Changes to the Articles of Association: the transitional regime

The new Code of Companies and Associations (“CCA“) came into effect on May 1^st 2019.

However, this does not coincide with the effective application of all the new provisions.

The main rules of the transitional regime are the following:

• as from January 1st, 2020, the mandatory provisions (which a company may not depart from) will automatically apply to existing companies, as well as supplementary provisions (which the articles of association may depart from) if they don’t conflict with the existing articles of associations;

• if a provision of the articles of associations is contrary to a mandatory provision of the CCA, it shall be deemed to be unwritten;

• as from January 1st, 2020, unamended articles of association should be read in combination with CCA’s mandatory rules;

• as from January 1st, 2020, companies will be required to bring their articles of association in line with the CCA as soon as they want to amend their present articles of association (unless using the authorised capital, exercising subscription rights or converting convertible bonds);

• companies existing before January 1^st, 2020 will have until December 31^st, 2023 to bring their articles of association in line with the CCA.

Here are some of the new mandatory provisions (applicable as of January 1^st, 2020):

• provisions related to the names of company forms and their abbreviations (CVBA/SCRL and CVOA/SCRI may no longer be used);

• new majority rules for general meetings (abstentions are now neutral);

• abolishment of the statutory share capital in BV/SRL;

• rules about the repurchase of own shares, e.g. the abolishment of the 20% cap (see our article on this topic);

• net asset and liquidity tests are now mandatory for any profits distribution in BV/SRL;

• new definition of “daily management”;

• new procedure for conflicts of interest within NV/SA and BV/SRL;

• new regime for directors’ liability;

• rules about the nullity of the decisions of governing bodies;

• new “alarm bell procedure” in BV/SRL;

On the other side, the following provisions are supplementary (their application will depend on potential statutory derogations):

• companies may now depart from the ad nutum dismissal of directors, which was formerly a mandatory principle;

• BV/SRL may now allow the free transfer of shares without prior approval by the other shareholders;

• BV/SRL may now have a withdrawal and exclusion regime payable by the company itself;

• BV/SRL and unlisted NV/SA may now freely depart from the former “one share, one vote” principle by incorporating a multiple voting right regime.

With these optional provisions, the Belgian company law got a lot more flexible and adaptable to each company’s needs.

The transitional regime is therefore very important and should not be neglected. Otherwise, a company might violate new mandatory provisions and might miss the benefits of the freedom and flexibility brought by the CCA.

We recommend the voluntarily opt-in (which is available since May 1^st, 2019) to our clients in order to avoid the simultaneously application of new provisions of the CCA and provisions of the former Company Code.

Deminor will guide you through each step of your transition to the new regime.
Please contact Thibaut Claes (thibaut.claes@deminor.com) for further information.