First encouter with the new company law reform
The new Companies and Associations Code (CAC) is published in the Belgian Official Gazette on 4 April 2019. We will first take a look at the most talked-about changes in the company law reform. For new companies and associations the new code enters into force as from 1 May 2019. For existing companies and associations this will be the case as from 1 January 2020.
The new Companies and Associations Code modernizes our company law.
Simplification: the number of different forms of companies is reduced from more than fifteen to four basic forms: the partnership, the private company (PC), the limited company (LC) and the cooperative company (CC).
Flexibilisation: the new private company will be an allround company form which should simplify the attraction of foreign investments.
Modernisation: this is translated in the choice for the principle of the registered office instead of the real seat principle (the company is governed by the law indicated in the article of association), the introduction of double voting rights in listed companies and multiple voting rights in non listed companies and the limitation of liability of the director.
Four basic company types
As from 1 May next the number of company types is reduced to four company types (the European company types not taken into consideration):
the partnership: the only company type without legal personality. The variants i.e. general partnership and limited partnership do have legal personality.
the CC: company type with legal personality and limited liability and a cooperative philosophy. Recognition stays possible.
the LC: company type for very big companies with legal personality and limited liability. As from now on, a single director can be appointed, with possible protection against resignation. An LC will have the choice between the current monistic governance system and a full-fledged dual governance system (with an executive committee and a supervisory board). A listed LC can provide for double voting rights for loyal shareholders in the articles of association, in non listed companies multiple voting rights are possible.
the PC: company type with legal personality and limited liability (the present private limited liability company). The PC is presented as the basic company type. The PC is a very flexible company vehicle: it can be listed, it is 'without capital': a legal minimum capital is no longer necessary, however sufficient means to perform the activities of the company should be in place, shares with multiple voting rights become possible, more possibilities for the emission of securities, ... However there is no longer a capital condition, the founder should take a net assets and liquidity test into consideration. Perfectly flexible.
The European company types - the European company, the European cooperative company and the European economic interest grouping - remain intact after the reform. We noted no changes except that we will find them in other articles in book 15, 16 and 18 of the CAC.
Public companies (companies making public offerings) disappear.
Also associations find a place in the new code. They can make profit, but cannot distribute this profit.