The Belgian Parliament approved the draft law regarding the new Companies and Associations Code (“CAC”) today.
The CAC will enter into force on 1 May 2019.
For an overview of some significant changes in the CAC, see our earlier post “Draft law of New Companies Code submitted to Parliament: Eight changes to keep in mind”.
Last minute changes
Shortly before the plenary vote, some changes were made to the much-discussed cap on directors’ liability.
The scope of the cap was limited to minor random errors (“lichte, toevallige fout” / “faute légère occassionnelle”) and a new, lower cap of EUR 125 000 was introduced for legal persons having a-3-year average turnover below EUR 350,000 (excl. VAT) and a 3-year average balance below or equal to EUR 175,000.
Application to yet-to-be founded companies
Companies incorporated after 1 May 2019 will be governed by the new Code immediately.
Application to existing companies
Companies incorporated before 1 May 2019 will in principle be governed by the new Code as from 1 January 2020. As an exception to this rule, the amended provisions regarding dispute resolution (exclusion and withdrawal) will already apply as from 1 May 2019, albeit only to proceedings initiated after this date.
However, companies can opt in earlier as from 1 May 2019 by amending their articles of association.
In any event, they will have to change their articles of association to comply with the new Code when making any amendments after 1 May 2019, (unless these amendments have to be made merely because of the exercise of authorized capital or subscription rights, or the conversion of convertible bonds).
The articles of association must be adapted to the CAC by 1 January 2024 at the latest.
Application to existing companies with an abolished legal form
The CAC abolishes several legal forms (e.g.: Comm.VA / SCA or CVOA / SCRI) and lays down stricter criteria for other forms (e.g.: CVBA / SCRL).
Companies with a to-be-abolished legal form or that no longer meet the criteria must convert into another legal form by 1 January 2024. Companies whose conversion is not made by this deadline will be converted automatically by operation of law.
However, the mandatory provisions of the CAC that apply to the legal form that most resembles the abolished or redefined legal form of a company (e.g.: Comm.VA / SCA = NV / SA with a single director) will already apply as from 1 January 2020.
All Belgian companies or foreign companies having business operations in Belgium should thoroughly assess the implications of the CAC for their current corporate governance structure and housekeeping to be prepared for complying with the new Code.
Stibbe can assist clients in addressing the challenges completely and how to make use of the opportunities ahead. Especially for groups of companies, the CAC might prove to be quite challenging.
Here you will find the Companies and Associations Code as approved earlier in third reading in committee. This version was approved, without amendments, in the plenary session today.