Following the entry into force of the new Belgian Code on Companies and Associations (BCCA) back in May 2019, all Belgian companies and non-profit organisations are obliged to amend their articles of association in line with the provisions of the BCCA before 1 January 2024.
The main purpose of the new BCCA was to modernise the legal framework for companies and associations by making the Belgian corporate landscape more flexible and contemporary. It has resulted in more freedom for shareholders and founders to structure and determine the modalities of their company, as well as a reduction in the number of company forms.
Further to the entry into force of the BCCA, the articles of association of many Belgian companies and associations, incorporated prior to 1 May 2019, contain provisions which are contradictory to the BCCA or which do not allow the company or association to fully benefit from the flexibility the BCCA offers. Furthermore, some of these companies still have a legal form which no longer exists under the BCCA and are subsequently obliged to convert to one of the remaining legal forms under the BCCA.
It is therefore recommended for any Belgian company, association, or foundation incorporated prior to 1 May 2019, to assess whether its articles of association need updating to avoid possible non-compliance with the BCCA (and potential sanctions), whether its legal form needs to be converted or whether it wishes to implement certain new beneficial modalities offered by the BCCA.
1 The bcca's innovative approach to corporate structuring
One of the premises of the BCCA was that a Belgian company should be a customizable instrument whereby its structure, management and directorship should be more adaptable to its specific needs.
Below are some of the new options the BCCA offers to founders and shareholders to implement in the articles of association in order to structure or manage their company:
- Governance models: For a public limited company (“naamloze vennootschap” or “NV” / “société anonyme” or “SA”), the BCCA has introduced three different options of governance models. The first option is the monistic governance model, whereby the company is governed by the traditional board of directors. The second model is the newly introduced dual governance model, consisting of a supervisory board (“raad van toezicht” / “conseil de surveillance”) and an executive board ( “directieraad” / “conseil de direction”), offering the possibility to separate the operations of the company and the supervision of such operations and management. Thirdly, the BCCA now allows for an NV/SA to be governed by a sole director, who holds full management powers.
- Dismissal protection: With respect to the dismissal of directors, the default rule under the BCCA remains that directors can be dismissed ad nutum, meaning at any time and without any motivation or compensation. The BCCA has however introduced the possibility for companies to deviate from the ad nutum principle and grant the general shareholders’ meeting the power to determine a notice period or a compensation in the event of a dismissal of a director. Should a company want to make use of this new possibility, those powers of the general shareholders’ meeting need to be included in the articles of association.
- Voting rights: Under the BCCA, the mandatory rule of "one share, one vote" has been abandoned, allowing the possibility of granting multiple voting rights to (certain) shares in Belgian companies. Companies are therefore given much more freedom and flexibility in tailoring the voting rights and other shareholder rights attached to the shares in their articles of association, highlighting the customizable nature of the governance structure.
- Written resolutions: By way of facilitating the management process, the BCCA includes the possibility for a management body to make decisions by unanimous written resolutions. Under the old Companies Code, such written resolutions could only be taken by the management body in exceptional cases based on urgency and the legal entity's interest. The provisions of the BCCA now allow for decision-making by the management body through unanimous written resolutions for all decisions, except for any matters excluded in the articles of association. However, if the articles of association of a company still refer to the old regime, an amendment of the articles of association is required to enable the management body to make use of the more flexible unanimous written decision-making process offered by the BCCA.
2 Transition and sanctions
Since the entry into force of the BCCA on 1 May 2019, a transition period has been provided as follows:
- As from 1 May 2019: new companies and associations can only be incorporated under the regime of the BCCA;
- As from 1 January 2020: all mandatory provisions of the BCCA (such as provisions on the conflict of interest, dividend distribution, special reporting obligations, etc) became automatically applicable to all Belgian companies and associations regardless of their incorporation date. As from then, any conflicting provisions in the articles of association with the mandatory provisions of the BCCA were to be considered void and non-existent.
- By 1 January 2024: all Belgian companies and associations are obliged to remove any provisions from their articles of association which are conflicting or non-compliant with the BCCA. Moreover, all companies having a legal form that no longer exists under the BCCA need to be converted into the correct legal form existing under the BCCA.
Failure to take appropriate action by the deadline of 1 January 2024 may result in possible director’s liability. Companies with a legal form that no longer exists under the BCCA shall be automatically deemed converted to the legal form existing under the BCCA which resembles the old form the most.
3 Way forward
Given the above, it is strongly recommended for all Belgian companies, associations and foundations incorporated prior to 1 May 2019 to review their articles of association for conflicting provisions with the BCCA, assess whether their legal form needs to be converted and decide whether they wish to implement certain new provisions of the BCCA in order to benefit from the greater flexibility the BCCA offers.
Our experienced team of lawyers is happy to assist you throughout this process or answer any of your questions in this respect.
Authors:
Maxime Colle
Delphine Penninck
