Most commonly used unregulated real estate investment vehicles in Belgium

Most commonly used unregulated real estate investment vehicles in Belg

Most commonly used unregulated real estate investment vehicles in Belgium

20.01.2020 BE law

On 1 January 2020, the mandatory provisions of the Code for Companies and Associations or "BCAC" entered into force. This article provides an overview of the main characteristics of the most commonly used unregulated real estate vehicles in Belgium (the regulated real estate vehicles are part of a separate publication that will be published shortly). It does not intend to provide a complete overview of all unregulated investment vehicles available, but it does give insight into the main characteristics of the most commonly used investment vehicles in Belgium.


The two most common types of investment vehicles are the open limited liability company (société anonyme/naamloze vennootschap (SA/NV)) and the closed limited liability company (société à responsabilité limitée/besloten vennootschap (SRL/BV)).

Whilst the SA/NV is currently the most commonly used form for a commercial company in Belgium, the SRL/BV is set to become the more popular type in the coming years.

The most prominent reform that the BCAC has made is the revival of the SRL/BV, whereby companies of this type have now more flexibility and do not longer have a capital requirement.

The BCAC sets out standard rules that apply to the SRL/BV, making the SRL/BV, in its unamended form, straightforward and simple. However, because most rules that apply to the SRL/BV are non-mandatory rules, shareholders can, to a large extent, deviate freely from the default system of rules. This allows investors to tailor their investment company according to their specific corporate needs in terms of governance, funding, and profit distribution.

The rules applicable to an SA/NV have also undergone a facelift, which was an attempt to simplify the constraints imposed by EU law. The main changes to the SA/NV are more transparency when reselling shares, equal treatment of shareholders, and simplified rules when acquiring own shares.

Equity and capital

Minimum standard of contribution

  • SRL/BV: Sufficient equity. The SRL/BV is reborn as a company without a share capital requirement. The new law has replaced this with the requirement to have sufficient equity for the company’s envisaged activities. This requirement must be assessed based on all sources of finance (e.g., bank or shareholder loans) that are made available to it. There is no minimum or maximum financial cap on the contribution requirement in the SRL/BV. As a general rule, upon incorporation, all contributions constituting the company's equity must be fully paid up, but the founding shareholders can deviate from this rule.

Creditor protection is assured by subjecting any form of distribution to a net-asset test and a liquidity test (cf. infra).

  • SRL/BV: Share capital conversion into non-distributable equity. As from 1 January 2020, the capital and the statutory reserve of all existing BVBAs/SPRLs is automatically converted into statutory non-distributable equity. To use this equity, the SRL/BV will need to update its articles of association to allow for this.

To ensure tax neutrality consequent to the removal of the legal notion of capital, tax laws have been amended to give their own definition of capital.

  • SA/NV: Minimum capital. An SA/NV requires a minimum paid-up capital of EUR 61,500, and at least 25% of each share must be paid up if the contribution is in cash. If the contribution is in kind, it must be fully paid up in five years.

Types of contributions

  • In cash. Contributions in cash must be deposited into a blocked bank account that is opened at a banking institution situated in the EEA, and this prior to entity’s incorporation or the increase.
  • In kind. In the SA/NV, such assets must have an economic value that will be contributed into the share capital. A promise to perform services (e.g., contribution in terms of labour) cannot be contributed into the share capital in exchange for shares in the SA/NV, but it can be contributed into the equity of an SRL/BV. Contribution of assets into the company requires a board of directors’ report and, in principal, a valuation report prepared by an auditor.

The registered capital (SA/NV) or equity (SRL/BV) needs to be fully and unconditionally subscribed to.


  • Limitations. Distributions (dividends, turn of contribution, consideration for selling shares to the company, compensation following exclusion or retreat, etc.) can only be made in an SRL/BV or an SA/NV after carrying out a net-asset test. In the SRL/BV, a liquidity test (which does not apply to the SA/NV) must be carried out additionally.
  • Net-asset test. In the SRL/BV, distributions may not cause the net asset value of the SRL/BV to become negative. In an SA/NV, no distributions can be made if the company's net asset value drops below the company's equity value (share capital + undistributable reserves).
  • Liquidity test. In the SRL/BV, distributions may only take place if, in the reasonable opinion of the governance body, the SRL/BV will continue to be able to pay its debts for a period of at least one year following the date of the distribution.

Interim dividends

Both the SA/NV and the SRL/BV can distribute interim dividends. The BCAC has abolished the prohibition to distribute in the first six months of the financial year and also abolished the mandatory minimum period of three months between two distributions. It is now also possible to distribute dividends on the basis of the previous financial year if the general shareholders' meeting has not yet approved the accounts for the previous financial year.

Shares and securities

  • Shares. Any issuance of shares or contributions (without share issuance) requires an authentic deed. Each issuance of new shares (even if the contribution is made in cash) requires a report from the governance body. This governance report must justify the issuance price of the shares and the impact that such share issuance has on rights of the existing shareholders (i.e., the voting rights and proprietary rights). In addition, the statutory auditor will need to draw up a report to confirm that the financial and accounting data in the governance report do give a fair view. If the contribution is made in cash, the requirement of an auditor's report can be waived by unanimous shareholder resolution. The directors' report and the auditor report are not required if additional contributions are made into the SRL/BV but no new shares are issued. Such additional contributions can be done by simple majority resolution, without the need to amend the articles of association.

Shareholders decide on the issuance of new shares. However, the BCAC also allows for the power to issue new shares, convertible bonds, or subscription rights to be delegated to the governance body.

  • Other securities. Both company types can issue all types of securities that are not prohibited by law (i.e., bonds, subscription rights, etc.).
  • Voting rights. At least one share must be issued with a voting right. The default rule that each share has one vote remains applicable, but parties can freely deviate from this rule. In listed companies, only double voting rights can be introduced to loyal shareholders (i.e., shareholders that have fully paid up their shares and held those for at least two years). In non-listed companies, the possibility to create categories of shares is far-reaching. For example, it is possible to create shares with multiple voting rights (without a cap), shares that entitle the holder to vote for certain decisions only (i.e., golden shares), or shares that have multiple voting rights when certain conditions are satisfied, etc.

Multiple voting rights can be introduced by issuing new shares with multiple voting rights or by granting multiple voting rights to existing shares. The creation of shares with multiple voting rights creates different share classes. Specific procedures and majorities apply (e.g., one vote per class must be held) if a company wants to amend or delete one or more specific share classes.

In an SRL/BV, voting rights can only be granted to shares. In an SA/NV, profit-sharing certificates can now be granted (multiple) voting rights.

There is no longer a link between what has been contributed and the rights that are granted in return for such contribution. In the SA/NV, shares represent a fraction of the company's share capital and can be denominated with or without nominal value. In an SRL/BV, the shares are denominated without nominal value.

  • Preferential right. When shares, convertible bonds, or subscription rights are issued, the existing shareholders have a preferential subscription right. This preferential right cannot be assigned under the articles of association, but a restriction to or waiver of that right is possible under certain conditions.
  • Profit entitlement. Each share must entitle the holder to some form of profit distribution. However, it is possible to create preferential shares (entitling the holder to a larger share of the profit) or to create shares that are exempt from loss contribution.
  • SRL/BV: Non-transferability as default. The default rule is that the shares in an SRL/BV are not transferable. A transfer of shares in an SRL/BV requires the approval of at least 50% of the shareholders who represent at least 75% of shares, after deduction of the number of shares involved in the transaction. Such approval is not required, however, for transfers to other shareholders, to certain related persons (spouses, parents, or children), or to other persons indicated in the articles of association (e.g., appropriation clauses in favour of a credit institution in case of a pledge of shares). The articles of association can stipulate that the shares be freely transferable or otherwise set certain transfer restrictions.
  • SA/NV: Transferability as default. The default rule is that no transfer restrictions apply to the SA/NV unless its articles of association or the terms of the security issuance or a shareholders' agreement provides otherwise. Restrictions to the transferability (e.g., pre-emption rights, lock-up periods, and approval clauses) may be imposed, but they must be justified by a legitimate interest (intérêt légitime/rechtmatig belang). The legitimate interest no longer needs to be continuous throughout the entire period of the restriction; it is sufficient if there was a legitimate interest at the time when the transfer restriction was agreed upon.
  • Shareholder register. The transfer of registered shares is effectuated when it is recorded in the company’s shareholder register. Any transfer restrictions stipulated in the company's articles of association must be transcribed in the shareholder register. Any agreements must also be recorded in the shareholder register if this is requested by a shareholder. Similar rules apply to registers of securities that give right to shares.


Governance models. The BCAC allows for three types of governance models for an SA/NV: a one-tier model (run by a single board of directors), a two-tier model (run by a supervisory board and management board), and sole directorship. In an SRL/BV, the default governance body consists of one or more fully competent directors, with the option of being organised or structured as a collegial body.

  • One-tier model. This model in an SA/NV has one governance body composed of at least three directors (or at least two directors if the company has less than three shareholders).
  • Two-tier model. This model has two governance bodies: a supervisory board and a management board. Each board is composed of at least three directors. A director in the supervisory board cannot be a director in the management board, and vice versa.
  • Supervisory board. The supervisory board is responsible for the company’s general strategy and policy and for executing all the powers that are reserved for the board of directors under a one-tier model.
  • Management board. The supervisory board appoints and dismisses the members of the management board. The management board executes all of the powers that are not reserved for the supervisory board. The powers of the management board and the supervisory board are mutually exclusive.
  • Sole director. Under the new BCAC, an SA/NV can now have a sole director with full power to act alone. Specific veto powers can be granted to the sole director.

Daily management. In an SA/NV and SRL/BV, the management body (irrespective of the form chosen) may delegate its powers to one or more daily managers who act separately or jointly as a collegial body. If the company chooses to adopt the two-tier model, this power belongs to the management board rather than the supervisory board. The articles of association no longer need to stipulate this; the law itself conveys this power on the governance body. Furthermore, the BCAC broadens the definition of daily management to cover acts pertaining to the daily business of a company and acts that are too unimportant or too urgent to justify any intervention from the governance body.

Appointment and dismissal of directors. The general shareholders’ meeting appoints and dismisses the members of the board of directors (one tier-model) and members of the supervisory board (two-tier model). The supervisory board appoints and dismisses the members of the management board. The sole director (and/or its successors) in the SA/NV and the director(s) in the SRL/BV can be nominated in the articles of association. If nominated in the articles of association, a special majority is required to dismiss each of these directors (even if it is a dismissal for cause). Directors in an SRL/BV or the sole director in an SA/NV are appointed for a fixed term or indefinitely. Members of the one-tier or two-tier governance body in the SA/NV are appointed for a maximum term of six years, but directors may be re-elected by simple majority.

The rule that directors in an SA/NV can be dismissed at any time and without severance pay remains the default rule. However, the general shareholders’ meeting or the articles of association can award the director a notice period or severance pay if he or she is dismissed. Dismissal for cause without notice or severance pay remains possible.

Members of the governance body cannot be employees; they must be self-employed individuals.

Natural persons or entities. Directors can be natural persons or legal entities. Legal entities that act as director must always be represented by a permanent representative who must be a natural person. This natural person is always jointly liable with the legal entity that he or she represents. A natural person can only serve as a member of a governance body under one capacity. If the company is a listed company, the sole director must be an SA/NV that adopted the single-tier or two-tier governance model.

Nationality and residence. There are no restrictions with respect to nationality or the residence of a company's director.

Powers and representation. In an SRL/BV, each director has in principle the full power to take all decisions that are necessary or useful for achieving the company’s purpose, except for decisions that are expressly reserved for the shareholders’ meeting. Each director in the SRL/BV can individually represent and bind the company, except if the articles of association provide otherwise.

In the SA/NV, the board of directors acts as a collegial body and has authority to bind the company for any act that is necessary or useful for achieving the company’s purpose, except for taking decisions on matters expressly reserved for the shareholders’ meeting. The collegial body represents the company towards third parties unless the articles of association provide otherwise. It is common for the company’s articles of association to stipulate that the company can be represented by two directors acting jointly or by the managing director acting alone within the scope of daily management.

Meetings. A board of directors must in principle meet according to the procedures set out in the company’s articles of association, or otherwise as the directors deem appropriate. At least one-half of the board of directors must be physically present to validly hold a meeting, unless the articles of association allow the directors to be represented by proxy or to hold the meeting by telephone. Written resolutions can be taken by the board if the board agrees to this unanimously, as long as the articles of association or the law do not restrict this possibility.

Shareholder meetings

The BCAC defines three types of shareholder meetings, of which two are discussed below (as the third form applies to listed companies only).

Annual general meeting. The annual general shareholders’ meeting must be convened once a year at the place, on the date, and at the time stipulated in the articles of association. The purpose of this meeting is to approve the annual accounts of the company (which must be done within six months following the end of the previous financial year) and to discharge the directors from their liability towards the company (decharge/kwijting) for the past financial year. The discharge is only valid if no information is omitted or incorrectly stated in the annual accounts, which would give an incorrect representation of the company’s financial position. In addition, no discharge is granted if any director has violated any provision of the BCAC, unless such violation has been disclosed at the annual general meeting.

Extraordinary general meeting. An extraordinary general meeting is convened each time when the company’s articles of association are amended (when there is an increase or decrease in share capital/equity, etc.).


The governance body is responsible for having the company’s annual accounts prepared. This consists of a balance sheet and profit and loss statement for each financial year. The director(s) must write a report on the previous year’s activities, which is submitted with the annual accounts to the shareholders for their approval at the annual general meeting.

The company must appoint a statutory auditor (commissaire/commissaris) to audit its accounts if the threshold of (at least) two of the following criteria were exceeded in the last two financial years:

  • average number of employees on an annual basis: 50;
  • annual turnover: EUR 9,000,000 (excluding VAT);
  • balance sheet total: EUR 4,500,000.

It is not necessary to include group companies in the calculation of these thresholds unless there is a specific obligation under law to produce consolidated accounts for Belgium.

Stock exchange

The shares, profit-sharing certificates, or certificates of the SA/NV and the SRL/BV can be traded on a regulated market. Public interest entities (PIEs) are regulated separately.

Financial assistance

Financial assistance restrictions apply to the two company types. As a rule, it is prohibited to borrow or to provide guarantees or security for purposes of funding the acquisition of that company’s own shares, unless certain conditions are satisfied. This is particularly important in a share deal for a single property real estate investment, whereby the shares of a single real estate company (“Target PropCo”) are acquired by a newly incorporated entity “BidCo”. In such scenario, the Target PropCo will be unable to guarantee or grant security for BidCo’s acquisition debt that is used to finance the acquisition of Target PropCo’s shares, unless the financial assistance conditions are satisfied.

Under the new companies code, procedural formalities have been simplified. However, the main, substantial requirement remains unchanged, and it is problematic for most real estate companies. Under this requirement, financial assistance is only permitted to the extent that the maximum guaranteed or secured amount is limited to the amount that would otherwise be available for dividend distribution by the guarantor or security provider. This amount must subsequently be booked by the guarantor or security provider as an unavailable reserve so that this amount will no longer be available for dividend distribution.

In the SRL/BV, the amount available for dividend distribution must be determined by the board of directors, ensuring that the company will remain in a position to pay its debt as they fall due in the twelve months following the distribution. The directors must take into account reasonable expectations of expected developments. The board must record its determination in a special board report, and the company’s auditor must report on the historical and prospective accounting and financial data contained in the board report. It is currently not clear how directors and auditors will comply with this requirement in practice. It is also unclear at this time whether lenders will be sufficiently comfortable in accepting such determination of distributable reserves, given the potential impact on the validity and enforceability of the guarantees and security that would otherwise constitute restricted financial assistance.

In the SA/NV the amount available for dividend distribution is equal to the value of the company’s assets minus the amount of provisions, debt, incorporation, expansion, and R&D costs (to the extent that they are expressed as an asset), paid-up share capital, any reserves that are not available for distribution, and any non-realised capital gains expressed in the company’s balance sheet. Under Belgian GAAP, real estate is booked at historical cost, and buildings are subject to depreciation, so the amount of assets in a real estate company’s balance sheet can be artificially low. Capital gains can be expressed in the balance sheet, but this would typically trigger immediate taxable capital gains (which can potentially be set-off against tax losses carried forward).

Société simple/maatschap

Before the BCAC reform took effect, contractors (for major development contracts) often used to form among themselves a temporary association without legal personality (société momentanée/tijdelijke handelsvennootschap). This company form has been abolished by the BCAC, however, but the société simple/maatschap is a viable alternative to the temporary association, as it has similar features:

  • No legal personality. The société simple/maatschap has no legal personality, so the partners (at least two) do not benefit from limited liability. The partners in the société simple/maatschap remain jointly and severally liable towards third parties for the acts conducted by the société simple/maatschap. Creditors of the société simple/maatschap can assert their rights on the funds of the company as well as the funds of the partners, except if the société simple/maatschap has a silent partner (in which case, this partner can only be held liable up to the amount of its contribution). A creditor of a partner cannot seize the funds or assert its rights on the funds of the société simple/maatschap; it can only assert its rights on the share percentage that the partner holds in the société simple/maatschap and on the amount of profits that have been paid out by the société simple/maatschap to that partner.
  • Term. The société simple/maatschap is deemed to be set up for an indefinite term. But under the BCAC, one can create a société simple/maatschap for a fixed term or for the purpose of a specific development project.
  • Purpose. Since the BCAC has abolished the distinction between a commercial company and a civil company, a société simple/maatschap can also have a commercial purpose (e.g., to develop a real estate project).
  • Contractual flexibility. The functioning of the société simple/maatschap is mainly defined by the partners and set out in the entity’s articles of association.
  • Profit and losses. The profits and losses are divided between the partners based on what has been contractually agreed upon. If nothing is contractually agreed upon, each will bear the amount of losses or enjoy the amount of profits that is proportional to what it has contributed into the société simple/maatschap. It is not possible to allocate all profits to a single shareholder or to exclude a shareholder from the participation interest in the profits.
  • Transferability of shares. The shares in a société simple/maatschap are not transferable, unless provided otherwise in the entity’s articles of association.
  • Governance. The société simple/maatschap is managed by one or more managers. A manager can be a partner, although this is not mandatory. A manager’s power to decide on behalf of the entity and to represent it is set out in the deed of nomination. If the manager is nominated according to the entity’s articles of association, he or she can be dismissed for cause only by a judge, by the approval of all partners, or according to the procedure set out in the articles of association (if any). If nothing on this is defined, each partner has the power to act on behalf of the other partners, except if the other partner or partners have objected to such acts before the act has been carried out.
  • Partners’ meeting. Decisions amending the entity’s articles of association require unanimity, except if the articles of association allow for another majority. Changing the essential elements of the entity’s object requires unanimity (even if the articles of association stipulate another majority).


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