4 November 2019
Companies: a new law, new obligations
The new Law on the Companies and Associations Code sets out changes for all types of companies, including associations and foundations. The new Companies and Associations Code (Code des sociétés et associations - CSA) applies from 1 May 2019.
The aim of the financial breakfast meeting organised in October by La Libre and the MoneyStore.be blog was to provide some clarification about the implications of this new law. What motivated the Minister of Justice, Koen Geens, to review the Companies Code? “The aim of this law was to simplify and modernise corporate law and make Belgium more attractive to business. From now on, all forms of legal entities are covered by a single code: the CSA. This code is very legible but provides for the removal of some existing types of companies,” explains Colette Téchy, Wealth Analysis and Planning Legal Adviser at ING Private Banking.
Strict financial plan
The new law allows for more flexibility and contains fewer imperative rules. What are the main notable features of the CSA? “The main reform is the disappearance of the concept of traders, replaced by the concept of companies. The law on legal entities is now codified in the same way for all companies as well as for associations and foundations. Associations can now, for example, carry out commercial transactions,” notes Baudouin Paquot, Lawyer at the Brussels Bar.
Limited companies (sociétés anonymes) still exist but SRL (limited liability company) replace SPRL (private limited liability companies) and cooperative limited liability companies no longer exist. The main change relates to directors’ liability. This liability now also applies to directors of ASBL (non-profit organisations).
Note that an SRL can now be created with a single shareholder. “For SRL, we now refer to shares, not parts, and the concept of manager has disappeared, to be replaced by director. There is no longer a minimum capital requirement. Shareholders can incorporate the SRL based on contributions in cash or in kind,” specifies Colette Téchy.
As there is no longer a minimum capital requirement, the legislator has reinforced the founders’ liability. When incorporating a company, a very strict financial plan is now required, with compulsory information such as a two-year budget, for example. “This means that the founders, along with the notary and the accountant, are liable for the financial plan,” warns Colette Téchy.
When dividends are distributed, the company must now carry out a liquidity test and a solvency test. It is important to emphasise that all types of companies are concerned by the CSA, including associations, ASBL, foundations, cooperative limited liability companies and common law companies, which are converted into simple companies.
Whatever the type of company, it will therefore need to adapt. “The law came into force on 1 May 2019. Any company created after that date must meet the new conditions of the CSA. Existing companies will need to amend their Articles of Association. This must be done before a notary by 31 December 2023. This deadline is extended to 2029 for associations,” notes Baudouin Paquot.
Finally, from 1 January 2020, distribution of dividends, for all companies, must be accompanied by a solvency test and a liquidity test. This new law will therefore require vigilance from all owners, founders, shareholders and directors of companies, including associations and foundations.
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© Isabelle de Laminne, La Libre Belgique