HOW THE CAC IMPACTS YOUR COMPANY AS OF 1 JANUARY 2020

The new Belgian company code has entered into force for some time now. Regardless of whether you undertake any action, the new Belgian company code will have an inevitable impact on your company as of 1 January 2020. The most important changes are, among others, the new names and abbreviations, capital that will be abolished for some companies and the rules governing the functioning of the general meeting and the board of directors that will be modified.

With effect as of 1 January 2020, the Companies and Associations Code (“CAC”) will also become applicable to companies which already existed on 1 May 2019. Even if you haven’t brought your Articles of Association in line with the CAC, the CAC will have an important impact on your company as of 1 January 2020.

The mandatory provisions of the CAC will become applicable.  Provisions included in your Articles of Association or agreements which are contrary to these mandatory provisions are considered to be non-existent.

The supplementary provisions of the CAC will also become applicable unless the Articles of Association of your company deviate from these provisions.

Below you will find an overview of the most important changes which may have an impact on your company as of 1 January 2020:

• The new names and abbreviations become applicable without the need to change the Articles of Association. For example: “Besloten Vennootschap met Beperkte Aansprakelijkheid” becomes “Besloten Vennootschap” and the abbreviation “BVBA” becomes “BV”.

• The capital concept is abolished for the Private Limited Liability Company (Besloten Vennootschap) and the Cooperative Company (Coöperatieve Vennootschap).

• The paid-up capital of the Private Limited Liability Company and the Cooperative Company, as well as their legal reserves, will, by way of law and without fulfilling any formality, be converted into a statutory unavailable equity account with effect as of 1 January 2020.

• A Private Limited Liability Company can only distribute profit considering the balance and liquidity test.

• In principle, the entire equity of a Private Limited Liability Company will be available for distribution taking into account the application of the aforementioned double distribution test and the fact that a modification of the Articles of Association will be required if (part of) the statutory unavailable equity is distributed.

• Distributing the profit of the previous financial year which has not been approved and the profit of the current financial year is made possible.

• The rules regarding the alarm-bell procedure are amended.

• Possibility to contribute work in a Private Limited Liability Company.

• All shares in a Public Limited Liability Company (Naamloze Vennootschap) and a Private Limited Liability Company can in the future be owned by one shareholder.

• A Public Limited Liability Company and a Private Limited Liability Company can issue all categories of securities (for example convertible bonds).

• Directors, members of the executive committee and the supervisory board perform their mandate on a self-employed basis. 

• The rules regarding daily management will become more flexible. In a Private Limited Liability Company, it will be possible to set up a daily management body. In addition, the definition of “daily management” is elaborated.

• The rules regarding conflicts of interests in a Public Limited Liability Company and a Private Limited Liability Company are made stricter and also become applicable to Cooperative Companies.  

• The new rules regarding director’s liabilities (including the cap on director’s liabilities) become applicable to management faults which occurred after the CAC has become applicable to your company. Management faults which have occurred before the CAC became applicable to your company remain subject to director’s liability regime of the Company Code.

• In the future, written resolutions adopted by the board of directors will always be possible, even if the Articles of Association do not include such option.

• The permanent representative of a director-legal person always has to be a physical person. This physical person can only have a seat in the board of directors in one capacity.

• The voting procedure during a general meeting is amended, for example the neutralization of abstentions. For certain companies this may have an impact on the existing balance between shareholders.

• Broader possibilities for electronic communication. Companies can include an e-mailadress and/or website in their Articles of Association and the shareholders can communicate an e-mailaddress via which they wish the company communicates.

With effect as of 1 January 2020, the CAC will thus have an important impact on your company and its functioning.

Finally, we want to remind you that all companies at the occasion of the first modification of their Articles of Association after 1 January 2020 immediately and entirely have to bring their Articles of Association in line with the CAC, unless the modification of the Articles of Association results from the application of the authorized capital, the exercise of subscription rights or the conversion of convertible bonds. In any case, the Articles of Association have to be amended by 1 January 2024 at the latest.

For more information you can always contact us via davy.smet@cotra.law or kurt.faes@cotra.law.