On 28 February, a new bill was passed by the Parliament with the aim of modernising the Belgian law of companies and associations. This bill came into force on May 1 under the name of the Code of Companies and Associations. This modernisation is the logical continuation of the insolvency law reform that came into effect on May 1, 2018, and the corporate law reform that was implemented on November 1, 2018. Spreds has therefore prepared a series of articles that will highlight the important elements of this reform and the points to which both investors and entrepreneurs must pay particular attention.
The aim of this reform is to make the legal provisions on society and associations simpler and more modern in order to make Belgium more competitive with regard to the establishment of companies. Indeed, the previous legal regime was criticized because it did not adequately meet the needs of the world of entrepreneurship.
The main change introduced by this Code is the reduction of the number of corporate forms in order to facilitate the choice of legal status for the entrepreneur. The legislator has therefore decided to retain 4 different legal forms against 17 previously:
- Private limited liability company which becomes the reference form for SMEs;
- Public limited liability company which remains the reference form for large companies and listed companies;
- Cooperative limited liability company reserved for entities with a real cooperative purpose;
- General partnership.
Companies must respect certain important dates in order to comply with the new legal regime. For companies incorporated from 1 May 2019, and therefore under the new regime, the Code is already applicable. With regard to existing companies, they can opt for an immediate application of the new code ("opt-in") through a change of legal status. In fact, a change in legal status makes compliance with the new law mandatory. With regard to the mandatory provisions, that means the provisions aimed at protecting the interest of a certain category of persons, the Code will become applicable for all existing companies from 1 January 2020. The other provisions will only be applicable in case of change of status.
We emphasize that companies will have until 1 January 2024 to bring their legal statuses into line with the new regime established by the Code. We therefore recommend that existing companies take advantage of a visit to the notary to change their status at the same time. In the case of companies that have not made the formal transformation in time, a conversion to the closest legal form remaining in the Code will be made. In addition, a company claiming to have some form but whose clauses are in accordance with another form of company will be requalified as such.
A new article about the new Company Code will be posted each week, so stay tuned!