As previously announced by our Commercial & Litigation Team, the Belgian Federal Government approved a draft legislation which aims to modernize our business law. The idea raised by the Minister of Justice was to create a general concept of ‘undertaking’ in order to improve consistency and avoid legal uncertainty, as the concept is currently used with different meanings in different legislations. In the new business law, the notion of ‘merchant’ (‘commerçant’ / ‘handelaar’) is replaced by the concept of ‘undertaking’ (‘entreprise’ / ‘onderneming’) which is more inclusive.
This change is, of course, not only a matter of terminology. By introducing an inclusive concept of ‘undertaking’, our business law should become more consistent and Belgium more attractive and competitive as a place of business.
The new business law directly modifies the Code of Economic Law, Judicial Code and Civil Code and will have the following major legal consequences for the economic actors:
1. Inclusive concept of undertaking
Every doctor, lawyer and architect, but also every farmer or non-profit organization, becomes an undertaking. According to the new Article I.1 of the Code of Economic Law, the new concept applies to:
any natural person who performs a professional activity being self-employed;
any legal person, including non-profit organizations and foundations even if they do not provide goods or services, but with the exception of (i) public law entities that do not provide goods or services and (ii) the state and its decentralized entities;
any other organization without legal personality, unless it does not make or intend to make a profit distribution.
The new definition of undertaking, “any natural person or moral person pursuing an economical purpose in a durable manner, including its associations” (Article I.6, 3° of the Code of Economic Law), is therefore based on formal criteria, while the old definition was based on the material criterion of the performance of a business activity.
The new definition of undertaking, “any natural person or moral person pursuing an economical purpose in a durable manner, including its associations” (Article I.6, 3° of the Code of Economic Law), is therefore based on formal criteria, while the old definition was based on the material criterion of the performance of a business activity.
2. Enlargement of the scope for commercial, company and insolvency regulations
As a result of this new concept of ‘undertaking’, a significant part of the economic legislation will apply to persons or entities falling under the concept:
this enables undertakings to perform what used to be called ‘merchant acts’ (‘actes de commerce’ / ‘daden van koophandel’) without limitation because there is no longer a distinction between ‘civil matters’ and ‘commercial matters’;
every undertaking will have to be registered and comply with accounting requirements. Even if the scope of these requirements already applies beyond the concept of ‘merchant’, important consequences will follow for the members of liberal professions which may be subject to the insolvency legislation and restructuring proceedings in the future.
3. Growing importance of the free evidence regime between and against undertakings
The specific evidence rules which currently apply between merchants, such as the presumed acceptance of an undisputed invoice and the free evidence regime, will apply between and against every ‘undertaking’ (and therefore also between and against doctors, lawyers, architects etc.). However, when natural persons considered as undertakings under the new concept perform activities outside the scope of their business activities, they remain subject to the civil evidence regime, in which the burden of proof does not rest on them.
These modifications will be part of the New Article 1348bis, Section 2/1 of the current Book III, Title III, Chapter VI “Evidence by and against undertakings” of the Civil Code, which means that the different evidence regimes currently laid down under the Commercial Code and the Civil Code will be gathered into the same code.
The free evidence regime, which allows the use of any kind of evidence unless stipulated otherwise by the law, becomes more important: the threshold for the use of free evidence (‘preuvelibre’ / ‘vrijbewijs’) is raised from 375.00 EUR to 5,000.00 EUR, and the free evidence regime will apply to unilateral acts. For instance and as provided under the new Article 1348bis § 2 of the Civil Code, the accounts of an undertaking can be admitted as evidence between undertakings, this provision replacing and enlarging the scope of the current Article 20 of the Commercial Code which currently applies only between ‘merchants’performing ‘merchant acts’ (‘actes de commerce’ / ‘daden van koophandel’).
4. The Commercial Court becomes the Undertaking Court
The Commercial Court follows the same pattern by becoming the Undertaking Court (Article 252 of the new business law). As the concept of undertaking is now clarified and enlarged, jurisdiction issues (i.e. between the Undertakings Court and the Court of First Instance) are likely to be avoided, resulting in more effective proceedings. This enlargement also means that the new Undertaking Court has jurisdiction over non-profit organizations which are not conducting an economic activity.
Therefore, the modification of the name of the Commercial Court into the Undertaking Court goes hand in hand with the new concept of undertaking.
5. Abolition of the Commercial Code
Finally, this modernization includes the abolition of the Commercial Code of 1807; or rather of its remaining fragments, which are integrated into the Code of Economic Law.
Only Book II of the Commercial Code about maritime and inland navigation will survive, the title of this residual code being adapted into the “Code of determined maritime privileges and miscellaneous provisions” (Article 259 of the new business law).
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The new business law will enter into force on 1 November 2018, save for some specific provisions which will enter into force on 1 May 2018 or at an earlier date to be determined by the King.
