By way of a reminder we will briefly go over the relevant timings: the Companies and Associations Code (“WVV” in its Flemish acronym) was adopted in May 2019. The new company law was immediately applicable to companies, associations and foundations incorporated or established after that date. For companies, associations and foundations incorporated or established prior to that date, the imperative rules became automatically applicable from 1 January 2020 onwards. Provisions of the articles of association that contravened these imperative provisions were deemed to be null and void. These organisations should have adapted their articles of association by 1 January 2024 at the latest.
Further to the adoption of the new company law a few types of business enterprise have also been scrapped. If your company fell under one of the abolished types of business enterprise, such as the partnership limited by shares (“Comm.VA” in its Flemish acronym), the economic partnership (“ESV”), the agricultural company (“LV”), the cooperative company with unlimited liability (“CVOA”) and the cooperative company with limited liability (“CVBA”), which is regarded as a spurious cooperative company, these have been turned ipso jure[1] into types of business enterprise stipulated by the legislator. Those companies finding themselves in this situation had until 30 June 2024 to adapt their articles of association.
There are no punitive sanctions or fines linked to late adaptations of articles of association. However, the members of the administrative or governing body are personally and severally liable for any prejudice incurred not only by the company, association or foundation, but also third parties, consequential to the late adaptation of the articles.
This means that provided the non-adaptation of the articles does not give rise to loss or damage of any kind, the situation does not entail any consequences. For most organisations that have not adapted their articles of association, the risks associated with late adaptation will be fairly limited. The company continues to operate with the existing articles of association but these must be deemed to be null and void wherever, and to the extent that, they run counter to the imperative rules of the WVV. Nevertheless these organisations are in an illegal situation.
Despite the fact that no fine is imposed and no other official sanction ensues on account of failure to adapt the articles of association in time, it must be pointed out that these companies are in an illegal situation and certain negative consequences could still arise.
Companies for which a supervisory director is appointed are subject to the obligation to report the non-adaptation of the company’s articles of association in the annual auditor’s report.
Moreover the lodging of a publication file is refused by the clerk of the court’s offices of various enterprise courts as long as the articles of association have not been adapted. This can be particularly inconvenient when, for example after a company takeover, there is the intention to publish a change of management in the annexes to the Belgian Official Journal. In this case the amendment to the articles of association will first have to be carried through (and published) before other publications can be effected.
It is also not inconceivable that in the framework of a public call for tenders a company might not be adjudicated a contract whilst it does not have its house in order from the point of view of company law as regards its articles of association and appointments.
Finally, banks or insurance companies may be reticent about granting a (new) line of financing or an insurance policy to a company that is not in compliance with the WVV.
Finally, specifically for a private limited liability company (“BV”) or a limited liability partnership (“BVBA”), no distribution can be effected from unavailable shareholders’ equity for as long as and insofar as this is not made available further to an amendment to the articles of association.
Despite the fact that the sanctions for failing to adapt the articles of association appear to be rather theoretical, this situation of non-adaptation may, as seen in the examples above, have less agreeable side effects.
If, after reading this article, you feel you want to set about adapting your company’s articles of association, feel free to contact our legal team who will give you the necessary support.
How do I adapt my articles of association?The adaptation of the articles of association can in theory be done very simply by means of an ordinary amendment to the articles of association. In that case the old articles will be replaced by a new version in keeping with the WVV. Depending on the legal form, this can be done privately or by means of a certified deed executed before a notary-public. |
