Companies code
The new Companies and Associations Code (hereinafter "CPC") actually came into effect as early as May 1, 2019. That meant that companies established as of May 1, 2019 had to comply with the new CPC. Existing companies, associations and foundations could decide to apply ("opt-in") the new rules by means of an amendment to the articles of association as of May 1, 2019. The WVV should between May 1, 2019 and January 1, 2020 (but did not have to) be applied by existing corporations, associations and foundations.
For good measure, this is the situation at and as of January 1, 2020:
(1) On January 1, 2020 became applicable to existing corporations, associations and foundations even if they were not already subject to the WVV, meaning:
- That the WVV should be applied by all newly established corporations, associations and foundations and by all existing companies, associations and foundations that (have to) make a change in the articles of association;
- That all mandatory provisions of the WVV apply to all companies, associations and foundations to the detriment of any conflicting statutory provisions at existing companies.
(2) No later than December 31, 2023 the bylaws of all companies, associations and foundations must comply with the CRD. The bylaws of companies whose legal form is no longer recognized in the WVV (limited partnership, agricultural partnership, economic partnership, cooperative society with on/restricted liability) will have to be amended within the first six months of 2024. The members of the governing body are personally and severally liable for damages suffered by the company, association or foundation, or by third parties as a result of the failure to fulfill these obligations.
An overview of the changes as of Jan. 1, 2020
(1) The WVV adds an important condition to the alarm bell arrangement. The governing body must apply the alarm system when:
- net assets (equity) are negative or in danger of becoming negative (balance sheet test)
- and when the governing body determines that it is no longer certain, according to "reasonably foreseeable developments," that the company will be able to pay its debts for at least the next twelve months as they become due (liquidity test).
The same double test must be completed positively for any distribution by the company to its shareholders. The governing body is responsible for this.
(2) The new rules on the permanent representation of director-legal entities (Article 2:55 WVV) no longer allow a legal entity to appoint another legal entity as permanent representative in the role of legal entity-director. Each director-legal entity must be represented by a natural person. Moreover, a permanent representative within the same company may no longer combine that role with a directorship in its own name or another mandate as permanent representative.
(3) The share register, now "register of registered securities", may be retained electronically but may need to be supplemented as it must state additionally as of now:
- statutory restrictions on transferability (pre-emption/preemptive rights, prohibition of alienation, etc.);
- upon the existence of a shareholders' agreement and if requested by a party to that agreement, transfer restrictions resulting from such shareholders' agreement;
- the voting rights attached to each share (cfr. the possibility of disproportionate voting rights in the BV) and profit rights as well as their share of the liquidation balance, if different from their profit rights.
(4) Existing companies with a legal form changed in the WVV (BVBAs, CVBAs) must use (in full or abbreviated form) the new indicate legal form (BVBA=BV; CVBA=CV or BV) on all deeds, invoices, announcements, notices, letters, orders, websites and other documents, whether in electronic form or not, emanating from the company (Article 2:20 WVV).
(5) The term "manager" disappears in favor of the now generalized term "director."
(6) Where a company is managed by a collegiate governing body (i.e. board of directors), a director may, in the case of a identified conflict of interest no longer participate in the deliberations and decision on the decision or transaction to which the conflict of interest relates. When a company has only one director, the decision or transaction may now be submitted to the general meeting. When there is also only one shareholder, the latter may take and execute the decision himself.
During 2020, take the time to review your company(ies) and prepare and/or implement the amendment and/or updating of articles of association, shareholders' agreement and other relevant documents. Generally, it is in your best interest not to wait until December 31, 2023.
In addition, keep in mind that the WVV also offers a lot of new possibilities, such as the creation of a BV with limited but conclusive initial capital due to the disappearance of the notion of capital, the provision of multiple/disproportionate voting rights, the great statutory freedom in the BV in general, the conduct of profitable business activities by a VZW, etc.
Bannister Lawyers and Mr. Roeland Vanstaen are ready to guide you through the redrawn corporate landscape and, as always, are happy to assist you with all your corporate law questions.
Roeland Van Staen
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