is in principle not accepted for income tax purposes. Still, in practice the tax authorities will accept the retroactivity of the restructuring provided that the retroactivity clause does not go back more than seven months and that it does not hamper the proper application of the tax provisions. There have been cases where an accounting retroactivity in excess of seven months was accepted in light of the specific circumstances of the restructuring.


What documentation is required in a corporate reorganisation?

The documentation that is required depends on the type of corporate reorganisation.

In general, corporate reorganisations require (besides the actual agreements) the drafting of minutes of the meetings of the management boards of the involved entities regarding approval of the transaction and the agreements.

Moreover, for the sale of the assets and liabilities under the continuity regime, the necessary corporate approvals as set out in the Belgian Companies Code will also need to be obtained (eg, approval by the board of directors of the authentic or private sales proposal and approval by the shareholders’ meeting of the sale).

As for (de)mergers, the necessary documentation is specified in the Belgian Companies Code, and includes, among others, special reporting of the executive bodies of the involved entities, special reporting of the statutory auditor, and intermediary statement of assets and liabilities not older than three months, if the last annual accounts predate the (de)merger proposal by more than six months.

It may be advised for some documentation of the restructuring to clearly contain the specific (business) motives of the companies for performing certain operations in order to safeguard the tax neutrality of the reorganisation.

In the event of a transfer of business in the sense of CBA No. 32-bis, the employees affected by the reorganisation must, before the completion of the transfer, receive a written transfer letter containing legally prescribed information with regards to the reorganisation. Specific written notifications and documents must be issued and signed in the event of a collective dismissal or a plant closure, or both.

Representations, warranties and indemnities

Should representations, warranties or indemnities be given by the parties in a corporate reorganisation?

Parties in corporate reorganisation are free to determine the scope of any representations, warranties or indemnities. The exact scope depends, to a large extent, on the type of corporate reorganisation and the relevant sector or industry in which the relevant parties are active.

It is, however, not common practice for the parties to an internal corporate reorganisation to include extensive representations and warranties in reorganisation documentation. Indeed, transfers are often made with very limited warranties covering, for example, capacity of the parties, internal corporate authorisations and title to shares or assets.

This may, under specific circumstances, be different in scenarios where the reorganisation measure is implemented as part of a presale structuring process.

Assets versus going concern

Does it make any difference whether assets or a business as a going concern are transferred?

Under general civil law, for each asset transferred belonging to the business, there must be verification that all asset-specific requirements are being complied with. Some of these requirements can be avoided by opting for a specific procedure in the Belgian Companies Code, which allows a branch of activities or a universality of goods to be transferred under the continuity regime (merger-like procedure).

Moreover, the transfer of assets is as a general rule subject to VAT. Such transfer will, however, not be subject to VAT if these assets constitute a going concern in the sense of the VAT Code and the following conditions are met:

  • both parties to the transaction are VAT registered;
  • the purchaser can autonomously continue a business with the transferred assets; and
  • the purchaser would have been able to deduct the VAT charged by the seller if the transfer had been subject to VAT.

The notion of going concern may also be crucial in the event the assets encompass real estate. The transfer of real estate generally triggers a registration duty of 12.5 per cent (10 per cent in the Flanders region). That duty may not be due if the assets are transferred as a branch of activity by means of certain restructuring operations that meet certain conditions.

Types of entity

Explain any differences between public, private, government or non-profit entities to consider when undertaking a corporate reorganisation.

Corporate law does in principle not differentiate between publicly and privately held companies in a reorganisation. Publicly held companies should, however, when performing a reorganisation, take into account all laws, regulations and requirements that apply only to publicly held companies (eg, disclosure and stock exchange requirements). Additionally, the decision-making process in publicly held companies is more burdensome than that in privately held companies.

The reorganisation of non-profit organisations is much less regulated than that of companies. Since 2009, a number of company law procedures apply mutatis mutandis to non-profit organisations. The reorganisation of non-profit organisations in general requires special attention because the legal end result must in principle be achieved through a concatenation of legal acts.

With regard to governmental entities, these are regulated by additional laws that do not apply to companies, so any reorganisation project would also require an examination of such laws.

Post-reorganisation steps

Do any filings or other post-reorganisation steps need to be taken after the corporate reorganisation takes place?

From a corporate perspective, the following post-reorganisation steps could be applicable, depending on the nature of the transaction:

  • update of the share register;
  • issuance of share certificates;
  • publication of the transaction in the annexes to the Belgian State Gazette;
  • amendment of the registration with the Crossroads Bank for Enterprises;
  • filing of asset purchase agreements and certificates with (in)direct tax and social security authorities; and
  • filing of a notarial certificate in order to release blocked funds.