Part VIII: Entry into force and transition regime

 

In our final newsletter we will discuss the entry into force of the new Code of Companies and Associations as well as the transition regime applicable to existing entities.

1 MAY 2019

The new Code entered into force on 1 May 2019. Entities incorporated on or after this date are subject to the new Code.

As of 1 May 2019 it is also no longer possible to incorporate those company and association forms that have been abolished by the new Code. It will therefore no longer be possible to incorporate a cooperative company with unlimited liability (CVOA/SCRI), a limited partnership with share capital (Comm.VA./SCA), a company with a social purpose (VSO/SFS), an agricultural company, an economic interest grouping, a trade association, a start-up private limited liability company (S-BVBA/SPRL-S), a “one shareholder” private limited liability company (E-BVBA/SPRL-U) or a temporary or silent company.

TRANSITION REGIME FOR EXISTING COMPANIES, ASSOCIATIONS AND FOUNDATIONS

Entities that exist - have legal personality - on 1 May 2019 are subject to the transition regime provided by the new Code.

  • The mandatory provisions of the new Code will become applicable to existing entities as of 1 January 2020. It should, however, be noted that at this date also the nonmandatory provisions of the new Code will become applicable, unless otherwise stipulated in the articles of association (AoA). As of this date, the paid up capital and the legal reserve of private limited liability companies will automatically be converted into a non-distributable reserve.

  • An existing entity can, however, choose to become subject to the new Code prior to 1 January 2020 (but not earlier than 1 May 2019). In case of such an early “opt-in”, the entity will need to bring its AoA in line with the new Code and the new Code will become applicable as of the date of the publication of the modification to the AoA.

  • Subject to a few exceptions, existing entities are required to bring their AoA in line with the new Code at the occasion of the first modification to their AoA after 1 January 2020 and at the latest by 1 January 2024.

  • Entities with an abolished company or association form will need to convert into one of the legal forms retained by the new Code at the latest by 1 January 2024. This will require a modification to the AoA. To the extent conversion has not taken place by this date, these entities will automatically be converted into their “closest” retained company or association form (e.g. a cooperative company with unlimited liability (CVOA/SCRI) will become a general partnership (VOF/SNC)). In case of automatic conversion, the Board will need to convene a meeting of the General Assembly within a period of 6 months to modify the AoA.

  • As long as an entity with an abolished company or association has not been converted, it will remain subject to the “old” legislation (Companies Code, Law on trade associations). It is important to note that in addition to the “old” legislation, such entity will, as of 1 January 2020, also become subject to the imperative provisions of the new Code applicable to the “closest” retained company or association form, as set out in the new Code.

What happens in case of non-compliance?

Board members of companies and associations can be held personally and jointly liable for any damage suffered by the legal entity in which they are a Board member or by third parties as a result of non-compliance with the aforementioned provisions.

Royal Decree executing the new Code

On 30 April 2019, the Royal Decree executing the new Code was published in the Belgian State Gazette. The provisions of the RD will enter into force simultaneously with the provisions of the new Code of which execution is ascertained.

Your contacts of the Curia Corporate and Not-for-profit team:

Yvette Verleisdonk, partner (yvette.verleisdonk@curia.be)

Sarah Verschaeve, partner (sarah.verschaeve@curia.be)

 
BerichtMr. Fox04 May 2019, wvv