Not much longer and the current rules and regulations affecting businesses and other organizations will look completely different.
Our current legislation no longer meets the needs of the modern business climate. The legislation, published in the Business Code, is too complicated and inconsistent. Legislators have therefore promised to simplify and modernize it. With the renewed legislation they aim to make Belgium more attractive to businesses.

The pioneer of the entire overhaul, Minister of Justice Koen Geens, already gave us a glimpse of what is to come in a July 20thĀ 2017 press release.

Combined legislation for all businesses and associations Ā 

The new Business Code will combine the legislation for all businesses, associations and foundations. Thus, all common provisions will be addressed together, rather than in separate sections. Associations and foundations will also be allowed to engage in unlimited economic activities in the future. And when they do so, they will be considered to constitute a ā€˜business enterpriseā€™ just like any other business.

The new Business Code will be divided into 5 parts to be covered in 14 books; for ease of use, article numbers will also include the book number.

Major shift in key principles

Many new key principles will appear. Following are a few examples:

  • all organizations will be allowed to engage in commercial activities;
  • the address stated in the business agreement, rather than the actual address, will be considered for international purposes;
  • the minimum investment required for closed corporations will no longer apply;
  • ā€˜super voting sharesā€™ will be allowed for public corporations as well as closed corporations;
  • both public andĀ closed corporations will be allowed to opt for single shareholder and/or Board option(s); and
  • the liability of the Board of Directors will be capped.

A limited amount of business structures

The new legislation greatly limits the amount of available business structures. Only 4 basic business structures remain: the partnership, the closed corporation, the cooperative corporation and the public corporation. All other business structures, other than those created by European law, disappear.

The closed corporation is the new spill-over

The renewed partnership structure will offer more possibilities and only 2 types will remain: the general partnership and the limited partnership (in which some of the partners enjoy limited liability).

The public corporation will beĀ the preeminent vehicle for corporations with a large and public shareholdership.

The cooperative corporation returns to its historical foundation and is only available to businesses which truly serve a cooperative goal.Ā  ā€˜Fakeā€™ cooperatives will be pushed in the direction of the closed corporation.

The biggest change is definitely that the closed corporation will become the spill-over structure for all businesses that are not public and not too large.

The new closed corporation offers a lot of contractual freedom and flexibility, with comprehensive legislation to supplement it. For example, the requirement of a minimum investment disappears but is being counteracted with an extensive liability for incorporatorsĀ or the Board of Directors. The existing rules regarding investment protection will be abolished or drastically rewritten.

For closed corporations we will also see the option of super voting shares (multiple voting rights per share), the possibility for the Board to increase capital and to distribute participation certificates, share purchase rights and convertible bonds. The rules concerning the addition, resignation or forced buy-out of shareholders will be modeled after those for the cooperatives. The regulations involving profit distribution are also being completely rewritten and a distribution will in the future only be possible when the business meets 2 requirements: an equity test and a liquidation test.

Conclusion

Existing agreements will definitely be affected by the new legislation. Partnership agreements, articles of incorporation and shareholder agreements need to be reviewed and rewritten. It is very clear now that present or future business partners and shareholders will need to have appropriate agreements in place. Customization will more than ever become the new norm. The legal advisors at aternio are keeping a close eye on all of the legislative changes and would be happy to assist you with your legal needs.