New articles of association under the Christmas tree this year?

Since 1 January 2020, the Belgian Companies and Associations Code (BCAC) applies to all legal entities that were already established before the BCAC entered into force on 1 May 2019. As a result of the entry into force on 1 January 2020, the articles of association of existing legal entities may be in breach of the applicable legislation since this date. Given the substantial changes introduced by the BCAC, the legislator has allowed as a general principle that existing legal entities must bring their articles of association into line with the provisions of the BCAC no later than 1 January 2024.

However, not all companies are concerned by this deadline. At the end of October 2023, barely 46% of the targeted companies had already brought their articles of association into line with the BCAC. Considering the rush at the offices of Belgian notaries public during the year-end period, it is likely that some legal entities will not meet the deadline and the mandatory amendment of the articles of association will have to be pushed over the year-end.

Late alignment of the articles of association could lead to joint and several liability for the members of the management body of the legal entity in terms of any damages suffered as a result of the failure to meet the deadline. However, the former minister of Justice (V. Van Quickenborne) indicated that for the one-person private limited liability company (besloten vennootschap / société à responsabilité limitée), there is only a rather theoretical risk that non-compliance with the obligation to bring the articles of association into conformity with the BCAC would cause effective damage to the company or third parties.

Nevertheless, the non-adjustment or late adjustment of the articles of association also has practical consequences on the functioning of the company. For example, the company will not (yet) be able to make use of the flexible decision-making process provided for in the BCAC if the articles of association still include a stricter regime. In addition, the possibility of establishing a management committee (directiecomité / comité de direction) has been significantly reduced by the introduction of the BCAC, rendering the function and operation of this corporate body unclear after 1 January 2024.

Companies that have adopted a legal form that will disappear (e.g. CVBA/SCRL, Comm.VA/SCA, ESV/GIE) and have not yet been converted into another legal form on 1 January 2024 will be converted into the envisaged legal form by operation of law on that day. In this case, an additional transitional measure is provided by the legislator whereby the management body must convene the general meeting no later than 1 July 2024 with as its agenda the modification of the articles of association to bring them into line with the new legal form.

To avoid ambiguities, contradictions and sanctions, legal entities have an interest in amending their articles of association as soon as possible. If you would like to verify whether the articles of association of your company or association are compliant with the BCAC or have any other questions, please feel free to contact us.