Recent Contributions
Online incorporation of companies and other legal entities & statutory mandate database
Online and remote incorporation of companies and other legal entities On 15 July 2021, the Company Law Digitalisation Act[1] was published in the Belgian Official Gazette. This new act transposes the Directive (EU) 2019/1151 of 20 June 2019[2], which is part of the wider digitalisation process promoted by the European Union. This act is a new step towards the digitalisation and modernisation of company law. After the introduction of the digital mandate allowing to remotely sign and execute authentic deeds such as deeds of amendment to the articles of association, and following the implementation of the articles of association database enabling the online consultation of all the articles of association and amendments that are executed by notary deed since 1 May 2019 (https://statuten.notaris.be), this new act allows since 1 August 2021 to digitally sign the authentic deed of incorporation of a company or other legal entity (such as an international non-profit organisation). The novelty consists in the fact that, from
Pledge on shares – what to check in case of due diligence: the pledge registry or the share register of the company?
After some delay, the new Pledge Act finally came into force on 1 January 2018[1]. This new legal framework introduced the ‘registered pledge’. This kind of pledge becomes valid and opposable without requiring a dispossession. This implies that the pledgor can remain in possession of the pledged goods. To make this pledge opposable to third parties, it needs to be registered in the ‘national pledge registry’ that has been set up for that purpose (https://pangafin.belgium.be/#?lang=NL). The pledge registry is publicly accessible: any person who holds a Belgian electronic identity card is able to conduct searches in the pledge registry. Every consultation requires the payment of a search fee per result, that will be charged before making the possible results available, even if the outcome is negative. In addition, the system will keep track of the identity of the person who performed the searches for a period of 6 months. This enables the pledgors to check who accessed their data. Before
How far does loyalty go? Can a director compete with the company, during his mandate or after the termination thereof?
A director is expected to be “loyal” to the company in which he exercises his mandate. The duty of loyalty of directors[1] emanates from the general ‘good faith’ principle in contract law, which states that agreements must be executed in good faith. It is accepted that this loyalty implies a non-competition obligation, which means that the director is not allowed to exercise activities during the term of his mandate that compete with the company’s (actual) business activities. He may not, for instance, set up a competing company, exercise a mandate or hold an operational position in a competing company, … This non-competition obligation applies even without an express agreement. However, it is possible to derogate from this non-competition principle by mutual agreement. In line with the above, most of the legal doctrine and jurisprudence accept that this non-competition obligation ceases to exist with the termination of the mandate (whatever the reason or the time of this termination may be), unless
Out of sight, but not out of mind: alternatives to physical attendance at general meetings
The need for legal alternatives to physical attendance at general meetings of companies or (international) non-profit organizations (“(I)VZW”), became more relevant than ever the past year. The Company’s Code, respectively the CCA, already included an array of options to address this problem even before it became an issue within the context of the Covid-19 crisis, some of these options only applicable to companies. The Law of 20 December 2020 (Belgian Official Gazette of 24 December 2020) on various temporary and structural provisions on justice in the context of the fight against the spread of the coronavirus COVID-19, introduces a certain number of both temporary and permanent flexibility-enhancing measures, including additional options for (international) non-profit organizations (“(I)VZW”). Below, we list the different options that are currently existing under company and association law, which can be used as an alternative to the traditional default decision-making procedure of a physically held general meeting: The general meeting in writing (“éénparige schriftelijke besluitvorming”) The CCA
The leonine clause in the CCA – risk-free shareholdership henceforth possible
To limit the risk which is inherent to entrepreneurship, entrepreneurs can choose to conduct their business through the use of a company. Depending on the type of company, the shareholders can benefit from a limited liability. This implies that their loss, if any, will be limited (in principle) to the loss of their contribution in the company. Is it possible for a shareholder to go even further and even safeguard his contribution in the company? In other words, can he participate as a risk-free shareholder in the company? The most common strategy to create a risk-free participation makes use of put options. Shareholder A (the risk-free participating shareholder) holds a put option on his shares, which gives him the right to sell his shares to shareholder B, while shareholder B commits himself to buy these shares. The transfer price is determined as equivalent to the subscription price at which shareholder A acquired his shares. If the suffers losses, resulting in
Reform of the matrimonial property law: implications for the spouse who is professionnaly active through a company
Common shares of which the membership rights are own. In case of spouses who are married under the legal regime with community of acquisitions, the professional income generated by each individual spouse is considered as community property. In this context, each spouse continues to have professional autonomy and can make his own professional choices, without the interference of the other spouse. To strengthen this professional autonomy, the 2018 reform of the matrimonial property law clarified and further developed the former rules provided for in article 1401,5° of the Civil Code regarding the membership rights of common shares. Today, the membership rights of shares acquired with common funds and registered in the name of one of the spouses, are the property of the spouse in whose name the shares are registered. The membership rights also include the right to act as owner of these shares. Their asset value however, is part of the community property (article 1405, §1, 5° of the