On May 1st, 2019, the new Code of Companies and Associations (hereinafter, « CCA ») entered into force. As mentioned in our previous Tax Insight from June 2019, the Belgian legislator planned a gradual application of the new Code for existing companies (i.e. companies existing before May 1st, 2019). Although their Articles of Association should still be adapted in accordance with the new CCA by January 1st, 2024, existing companies will be subject to the mandatory provisions of the new Code as from January 1st, 2020.
In practice, as from January 1st, 2020, the Articles of Association of a company that are in contradiction with these new mandatory provisions will be void; even if the company did not yet decide to opt in for the application of the new CCA. Aside from a rather limited formulation of the definition and scope of these provisions in the law itself, the preparatory works shed some light on which provisions should be deemed mandatory a.o.:
- Prohibition for directors, members of the Supervisory Board or the Executive committee from exercising their mandate under an employment contract.
- Names and abbreviations of the legal forms; for example, the name « private limited liability company » should be mentioned as follows « limited liability company », even before the bylaws have been modified. In this respect, all the papers, invoices, websites would need to be adapted.
- The term of « manager » will be removed and be replaced by « director »; this should once again be adapted in the signature on the official documents.
- Henceforth any distribution of benefits within the BV/SRL will be subject to a double test (known as the balance sheet- and the liquidity test) in order to protect the company’s creditors. Knowing this, it might seem interesting to consider dividend distributions or capital reductions or to even convert the LLC to a public limited company before these stricter rules apply
- Rules concerning the settlement of conflict of interests within the board of directors and regarding listed companies.
- The capital and the statutory reserves of all the existing BVs/SRLs and CVs/SCs will be automatically and without any formalities transformed into statutory non-distributable reserves.
- The interdiction within the board of directors to act both as natural person and as legal representative of a legal entity: the permanent representative must be a natural person and he or she can no longer sit on the board in more than one capacity.
Based on the above, and in order to directly benefit from the greatest flexibility offered by the new Code, it is possible to opt in for the new rules by adapting your bylaws.
If you would like more information regarding this subject, or if you would like our assistance with the completion of these formalities, do not hesitate to contact the RSM Belgium Tax team (firstname.lastname@example.org).
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