Entry into force of the Companies and Associations Code (WVV)

The new Companies and Associations Code (CCA) entered into force on 1 May 2019 and became immediately applicable to new companies and associations. Existing companies and associations must apply the new regulations from 1 January 2020, but they can already voluntarily submit to the new code before that.

Sooner or later, all companies and associations will have to conform their statutes to the new code. For the time being, however, there is no reason to panic: existing companies and associations will be given sufficient time for this. When exactly should you take action in your company or association? Which legal rules are now applicable to your company or association?

May 1, 2019: the code applies to new companies and associations

1/ The new code is immediately applicable to companies and associations without legal personality established from 1 May 2019, and to companies and associations with legal personality whose deed of incorporation was filed from 1 May 2019.

As of 1 May 2019, it is therefore no longer possible to establish companies and associations with a legal form that is abolished by the new law (such as the limited partnership with shares, the agricultural company, the cooperative company with unlimited liability, the professional association, etc.). Cooperative limited liability companies will continue to exist, but they must henceforth have a genuine cooperative purpose, which is strictly defined by the new code.

Existing companies and associations can no longer be converted into one of the abolished legal forms from 1 May 2019.

2/ Existing companies and associations can voluntarily submit to the new law from 1 May 2019 (the so-called “opt-in”), but they are not yet obliged to do so.

When must my existing company or association adapt its articles of association to the new code at the latest?

3/ Existing companies and associations that wish to make use of the opt-in must amend their articles of association by decision of the general meeting.

Practical: the opt-in can be useful, for example, for directors who want to benefit from the limitations on directors' liability for future management actions or for shareholders who want to distribute the capital and/or legal reserve of their BV.

Please note, cherry picking is not allowed. Anyone who wishes to make use of the optional entry into force must fully adapt the articles of association to the provisions of the new code.

4/ Existing companies and associations that do not make use of this option should not immediately amend their articles of association. They will be given the time until January 1, 2024 to do so, on the understanding that at the next amendment to the Articles of Association, they will[*] after 1 January 2020, they must bring their statutes into line with the new code. [*This does not apply to amendments to the articles of association resulting from the application of the authorized capital, the exercise of subscription rights or the conversion of convertible bonds.]

Practical: are you planning an amendment to the articles of association (eg a capital increase) but do you not yet wish to be fully subject to the new code? This is still possible until January 1, 2020. After all, an amendment to the articles of association before January 1, 2020 does not entail an obligation to conform the articles of association to the new code.

If this does not happen, the directors risk being liable for any damage that the company or association would suffer as a result of this negligence.

5/ Companies and associations whose legal form is discontinued must convert to one of the remaining legal forms before 1 January 2024.

Failing that, such companies and associations will automatically be converted to the legal form closest to their existing legal form on 1 January 2024.

Practical: this also applies to a CVBA that does not meet the cooperative finality as described in the new code. This company must be converted into another legal form. If not, it will automatically be converted into a BV on 1 January 2024.

Which legal rules now apply to my company or association?

6/ The new code will apply in full to new companies and associations from 1 May 2019. The old code no longer applies to these companies and associations. Existing companies and associations are also fully subject to the new code when these companies and associations adapt their articles of association to the new code. In other words, this is either with the opt-in, or with the next amendment to the articles of association from 1 January 2020, or at the latest 1 January 2024 (see above).

7/ For existing companies and associations that have not yet adapted their articles of association to the new code, both the old and the new code will apply simultaneously pending an amendment to the articles of association.

  • The mandatory provisions of the new code will apply to all existing companies and associations from 1 January 2020, even if these companies and associations have not yet amended their statutes. Provisions in the articles of association of your company or association that would conflict with this are considered unwritten.
    These mandatory provisions are not exhaustively enumerated in the law, but, according to the Explanatory Memorandum, they contain, among other things, the rules regarding profit distributions, the amended alarm bell procedure, the amended conflict of interest procedure, the amended exit rules at the expense of the assets in the BV and in the CV, the general regime of directors' liability, etc. For example, on January 1, 2020, the paid-up part of the capital and the legal reserve of a BVBA will be converted by operation of law into a non-distributable reserve under the articles of association.
  • The non-mandatory provisions of the new code will also apply on 1 January 2020, but only insofar as the articles of association of the company or association do not deviate from them. In other words, only the non-mandatory provisions of the new code, from which the current articles of association of your company or association deviate, will not yet apply to your company or association.
  • The new dispute settlement procedure will apply immediately to all companies for proceedings initiated after May 1, 2019, regardless of when the underlying facts took place. The old law continues to apply to pending proceedings.
  • There is a different arrangement for associations: as long as they do not change their corporate purpose, they will remain subject to the current regulations until 1 January 2029.

8/ A special arrangement applies to companies and associations whose legal form disappears. The old code will continue to apply prior to conversion. In addition, the new mandatory provisions with regard to their new legal form also apply (e.g. the mandatory provisions with regard to the NV will apply from 1 January 2020 to the current limited partnerships with shares if they have not yet changed their legal form).

Practical: this also applies to a CVBA that no longer meets the cooperative purpose as described in the new code. The mandatory provisions of the BV will apply to these companies from 1 January 2020.

Conclusion

The entry into force of the new Companies and Associations Code is a complex tangle. If you want certainty about the legal rules that apply to your company or association, it is best to comply with the provisions of the new code before 1 January 2020.

We are happy to determine which legal form best suits your expectations. We are therefore happy to work out a tailor-made route for you (info@vsadvocaten.be).

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