Part I: Introduction to the new Code

As some of you may already know, the new Code of Companies & Associations was approved on Thursday 28 February 2019 by the Belgian federal parliament. The legislative process took much longer as was originally expected, but in the end the new bill was adopted – to the relief of many lawyers – despite the fall of the Belgian federal government in December 2018.

The new Code will enter into force on 1 May 2019 for new companies, associations and foundations and the mandatory provisions of the new Code will apply to existing companies, associations and foundations as of 1 January 2020. In addition to that, there will be a transition period of several years to allow companies, associations and foundations to adapt their articles of association.

The new Code brings along a major modernization of Belgian corporate and association law. It will simplify and introduce more flexibility and should, as a result, be more user friendly. Belgium should also become more attractive for foreign investors and companies.

By means of several newsletters which we will send as of this week and until 1 May 2019, the first date of entry into force of the new Code, Curia will inform you on the important features of the new Code.

The main changes are the following.

The existing law has a great number of company forms, some of which are seldom used. The new Code reduces the number of company forms to eight: NV/SA (public limited liability company), BV/SRL (private limited liability company), as the new standard company form, the CV/SC (cooperative limited liability company), which can e.g. also take the form of CV/SC recognized as a social enterprise, the partnership, VOF/SNC (general partnership), CommV/SComm (limited partnership) and the less commonly used SE (Societas Europaea) and SCE (Societas Cooperativa Europaea). Existing companies in forms that will be abolished (such as the CVOA/SCRI and LV/S.Agr.) will need to be transformed prior to the end of a transition period.

The existing, separate law for associations and foundations will be integrated into the new Code and the new Code will apply to the legal entity forms most commonly used in the not-for-profit and social profit sector. As a result, associations and foundations will have to comply with the general rules of the new Code. For associations, an important difference will be that they will be allowed in the future to engage in commercial activities without limitation, whilst the prohibition to distribute profits to their founders, members or directors will remain valid. The new Code will also clarify and complete the existing rules applicable to associations and foundations.

Existing law has a large number of criminal sanctions, imposing penalties and even imprisonment. These sanctions were seldom imposed in practice. The new Code reserves the criminal sanctions for specific, serious infringements.

In the coming weeks, we will inform you in our newsletters on the main changes introduced by the new Code, concentrating on the topics which we believe are most relevant for Curia’s clients. We will discuss the new rules for associations and foundations, for cooperatives and cooperatives with a social purpose. In addition, the new BV (private limited liability company), which will become an important company form in the future, as well as the implications for directors and the transition regime will be discussed.

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)