Adaptation of bylaws to the new code of companies and associations

As you know, on 1 May 2019, the new Code of companies and associations entered into force. This modernization of the regulatory framework for companies was intended to make Belgian company law more flexible and simplified.

Specifically, the amendment to the CPR means that since 1 May 2019, shareholders and founders of companies have greater freedom to determine the arrangements and rules in the company. The number of company forms was also drastically reduced.  This means that some of the 'old' company forms will disappear and/or have to be converted to one of the company forms under the new code.  Know that the mandatory provisions of the new company law already apply since 1 January 2020!

Companies already in existence on 1 May 2019 have until 31 December 2023 to adapt their bylaws to the new legal framework.  Time to take action!

The time taken by notaries to process the conversions is lengthening due to the high number of pending files. 

The question that is asked very regularly: what is the sanction if articles of association are not brought into line with these 'new' company laws in time?  The members of the governing body of this existing company are personally and jointly responsible for damages suffered by the company or by third parties as a result of non-compliance with this legal obligation.  Furthermore, there may be certain provisions in the articles of association that are contrary to the WVV, which means they are no longer considered existing.

Possible opportunities

You can always opt to have only minimal adjustments carried out on your existing company.  However, since the change in the law, a Belgian company is more than ever a 'tailor-made' product and a company can be tailored to your (professional and private) needs. For instance, different types of shares can be created, there is the possibility to grant different voting rights or profit rights to different categories of shares/shareholders, there is more freedom to modulate the transfer of shares, there is an extended possibility to pay interim dividends and there is more room for family companies to respond to family wishes and needs, etc.

An opportunity implemented by many existing Private companies, when bringing their articles of association into line with the new law, is to make their equity accounts available.  A major advantage of this is that the original contribution can be repaid or distributed by a simple majority decision of the general meeting, without the need for notarial intervention.

Furthermore, some 'old' company forms are disappearing.  The limited partnership on shares (Comm.VA) is one of them.  Existing Limited partnerships on shares (Comm.VA’s) that have not spontaneously switched to another company form before 31 December 2023 will be converted into a public limited company (NV) by operation of law.  Comm.VA’s that spontaneously convert to an NV before 31 December 2023 do not have to comply with a number of legal obligations.  Indeed, these can be avoided by converting in time!  This conversion procedure entails (Art 14:3 to 14:5 WW):

• Explanatory report of the managing body;
•  Statement of assets and liabilities not older than 3 months before the general meeting that will decide on the conversion proposal;
• Audit report of auditor, auditor or certified accountant.

Note: the conversion of a Comm.VA into a company form other than the NV must always be done in accordance with the ordinary conversion procedures of Book 14 of the Companies Code.

Time to take action!

Companies incorporated before 1 May 2019 will have to amend their articles of association by 31 December 2023 to convert them in accordance with the new code and, in certain cases, shareholder agreements and management and director agreements will also have to be amended.

Companies that still have not taken any action after 31 December 2023 will be automatically converted into the legal form closest to the old form. This automatic conversion (without an amendment to the articles of association) obviously does not allow you to take advantage of the opportunities of the new rules. On top of that, if you do not comply with the deadline for conversion, you may be held liable as a director for any damages resulting from this negligence.

It is therefore important to tackle the conversion of your company in a timely manner and keep the potential opportunities of the new rules under review. The conversion deadline is approaching! Given the administrative process that needs to be completed in the context of the conversion (identifying opportunities, amending the articles of association, notarial ratification (where necessary)), it is best not to wait any longer.

Take action as soon as possible in order to complete the conversion in time. You can always contact your account manager for this.