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Last update date : September 2015
The present memorandum outlines a number of issues relating to the incorporation and operation of a Belgian ‘société anonyme’ (in French) or ‘naamloze vennootschap’ (in Dutch) (SA/NV). It is intended as a general introduction and does not purport to be comprehensive in all respects.
TABLE OF CONTENT
1Incorporation of a Belgian ‘société anonyme’ Or ‘NAAMLOZE VENNOOTSCHAP’
1.1Share capital
1.2Costs of incorporation and time factor
1.3Bank account
1.4Financial plan
1.5Shareholders and directors
1.6Auditors
1.7Crossroads Bank for enterprises (former registry of commerce)
1.8Regulated activities and Operating license for small and medium sized companies
1.8.1Operating Licenses
1.8.2Small and medium sized companies
2Operation of a SA/NV
2.1Legal aspects
2.1.1Later funding of a SA/NV
2.1.2Management and representation
2.1.3Types of shares and Transfers of shares
2.1.4Duties and liabilities of the directors
2.1.5Liabilities (civil law)
2.1.6General shareholders' meeting – Special majority rules
2.2General obligations of the employer (the company) under Belgian law
2.2.1Registration with the social security administration (ONSS/RSZ) and tax administration, and payment of the social security contributions and wage withholding tax
2.2.2Registration with a family allowances fund
2.2.3Work accident insurance
2.2.4Work regulations
2.2.5Establishment and keeping of social documents
* * *
1Incorporation of a Belgian ‘société anonyme’ Or ‘NAAMLOZE VENNOOTSCHAP’
1.1Share capital
The minimum subscribed share capital for a SA/NV amounts to EUR 61,500. At least one-fourth of the total subscribed capital must be paid in upon incorporation, with a minimum of EUR 61,500.
1.2Costs of incorporation and time factor
The deed of incorporation must be notarized. The notary’s fees are subject to specific regulations enforced by the law. The notary’s fees are calculated on the basis of a digressive scale depending on the amount of the share capital of the company to be incorporated.
Furthermore, the deed of formation will have to be published in the form of an extract in the Appendix to the Belgian State Gazette. The cost of this publication amounts to approximately EUR 200 (including VAT). The notary takes care of all these formalities and costs.
Incorporating a company in Belgium is relatively easy. Once all information is available, and the amount of the capital to be paid up is made available (see hereafter), it is matter of a few days (depending on the time necessary to proceed with the formalities mentioned hereafter in 1.3and 1.4).
1.3Bank account
The share capital can be paid either in cash or in kind.
If contributions in kind are chosen, the same will have to be valued by an accountant, and the incorporators will be required to justify the valuation and the motives for the contribution in kind in a separate report.
If the contributions are in cash the notary will have to receive evidence that the minimum capital has been credited to a special escrow account opened in the name of the company to be founded with a bank authorized to operate in Belgium. This evidence takes the form of a certificate issued by the bank.
The money paid in is subsequently released in favor of the company upon submission to the bank of a statement by the notary establishing that the company has been duly incorporated.
1.4Financial plan
The incorporators of the company must also submit to the notary a so-called “financial plan” in which they justify (for the first two financial years) the future capital requirements of the company to be set up. Should the company be declared bankrupt within three years following the company’s formation, the incorporators may be held personally liable for the obligations of the company, if the bankruptcy has been caused by a manifest insufficiency of capital during the company’s first two financial years.
It should be emphasized that this financial plan will not be published but kept by the notary in his records. It is only communicated to the commercial court at the request of the judge or the public prosecutor.
For a SA/NV, the articles of association may provide that only certain major incorporators will be liable under the above rules, whereas the other incorporators will be deemed to be mere subscribers.
1.5Shareholders and directors
A SA/NV must have at least two shareholders and two directors (individuals or legal entities), or a minimum of three directors if there are three or more shareholders. If, during the life of the company, the number of shareholders is reduced to one for a period of more than a year, this single shareholder will become jointly liable with the company for all of the company’s liabilities that have arisen as from the date on which all shares were concentrated in the hands of the one single shareholder.
Whenever a legal entity is appointed a director of a SA/NV, it must designate an individual to perform the mandate in its name and for its account. This permanent representative shall be in the same position as if he were acting in his own name and for his own account. His appointment (and resignation) must be published in the Appendixes to theBelgian State Gazette
Citizenship or place of incorporation of the shareholders or directors is not relevant (except that directors, permanent representatives, members of the management committee may need to have a work permit (employees) or a professional card (self-employed persons) if they are not EU nationals)[1].
1.6Auditors
An auditor will be required if the SA/NV employs more than 100 employees or if it meets at least two of the following three criteria:
- more than 50 employees (annual average);
- an annual consolidated turnover of more than EUR 6,250,000 (ex VAT);
- a total of consolidated balance sheet of more than EUR 3,125,000.
An auditor may be appointed for a renewable term of three years. The general shareholders' meeting may only withdraw such an appointment on serious grounds.
1.7Crossroads Bank for enterprises (former registry of commerce)
A commercial company must be registered with the Crossroads Bank for Enterprises ("Kruispuntbank voor Ondernemingen/Banque-Carrefour des Entreprises") which came into being on 1 July 2003.
The Crossroads Bank for Enterprises (CBE) is a new register for all enterprises (legal entities, associationsand individuals), the purpose of which is to register and manage all basic information pertaining toenterprises and to simplify the administrative formalities that must be complied with in orderto establish and manage a business in Belgium.
Every company will receive an enterprise number, which will be its unique identification number with theBelgian authorities (VAT, CBE, social security, etc.) and the courts. New companies will receive anenterprise number upon registration with the CBE. For existing companies, the enterprise number is 0followed by the VAT number. The number must be used on all company documents, including invoicesand judicial documents.
Failure to register is a criminal offence. In addition, claims on behalf of a company that is not registered will be inadmissible in court, and the company may be ordered to discontinue its business.
The registration must be effected by the person in charge of the day-to-day management, either personally or through a power of attorney. For practical purposes, a power of attorney will generally be granted to a nominee (a specialized agency) in the deed of incorporation of the company.
For regulated activities and for small and medium-sized businesses, the registration is subject to prior special authority granted by the competent administration(s) (see also hereafter).
1.8Regulated activities and Operating license for small and medium sized companies
1.8.1Operating Licenses
If the nature of the business (regardless of its size) is a regulated activity for which an authorization is required (e.g. the banking sector), the company will not be registered unless it is able to show that it has obtained the relevant authorization.
1.8.2Small and medium sized companies
A small or medium-sized business that carries on activities requiring registration with the CBE, must be managed by a person who fulfils certain requirements in terms of management skills.
Will be deemed to be small and medium-sized businesses:
- Businesses which number of employees does not exceed an annual average of 50;
- Businesses in respect of which no more than 25% of the shares or voting rights attached thereto are held by one or more other companies which are not small or medium-sized businesses;
- Businesses which annual turnover does not exceed EUR 7,000,000 or which balance sheet total does not exceed EUR 5,000,000.
In practice it is accepted that evidence that the company does not qualify as a small or medium-sized business may be given by way of a declaration upon honor or by an appropriate mention in the deed of formation.
2Operation of a SA/NV
2.1Legal aspects
2.1.1Later funding of a SA/NV
The funding of a SA/NV can be taken care of in numerous ways. Some of the more common ways are described hereafter.
2.1.1.1.Increase of capital
An increase of capital will normally be carried out through a shareholders' resolution. The board will convene a general shareholders' meeting in front of a notary. A majority of 75% in favor of the increase will be required. The increase broadly follows the rules in respect of payment of capital upon incorporation.
However, it is also possible to provide in the articles of association that the board is authorized to increase the capital up to a maximum to be determined. The authorization will remain valid for a maximum term of five years (renewable).
2.1.1.2.Loans
Obviously it is also possible to fund a SA/NV by way of loans, which may be subordinated or not. Loans granted by shareholders are common; interest provisions must, however, be checked from a taxation point of view. A SA/NV is also authorized to issue bonds, convertible or not.
2.1.2Management and representation
2.1.2.1.Directors and powers of the board of directors
A SA/NV is managed by a board of directors whose members are elected by the general shareholders' meeting for a maximum term of six years, which is renewable. The directors may be dismissed at any time by a majority vote of the general shareholders' meeting.
Normally, the board of directors has all powers to accomplish all acts necessary (or useful to) the accomplishment of the purpose of the company, except those acts which are reserved to the general shareholders' meeting (e.g. amendment of the articles of association, winding-up of the company, approval of the annual accounts and apportionment of profits, appointment and termination of directors and auditors and increases or decreases of capital). The board of directors may appoint a chairman. It may also confer the day-to-day management to one or more managing directors.
2.1.2.2.Representation of a SA/NV
A SA/NV is represented vis-à-vis third parties by its board of directors. However, the articles of association may grant the power to represent the company to one or more directors, either alone, or jointly. Such a provision is enforceable vis-à-vis third parties.
All other restrictions or apportionment of tasks will not be enforceable with respect to third parties, even if published. Such restrictions will only have an effect that remains internal to the company. For instance, approval required to be obtained from an investment committee in respect of certain investments falls within this category of restrictions.
2.1.2.3.Day-to-day management
The daily management is defined as the power to carry out the acts of management that are commanded by the day-to-day life of the company and those which, because of their lack of importance or the need for a quick solution, do not justify the intervention of the board of directors itself. Powers of daily management may be granted to one or more persons who need not be directors. Restrictions on the powers of day-to-day management are generally not enforceable vis-à-vis third parties, even if published.
2.1.2.4.Management committee
Since the law allows assignment of day-to-day management to one or more individuals acting alone or jointly, it implies the admission of the existence of management boards having management representation powers within the limits of the day-to-day management. This is only useful for companies of a certain size, where the directors or managing directors are unable to cope with the huge amount of acts of day-to-day management.
The Corporate Governance Act of 2 August 2002 provides a legal framework for the creation of a management committee ("Comité de Direction"/"Directiecomité") within a Belgian SA/NV.
If a management committee is to be created, the articles of association must expressly provide for the possibility for the board of directors to delegate its management powers to a management committee. A management committee may be composed of one or more members, which may or may not be directors. The delegation may not relate to the general policy of the company or include any acts which are reserved to the board of directors by law.
The articles of association may also grant one or more members of the management committee the power to solely or jointly represent the company.
The creation of a management committee and the power of one of more members of the management committee to solely or jointly represent the company may be invoked vis-à-vis third parties after the publication thereof in the Appendix to theBelgian State Gazette. If the scope of the tasks delegated to the management committee is restricted (following a provision in the articles of association or a decision of the board of directors), such restrictions (even if published), as well as any distribution of tasks within the persons of the management committee may not be invoked vis-à-vis third parties.
The board of directors of the company is responsible for the supervision of the management committee.
2.1.3Types of shares and Transfers of shares
Shares in a SA/NV will be in bearer form or in registered form. For registered shares, title to shares will result from appropriate mentions in the company’s stock ledger. If the shares are in bearer form title will result from possession of share certificates.
Transfers of shares in a SA/NV are basically free, but it is allowed that the parties provide for restrictions on the transfer of shares, e.g. by way of rights of first refusal in favor of the existing shareholders. Such restrictions may be included in the articles of association or contained in separate shareholders’ agreements.
It is also possible to include in the articles of association a share transfer approval clause by virtue of which transfers of shares are only allowed if approved either by the general shareholders' meeting or the board of directors. If the proposed transferee is refused, the company will generally have to make sure that the shares can be taken over by one or more existing shareholders or by a third party.
It goes without saying that restrictions of this type are effective mainly in respect of registered shares. For bearer shares restrictions on transfers may be rendered effective through a deposit of the shares with a third party.
It is to be noted that the law provides that shares may also be represented in a dematerialized form. Such dematerialized shares are represented by a registration of the share in the holder’s name in an account opened with an approved financial institution. Booking from one account to the other operates the transfer of such shares. However, the necessary implementing decrees relating to dematerialized shares have not yet been adopted.
2.1.4Duties and liabilities of the directors
2.1.4.1.Duties
In addition to their management tasks the directors have inter alia the following duties:
- to prepare a management report to be submitted to the general shareholders' meeting, where appropriate, and other appropriate special reports (e.g. in the event of a contribution in kind);
- to prepare the annual accounts in a truthful manner in accordance with the accounting rules, to submit these to the auditors, if any, and to the general shareholders' meeting (within six months after the end of the financial year at the latest) and to publish the annual accounts within 30 days following their approval;
- to make sure that the names and addresses of directors, persons in charge of day-to-day management and auditors, if any, are published; equally, to arrange for publications of other important decisions e.g. a change of the registered office, pre-merger notifications etc., as and when appropriate;
- to convene the shareholders at least once a year for the ordinary general shareholders' meeting, and in the following cases: if the company’s net assets are reduced to less than the subscribed share capital; in case of a request to call a general shareholders' meeting on behalf of shareholders representing one-fifth of the share capital; in case of any other event provided for in the articles of association;
- to file the company’s tax return within the time period imposed by the tax administration;
- to hold a special VAT accountancy and to file VAT returns depending on the size of the company.
2.1.5Liabilities (civil law)
As a matter of principle, the directors are not personally liable for the commitments of the company. The company is bound by the commitments made by the board of directors or the directors on behalf of the company, even if the same exceed the company’s corporate object, unless the company is able to demonstrate that the third party in whose favour the commitment was made could not be unaware that the commitment was made outside the competences of the directors.
The directors are liable towards the company for mismanagement; the general shareholders' meeting may decide by way of a majority vote to hold the directors liable. Minority shareholders may have a right of action in certain cases.
In addition, all directors are jointly and severally liable towards the company and third parties for violations of the company law, accountancy law, or the articles of association of the company. A director who did not take part in the violation may escape this liability if the following (cumulative) conditions are met:
the director must demonstrate that he did not take part in the violation;
- he must demonstrate that he did not commit negligence; and
- he must give inform the next forthcoming general shareholders' meeting about the violation.
Finally, directors may be held liable vis-à-vis third parties on the basis of the general law of tort, if they commit negligence.