Approval of the new code of companies and associations by the Belgian parliament

Approval of the new code of companies and associations by the Belgian parliament

On 28 February 2019 the Belgian federal Parliament gave its green light to the new Code of Companies and Associations. The aim of the new law is to modernise and simplify the existing framework and unify rules for the same kinds of activities. It also offers international associations direct transfer possibilities to Belgium from abroad.

In the new legislation, associations and corporate societies are governed by the same code. The incorporation of the 1921 Association Act into the new code removes existing analogies and references that were present in the Act and required frequent knowledge updates. The code distinguishes between commercial and non-profit entities.

The new law has been subject to a lengthy process and various discussions due to its broad scope. It encompasses the changes of rules for companies and associations, as well as the need to adapt to new EU legislation requirements for companies. It has reduced the number of company categories from 17 to 4 and kept the categories of associations and foundations, and established clear principles for profit distribution.

The denomination for associations remains unchanged, with the existing distinction:

  • Non-profit organisations and associations – ASBL (in French) and VZW (in Dutch)
  • International non-profit associations – IASBL (in French) and IVZW (in Dutch)

Most of the provisions for associations follow previous legislation, however, there are several aspects of interest that are introduced with the new law, such as:

  • The possibility of transnational conversion of an entity based abroad into a Belgian international association or company while continuing its legal nature
  • The possibility of associations merging and splitting
  • Specific definitions of obligations for governing bodies
  • Legal limitations of liability for directors
  • A lowering of the minimum number of members

It is important to point out that non-profit organisations have been treated on the same level as companies in terms of obligations such as keeping accounts, registration within the Crossroads Bank for Enterprises (CBE) and the right of insolvency since 2018.

The entry into force will be progressive. As of 1 May 2019, newly created companies, associations and foundations will have to comply with the new rules. For existing companies, associations and foundations, the binding provisions of the new code will apply at the latest as from 1 January 2020, with a transitional period to allow them to adapt their statutes foreseen until 2024.

A presentation on this topic was given at the 2019 European Association Summit by the partners of the FAIB – Federation of International and European Associations in Belgium. The material is available here.