Subject: new company law – consequences as from January 1 , 2020. What does this mean for you?
The new Code of Companies and Associates has entered into force since May 1, 2019. What does this mean for you?
Due to the new company law, a number of company forms will disappear as from 1 January 2020. Which are these and what are the consequences in that case? What is important and what data should you keep in mind?
Which forms will stay and which will disappear?
What should you do?
If you work in a form that does not exist in the new company code, you will have to convert it into a form of company that will continue to exist under the new company law. Your articles of association must therefore be amended, whether or not by notarial deed.
For the modification of the bylaws, you have time until January 1, 2024. Also for the conversion, the general period applies until 1 January 2024.
Which rules apply in the meantime? As long as the conversion has not taken place, the rules of the old company law will continue to apply to your company, unless it concerns mandatory provisions from the new company law. They apply from January 1, 2020, regardless if the modification of the bylaws has been done or not.
What are the mandatory provisions?
The mandatory provisions are the provisions that may not be deviated from. This includes (non exhaustive list):
Designations and abbreviations of company forms;
Rules regarding profit distributions in BVs;
The disappearance of the term capital in a BV;
The definition of a cooperative society.
The name will therefore change on January 1, 2020! So if you still have a bvba then this will be regarded as a bv from 01.01.2020 as it is a mandatory provision. Even if you do not change your articles of association, your bvba will be changed into the name bv as from 1 January 2020.
Your company name and form must be mentioned on your letterhead as well as on all other documents originating from your company (eg brochures, general terms and conditions, order forms, invoices, etc.).
Strictly speaking, this means that you must mention 'bvba' behind your company name up to 2019 and as from 2020 you must put 'bv' behind your company name on your letterhead. If you order new letter paper, then you can mention 'bv' on the latter.
However note that you can still use your old stationery for a while. You will not be ‘punished’ immediately if you still have "bvba" on your letterhead as from 2020.
The new Company Law defines a new test as a successor to the old so-called net asset test if private companies (BVs) want to perform a distribution from the company's assets. A balance test and a liquidity test must be carried out prior to the distribution.
The above does not only concern the payment of a dividend, but also for example, bonuses (profit distribution to directors), the repayment of a contribution, the repurchase of own shares etc….
The liquidity test in particular could throw a spanner in the works. After all, the liquidity test must demonstrate that, according to the developments that can reasonably be expected, the company should still be able to pay the debts that will be due for a period of at least 12 months after the distribution. In addition, the directors are liable and must prepare a special report.
The wrongly made distributions can therefore be reclaimed from the shareholders, even if they received the amount in good faith.
Consequently, it is perhaps appropriate to pay an interim dividend before 31.12.2019.
The capital will be abolished in a BV (formerly BVBA) and CV (formerly CVBA) from 01.01.2020 and will be converted into an unavailable reserve. For NVs, the term capital remains.
In the new company law, a cooperative company will only be allowed to serve companies that pursue a "real" cooperative object and purpose.
What if you do nothing by 01.01.2024?
If you have not yet done anything (so no changes have been made to the articles of association, whether or not by notarial deed), before 1 January 2024 your current company will be "automatically" converted into another company form. Therefore you cannot choose the form. The law determines the form in which your company will legally "change". Below you will find an overview of the forms that will no longer exist (see Table 1).
After such an automatic conversion, the Board of Directors must convene a general meeting within six months with a view to amend the articles of association. If you don’t act as such, you are personally and jointly and severally liable for the damage suffered by the company or third parties due to non-compliance with this obligation to amend the articles of association.
If you have any questions regarding this matter, please send an email to your contact person and do not respond to this email.
Filip Diez Marjolijn Himpens Johan Hellinckx