The BCAC has entered into force on 1 May 2019. What are the key dates for companies in the transition period?
The new Belgian Companies and Associations Code (BCAC) has been adopted in parliament by law of 23 March 2019. The entry into force of the BCAC is characterised by a gradual approach whereby the Code enters into (full) force earlier for some companies than for others.
Companies constituted on or after 1 May 2019
As from 1 May 2019, the BCAC has entered into force and is fully applicable to all companies, associations and foundations constituted on or after this date.
The entry into force also impacts the incorporation process in itself. The incorporation of a private limited liability company (BV / SRL), the successor of the well-known ‘BVBA / SPRL’, an ordinary cooperative company (CV / SC) or a public limited liability company (NV / SA) for instance requires a more in-depth financial plan of the founders. In addition, as from 1 January 2019, it is also no longer possible to incorporate a company under any of the legal forms that have been abolished by the BCAC such as e.g. a cooperative company with limited liability (CVBA / SCRL) or a partnership limited by shares (Comm.VA / SCA).
Between 1 May 2019 and 31 December 2019, to benefit instantly from the increased flexibility and other benefits of the BCAC, existing companies can voluntarily ‘opt-in’ to the BCAC by bringing their articles of association in line with the BCAC.
1 January 2020: mandatory provisions and obligation to adapt articles of association
From 1 January 2020 onwards, all mandatory provisions of the BCAC will apply to all existing companies, irrespective whether the articles of association of your company have been brought in line with the BCAC. The provisions in the articles of association that conflict with the mandatory provisions of the BCAC will be void. The legislator has not provided detailed guidance on which provisions of the BCAC are mandatory. The preparatory works, however, provide some examples of the most important changes that apply from 1 January 2020 are e.g.:
- the new names and abbreviations of the legal forms – from this date you must e.g. refer to ‘BV/SRL’ instead of BVBA/SPRL;
- the share capital of the BV(BA)/S(P)RL will be automatically converted into a ‘statutory non-distributable reserve’;
- the changed procedure in case of conflicts of interest in which case the conflicted director may no longer participate in the deliberation and decision-making on the relevant agenda item;
- the legal representative of a director-legal entity must be natural person – cascade of representatives is no longer allowed;
- the confirmation that directors are prohibited from exercising their corporate mandate under an employment contract – a director can however be employed by the company, to the extent his/her tasks as employee are fundamentally different than his/her responsibilities as a director;
- abstentions no longer count as negative votes at the shareholders’ meeting;
- the introduction of a legal definition of ‘daily management’ which is broader than the definition introduced by the jurisprudence of the Belgian Supreme Court; etc.
All other (non-mandatory) provisions of the BCAC will also apply to the extent they are not contradicted by the articles of association of the company.
Furthermore, companies have the obligation to adapt their articles of association to the BCAC at the occasion of the first amendment to articles of association as from 1 January 2020.
1 January 2024 as ultimate deadline
The transitional period of the BCAC ends on 1 January 2024. By this date, all companies must be fully compliant with the new Code and all articles of associations must thus have been adapted. Companies organised under a legal form that is abolished by the BCAC, will be automatically converted into the corresponding company by operation of law. The directors of the companies that fail to meet this deadline can be held liable for all resulting damages.