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.

7 consequences of incomplete registration
The importance of correct registration in the crossroads bank for enterprises in 2019
Each company has its unique registration in the Crossroads Bank for Enterprises (CBE). However, businesses often forget to keep this registration up to date. This may have unpleasant consequences. The CBE is a register managed by the Federal Public Service Economy in which all basic information about companies and their establishments is kept. The CBE centralises the basic information about com
Are they 50% or 100% deductible?
Reception costs of a publicity event are only deductible in part
According to the letter of the law (art. 53, 8° of the Income Tax Code (WIB), reception costs incurred during a business related event are only 50% deductible. For some time already, there have been ongoing discussions concerning the question whether or not this limited deductibility likewise applies when the reception costs are incurred within the context of a publicity event.  And do these
Not as obvious as many people think
Restructuring? Think about your directorships
The restructuring of a company involves many aspects. An element that is often forgotten is the directorship positions held by the acquired company in a number of other companies. The question is what will happen with these directorships once the company holding them disappears as a result of a merger or division. In many cases, the intention is that these directorships will continue uninterrupted
This year it will be more likely that people will need to respond
Simplified declaration proposal? Check it thoroughly and respond in good time!
The number of simplified declaration proposals has been on the rise for several years now. This year, more than 3.2 million Belgians will receive such a proposal. If nothing needs to be changed, you do not need to respond either. However, if something does need to change (i.e. the Tax Authorities hold incorrect or incomplete data), then you must respond in good time. This year,
Also companies are required to follow the procedure
Conflicts of interest in the new Companies and Associations Code
The new Companies and Associations Code (CAC) entered into force on 1 May 2019. The CAC provides for broader and stricter regulations concerning conflicts of interest that may arise within an organisation. Broadening the scope of regulation means that the directors of cooperative companies, non-profit organisations (ASBL/VZW) and foundations&n
Important things you have to know
Some do’s and don’ts when making a bank donation
The bank donation is still a very popular way of donating money by bank transfer. This is not surprising: if it is carried out according to the rules of the game, the bank donation is a valid donation, without (too much) red tape and without incurring gift tax. However, there are a few rules that threaten to spoil the game if they are not followed correctly. Hence some tips that you should keep in
The further course of the relationship between the UK, the EU and the EEA
What impact will Brexit have on your corporate income tax?
For the time being, the United Kingdom (UK) is still part of the European Union (EU) and the European Economic Area (EEA). The UK has since been given until 31 October 2019 at the latest to implement Brexit. This means that cross-border transactions with the UK continue to fall within the scope of EU directives. However, after Brexit, the UK will no longer be able to rely on these directives. This
Less strict circular for catering sector
New circular regarding the VAT rate for restaurant and catering services
On 1 January 2010, the VAT rate for restaurant and catering services was reduced to 12%. This rate only applies to food. Drinks (including non-alcoholic beverages and coffee and tea) are still subject to the standard VAT rate of 21%. On 23 December 2009, the administration published an explanatory note in which it detailed how an overall price for a menu (including drinks) needed to
From now on, also 'high' fixed cost deductions for self-employed persons
Personal income tax return form AY 2019: several new features explained
From now on, also 'high' fixed cost deductions for self-employed and other changes  The new personal income tax return form for assessment year 2019 was published on 7 April, the starting shot for the annual tax return race. For the Flemish tax return, "only" 6 codes have been added, and for the Walloon and Brussels tax returns, "only"
Does the new definition of a company have any consequences for your organisation?
Broader requirements for registration with the CBE - clarification for unincorporated companies
In a previous article, we explained that the introduction of a definition of 'company' in the new Companies and Associations Code (CAC) also affects the registration with the CBE (Crossroads Bank for Enterprises). In this article, we will discuss in more detail the registration obligation for unincorporated companies.  Consequences of the broader definition of a company  With the new

Subscribe to our newsletter