The new Belgian Code of Companies and Associations: 7 practical novelties
As from 1 January 2020, the mandatory provisions and also – to the extent that nothing is stipulated in the articles of association of the concerned company – the default rules of the new Belgian Code of Companies and Associations (hereinafter “BCC”) are fully applicable to all companies. This means that, as from 1 January 2020, you, as an entrepreneur, have to take into account a number of additional rules. In the present article, we clarify 7 practical novelties in the BCC for you.
Procedure of conflict of interest
From now on, a director involved in a conflict is obliged to abstain from participating in the discussion and the voting on the concerned act or transaction. In case all directors have a conflict of interest, the general assembly of shareholders shall take the concerned decision. If the sole director is also the sole shareholder, the decision can be taken as usual.
Prohibition on cumulation within the board of directors
Under the former Belgian Company Code, a person within the board of directors could exercise various “duties”, namely as director/natural person AND as permanent representative of a director/legal person. This way, it was possible to keep control within the board of directors.
The BCC now explicitly states that a director/natural person is no longer entitled to exercise the function of permanent representative of a director/legal person within the same board of directors, or vice versa. This implies that a cumulation of various functions within the same board is prohibited. Nevertheless, the BCC offers more flexibility to simplify and customize your governance model.
In the past, the scope of the powers of daily management was unclear in jurisprudence and legal doctrine. The BCC clarifies this and states that the daily management covers the actions and decisions that (i) are not beyond the needs of the company’s daily operation, (ii) are of less importance or (iii) are urgent, and thus do not require the intervention of the board.
Convocation of the General Meeting
Under the BCC, the board of directors is obliged to convene the General Meeting upon request of the shareholders who represent one tenth of the share capital or of the shares. In the former Belgian Company Code, the minimum threshold was one fifth of the share capital.
From now on, every dividend payment in a private company (“BV”) or cooperative company (“CV”) must be preceded by a net assets value test and liquidity test. The net assets value test is based on the regulations under the former Belgian Company Code. The liquidity test is new and implies that the board can only make a payment provided the company’s liquidity position would not be jeopardized within a period of 12 months starting from the payment date. The directors shall be held liable for any violation of this article.
Modified capital repairment procedure
Following the abolition of the share capital, the alarm bell procedure in the private company and cooperative company is also changed accordingly. The alarm bell procedure is only to be applied in case the net assets value is negative, or are at risk of being negative, and in case it can be expected that in the 12 next months the company’s liquidity position would be jeopardized.
Additional information in the share register
The BCC determines that from now on, some extra items must be mentioned in the share register, as for instance: the total number of shares issued by the company, the total number of shares per type, the statutory transfer restrictions and, if requested, all transfer restrictions resulting from agreements or issuance conditions. This as a counterweight for the flexible way in which membership rights and transfer restrictions under the BCC can be contrived (unequal voting rights, unequal profit distribution, preferential dividend rights, etc.).
However, the BCC does not only impose new and additional regulations, it also offers a great deal of opportunities. Even though the deadline to align your company’s articles of association is 2024, it can already be useful to exploit these opportunities by means of an amendment of your articles of association.
Sara Burm and Nathan Declerck
De Langhe Advocaten
Published in VOKA – Entrepreneurs, VOKA Kamer van koophandel West-Vlaanderen en Oost-Vlaanderen, edition 2 2020.