Help, soon my legal entity type will no longer exist!

The WVV ("CAC") is on its way
On 4 June 2018, the "draft legislation introducing the Companies and Associations Code" was filed in the Chamber, marking one of the most far-reaching corporate law reforms since the introduction of the coordinated laws on commercial companies on 30 November 1935.

This extensive reform of corporate law corresponds with the introduction of the “Companies and Associations Code” (abbreviated as "WVV” - in Dutch “Wetboek van Vennootschappen en Verenigingen”) and is based on three key aspects: (i) a thorough simplification, (ii) a far-reaching flexibilisation, and (iii) an adaptation to a number of changes from the European level.

Limiting the number of legal entity types

In the context of the thorough simplification of corporate law, the number of (Belgian) legal entity types will be reduced dramatically. After all, the current Companies Code has 18 legal entity types (including the European legal entities).

The new legislation provides only 4 basic types:

  • The partnership;
  • The private company ("BV");
  • The limited liability company ("NV");
  • The cooperative company ("CV").

Limited companies and partnerships in the WVV
The partnership will become the most basic type of unlimited company that can exist both with or without a legal personality.

A partnership having legal personality can be modelled as a general partnership ("VOF") if it has unlimited partners or as a limited partnership ("CommV") if it has at least one silent partner.

In areas where the three remaining limited companies (BV, NV, CV) have a strongly overlapping scope in practice, they will be reinforced in terms of their distinguishing features.

The BV will becomes the most essential type of limited company for SMEs.

Which legal entity types will disappear
With the introduction of the WVV, the following types of legal entities will disappear:

The temporary and the silent trading company
The partnership can have both a quiet and a temporary character under the new law. As a result, there is no further need for a separate legal entity type.

The cooperative company (with unlimited liability (CVOA))
The CVOA is increasingly rare under the current law. The cooperative company with limited liability will continue to exist, but will only be able to be used by companies that effectively propagate cooperative principles, which means that, as their main objective, they exist to meet the needs of shareholders or to develop the socio-economic activities of shareholders. If one wishes to establish a company with a legal personality, but with unlimited liability of its partners, one must revert to the VOF under the new legislation.

The partnership limited by shares (Comm. VA)
The main reason for establishing a Comm. VA under the current laws is to create a limited company whose shares are freely transferable, but where a seemingly irremovable statutory director/managing partner can be appointed. Due to the flexibilisation of the NV and especially of the BV, the characteristics of a Comm. VA can be perfectly achieved under these new legal entity types.

The economic partnership (ESV)
An ESV is a company that can be established by contract for a definite or indefinite period of time, by natural persons or legal entities, with the sole purpose of facilitating or developing the economic activities of its members, or to improve or increase their results. The objective of this rare legal entity type can be perfectly realised as a VOF, a CV or a non-profit organisation (VZW).

The agricultural company
The agricultural company strongly resembles a VOF or a CommV, and is mainly used because it provides access to certain civil rights (e.g. leaseholds) and tax benefits. Under the new legislation, the agricultural company will disappear as a separate legal entity type, but the VOF, the CommV, the BV and the CV can be recognised as an agricultural company to provide continued access to the aforementioned benefits.

The company with social purpose
At present, a company can assume the status of a company with a social purpose if it meets certain conditions. In the new WVV, this possibility will only be open to a CV, which can request recognition as a social enterprise.

The new WVV will most likely take effect on 1 January 2019. After ratification of the new code, no new companies can be incorporated under or converted into a discontinued legal entity type.

For existing companies with an abolished legal entity type, a transitional arrangement will apply until 1 January 2024. For these companies the current Companies Code will continue to apply until the point in time that they are converted into another legal entity type, with the exception of a number of mandatory provisions from the new WVV that will apply immediately.

If they have not yet been converted into another legal entity type by 1 January 2024, they will be converted automatically by operation of law as follows:

  • The Comm. VA will become a limited liability company (‘NV’) with a sole director;
  • The agricultural company will become a VOF, or if there are silent partners, a CommV;
  • The ESV will become a VOF;
  • The CVOA will become a VOF;
  • The CVBA that does not meet the definition of a cooperative company will become a BV.

The members of the executive bodies of companies that are automatically converted in this way must convene a general meeting within six months of this conversion with a view to amending the articles of association. They are personally and severally liable for the damage suffered by the company or third parties due to non-compliance with this obligation.

The requirement to register gets a broader scope
More entrepreneurs must register with the Crossroads Bank for Enterprises (CBE)
Under the aim of creating a more attractive business climate, changes were made to the existing company law. In that context, the legislator has done away with the ‘trader’ concept, replacing it with the umbrella term ‘enterprise. Besides forming the basis for the rules of the Code of Economic Law, the Judicial Code and the Civil Code, the new enterprise concept also has consequences for reg
More specific: matrimonial property law
A new compensation obligation in the legal system
What if a spouse practices his profession in a company whose shares all form part of his separate property? The Act of 22 July 2018 has introduced considerable changes to matrimonial property law. This article addresses a specific addition to that law, namely the possible disadvantage incurred by the matrimonial property when a spouse practices their profession through their own company1. 
Changes in the cary proxy and usufruct
Estate planning: recent developments
Over the last few months, we have regularly reported on the important changes in estate planning and inheritance planning. Below is an update of some of those changes.   The care proxy: secure your estate for later The classic example is a person who, due to a physical or mental limitation (e.g. coma, dementia), is – temporarily or permanently – unable to manage their assets properly.
Happy Brexmas?
How to prepare your company for Brexit?
On 10 December 2018, the British Prime Minister decided to postpone the vote on the Brexit deal in the House of Commons. The risk of a ‘no deal’ disaster scenario is increasing. What are the important dates? On 29 March 2017, the United Kingdom formally informed the European Council of its intention to leave the EU (according to the procedure provided in Article 50 of the Lisbon Treaty). C
A popular control structure
The all-powerful manager of a civil-law partnership: was it always a fiction?
The civil-law partnership has long been a popular control structure among wealth planners. In many cases, donors do not want to give up their assets entirely, and still want to retain some control over what they donate. Definitely in cases of transfers of family companies, the donors (often parents or family members) still want to retain control over the course of the business.  The advant
The tax framework
Company subsidies: exempted or not?
Various subsidies were briefly described in the article by our colleagues from Strategy and Operations. They explained that they can assist you and your company with guidance on subsidies, from A to Z.1 In this context, we would like to discuss the tax framework for subsidies: how are awarded subsidies treated tax-wise within companies? Are these subsidies exempt from corporation tax and, if
Right to deduct VAT possible for costs incurred during the purchase of shares
The Ryanair ruling
Right to deduct VAT also possible for costs incurred during the purchase of shares, if the purchase ultimately does not (fully) go ahead The European Court of Justice recently confirmed that VAT on costs incurred during the purchase of shares may be deductible even if the purchase ultimately does not (fully) go ahead. As such, the Court of Justice has upheld the principle that the preparatory t
What are the options?
The deduction for investment: an illustration of the options
The deduction for investment allows companies and natural persons who earn profits or benefits to reduce their taxable profits by placing part of the acquisition or investment value of investments in new tangible and intangible fixed assets. Depending on the size of your business and the nature of your activities, you can generally apply the regular, one-off deduction for investment of 20% (tem
Valuation of usufruct
Now also a witch hunt when usufruct is sold?
In previous editions, we have already written about the valuation of usufruct when purchasing property, but recently there have also been regular reports of checks on the valuation of usufruct when reselling. However, up until now, the case law has followed the viewpoint of the taxpayer. Brief description For several years, there has been a lot of controversy regarding the valuation of usufruc
Vlabel is using conciliatory language
Has the decrease in Flemish sales duty led to an increase in the costs for purchases of usufruct?
The decrease in sales duty: also for split purchase usufruct-bare ownership The recent drop in the rate (to 7.00%) for purchases of family homes comes with a number of conditions. For example, the purchaser must be a natural person. Following some uncertainty, it was subsequently confirmed that, in the event of a split purchase of such a property by a company for the usufruct and the bare owner f

Subscribe to our newsletter