Daily management

New Code of Companies is already in effect

On February 28, 2019, the Chamber of Representatives adopted the bill introduced by Minister Geens on the reform of company and association law. A major clean-up that ushers in significant changes and simplifications. It came into effect on May 1st.

As ING Belgium’s Head of General Legal Affairs Lien Thijs explains, the new Company and Association Code (CAC) is a fundamental reform of company law.

The legislator’s aim was both to simplify and to bring everything together within one law. The CAC thus covers companies, non-profit associations and foundations. It removes the concept of ‘public company’, reduces the regime applicable to listed companies and reduces the number of possible legal forms, putting an end to certain structures such as the Temporary Company or Agricultural Company. And it also reduces the number of criminal penalties. But it does not remove them all, contrary to what has been said in the press.

Three founding articles of the new CAC

Private Limited Companies become Limited Companies

The most symbolic disappearance is that of the Private Limited Company, which becomes the Limited Company. And as a company can now be incorporated and administered by one person and will no longer have a minimum capital, the Single-Person Private Limited Company and Starter Private Limited Company are now obsolete: they also disappear and become Limited Companies. Of course the Public Limited Company remains, as does the Cooperative Company, which must now meet strict requirements that guarantee its cooperative nature. Many will become Limited Companies.

The concept of registered capital has also been removed for Limited Companies, which will no longer need a minimum capital. But while it is no longer necessary to inject funds when setting up the company, the founders will be required to present a more detailed financial plan. “Instead of the minimum fixed amount depending on the type of company (€ 18,550 for Private Limited Companies in the old code), the company must now have ‘sufficient’ assets to start with and this must be justified in the financial plan. This obligation increases the responsibility of entrepreneurs,” Lien Thijs adds.


However, Public Limited Companies will continue to have to meet minimum capital requirements, in accordance with European rules. This is likely to be the legal form specified for large companies and listed companies.

“The company needs to have ‘sufficient’ starter assets, which must be demonstrated in the financial plan, an obligation that raises the responsibility of entrepreneurs.”

1 share does not always equal 1 vote

The contribution to the company set-up can be constituted in cash, in kind or, and this is a further innovation, in effort - a partner may provide professional knowledge, work or services. These last two options must be valued by a reviewer. In Limited Companies, the contribution no longer needs to be indicated in the statutes. If it is, it is under the heading ‘Statutory account of unavailable assets’ that will replace, from 1 January 2020, the heading ‘Unavailable capital and reserves’ in the annual accounts.


Shares, bonds, ‘subscription rights’ (the new official term for ‘warrants’) ... Like Public Limited Companies, Limited Companies can issue all categories of securities and assign whatever rights it wishes. “Two shareholders who have made the same contribution need not necessarily have the same rights,” says Michael Zadworny, Legal Advisor at ING Belgium. This is an important provision, especially for family businesses. At the general meeting, multiple voting rights are allowed in unlisted companies. In these, a double voting right called ‘loyalty’ can be granted under certain conditions. But it is not acquired ad vitam: it can also be lost. Beware however: the rule 1 share = 1 vote always prevails if the statutes do not state otherwise.

New terminology. From … to …

  • Company Code (CC) to Company and Association Code (CAC)
  • capital to assets
  • manager to director (in Limited Companies)
  • stocks to shares (in Limited Companies)
  • warrants to subscription rights

Better-protected assets

The CAC ensures protection of companies’ assets and of their creditors. When are their rights potentially threatened? In the event of distribution of dividends or (part) of the assets, in particular. Specific rules apply in all cases, but there’s an important new aspect to the CAC: besides the examination of the net assets (balance sheet) imposed on Public Limited Companies, Cooperative Companies and Limited Companies, the Board of Directors of the latter two will examine the company’s liquidity before any distribution of a portion of the assets.


This consists in checking if the asset distribution will not prevent settlement of debts due in the following 12 months. “The management body takes responsibility for this and may be subject to criminal penalties if it does not,” warns Lien Thijs. The same applies if the company (Limited Company, Cooperative Company or Public Limited Company) opposes the examination of the net assets. “


Limited liability

Another essential point of the reform concerns the responsibility of directors. The new company code marks the end of their unlimited liability, which could reduce the attractiveness of Belgium abroad and be expensive in terms of insurance. In case of gross negligence (fraud, misconduct, intentional negligence, etc.), of course, the limitation of liability does not apply. But if, and only if, the fault is minor - which therefore still limits the scope of the new provision - the financial penalties are between 125,000 and 12 million euros, depending on the size of the company.


Since we are talking about management bodies, we must also know that from now on, a Public Limited Company can also be administered by a single director, whether an individual or personal legal entity. The default rule remains, however, the so-called ‘one-tier’ system, with a Board of Directors composed of at least 3 directors, unless the company has only 2 shareholders.

Gradual entry into effect

The new CAC came into effect on May 1st. It applies to any company created after this date and now prohibits the use of any of the old legal forms such as Private Limited Company or Temporary Company. And nothing prevents an existing company from adapting to the new CAC rules immediately.


From 1 January 2020: entry into effect for companies created before 1 May 2019. "The mandatory provisions of the CAC apply, as well as the additional provisions if the statutes do not state otherwise,” says Michael Zadworny. For example, on that date, a Private Limited Company becomes a Limited Company and its manager becomes a director."

From 1 January 2024: all companies must have adapted their statutes to comply with the CAC. They have until that date, unless they take a decision by then that imposes a statutory amendment. In this case, they must obligatorily amend all their statutes to conform with the new Code.

“This major reform introduces many changes and simplifications, in particular concerning companies’ legal forms and assets.”

Good to know

  • Many of the CAC rules apply by default but the statutes of the company can differ from them more easily.
  • Any distribution of dividends or reduction of assets must be subject to a balance check and, for the Limited Company and Cooperative Company, a liquidity check.
  • The responsibility of the directors is no longer financially unlimited but is limited - note, only in case of accidental minor fault! – to penalties of between 125,000 and 12 million euros.
  • A Public Limited Company can be administered by a single director.