ADOPTION OF THE NEW COMPANIES AND ASSOCIATIONS CODE: What shall your company do?
After months of debates within the Belgian Chamber of Representatives, the companies and associations Code (hereafter: “New Code”) has been adopted on February 28, 2019.
In a nutshell, the New Code will enter into force as from May 1st, 2019 for new companies and as from January 1st, 2020 for existing companies.
Some of the main amendments brought by the New Code to the legislation governing Belgian companies are the following:
- The reduction of the number of companies forms to only 4 (instead of 15);
- The flexibility of the new rules. Notably, the mandatory rules regulating the new private limited company (i.e. in French: “société à responsabilité limitée”; in Dutch: “besloten vennootschap”) are very limited, as a consequence of which the shareholders have considerable freedom in determining the rules governing their relations and the company’s governance ;
- The introductionof a liability cap for directors;
- The possibility to issue multiple voting shares; and
- The introduction of procedures of cross border transformation under Belgian law. The adoption of said theory will facilitate the migration of companies from Belgium and towards Belgium.
In practice, what does it mean for your company?
The articles of association of your company shall be amended to bring them into compliance with the New Code:
- In theory: the deadline provided by the New Code is January 1st, 2024;
- In practice: we strongly recommend any existing company to consider amending their articles of association as soon as possible as from the entry into force of the New Code.
Why is it important to amend your articles of association?
- Allowing your company to benefit from the advantages offered by the New Code(e.g. the possibility to issue multiple voting shares);
- Avoiding any potential contradictions between the current articles of associationof your company and the New Code’s mandatory provisions, these latter prevailing in case of conflict. Such conflicts could lead to legal uncertainty and risks for your shareholders, directors, but also any third parties;
- Avoiding your company being bound by residual rules(i.e. rules that apply in the absence of provisions in the articles of association), the consequences of which have not been duly assessed.
KOAN Law Firm’s Corporate and M&A team will keep you further informed regarding the main rules introduced by the New Code in the upcoming weeks and months.
Please feel free to contact us should you have any questions regarding this topic or should you need any assistance to assess the impact of the New Code on your company.
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