The companies and associations code

Irene Tromp   |  

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Irene Tromp

Irene is legal adviser in the BOFIDI Tax & Legal team.

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On 1 May 2019 the Companies and Associations Code (hereinafter referred to as CAC) came into force. Today the Code applies to all companies established as of that date and to all previously existing companies that have already opted to amend their articles of association to comply with the CAC (hereinafter ‘opt-in’).

Previously existing companies still have until 31 December 2023 to amend their articles of association. Please note that as of 1 January 2020 the mandatory provisions of the CAC will apply, and a few automatic adjustments will be made.

Abolished legal forms and designations

As of 1 January, the following types of company will automatically be given a new designation.  
V.O.F./S.N.C. becomes VOF/SNC;
— Comm.V/S.Comm becomes CommV/SComm;
— BVBA/SPRL becomes BV/SRL;
— CVBA/SCRL becomes CV/SC.

These companies should adapt their correspondence, invoices, website, etc to include the new designation as of 1 January.

Other types of company will retain their current designation as long as they have not amended their articles of association. Some types of company have been abolished. Companies that have one of the abolished legal forms must have their articles of association amended before 1 January 2024 and adopt one of the remaining forms.

Abolition of the share capital requirement for all types of company except the NV/SA

The share capital requirement will be abolished for BVBA/SPRLs and CVBA/SCRLs as of 1 January 2020. For these companies the paid-up capital and the legal reserve will be automatically converted into unavailable equity. To make this unavailable equity available again, the articles of association must be amended to bring them fully into line with the CAC.

You should also take into account that, as of 1 January 2020, each distribution will be subjected to a double distribution test: the liquidity test and the net assets test.

This may therefore be an excellent opportunity to carry out a capital reduction within your BV/ BVBA/SPRL or CVBA/SCRL before the end of the year.

NB: The concept of share capital continues to exist for tax purposes!

Directors: those with dual roles, cascades and independence

As of 1 January 2020 a natural person will only be able to sit on the management body in one capacity.

More specifically, this means that if you are on the board of directors in your own name, you will no longer be able to sit simultaneously as the permanent representative of a company, and vice versa. As of 1 January, the sanction for doing so is that management decisions may no longer be considered valid.

In addition, ‘cascades’ of representatives will also be abolished. As of 1 January, only a natural person can be a permanent representative of a company. A legal entity will no longer be able to designate a legal entity as its permanent representative.

We therefore advise you to check whether your management body is in order and to take the necessary measures in time. Make sure you look at your articles of association too, and check whether they prescribe a minimum number of board members.  This might be a good time to evaluate your board of directors and bring it into line with the law.
Finally, we note that the CAC now explicitly stipulates that directors of NV/SAs, BV/SRLs and CV/SCs must perform their duties as self-employed persons.  Directors may still have an employment contract with the company, but not for the tasks they perform in their capacity as directors. Moreover, the director of a BV/SRL or CV/SC is no longer referred to as a “business manager” but as a “director”.

If you have any questions about the above, please do not hesitate to contact us.