Conflicts of interest under the new CAC – new rules, new questions and points of attention
The regulation set out in the Companies Code (CC) to manage conflicts of interest in cases of directors having conflicting proprietary interests is complicated, since it depends on the situation. Just think about the appointment of an ad hoc trustee in private limited companies (‘BVBA’ / ‘SPRL’) having no collegial board; the duty to abstain imposed on directors of listed public limited companies (‘genoteerde NV’ / ‘SA noteé’) which does not apply on directors of unlisted companies; the lack of statutory regulation for directors of non-profit organizations (‘VZW’ / ‘ASBL’) – the list goes on. The legislator has taken the opportunity offered by the new Companies and Associations Code (CAC) to harmonize the regulation managing conflicts of interest. Here we provide an overview of the most significant changes: Duty to abstain becomes the general rule. The director having a conflict of interest must abstain at all times, which implies that s/he will no longer be allowed to participate in the
Opt-in only becomes applicable after publication of the amendment to the articles of association – practical implications
The new Companies and Associations Code (CAC) entered into force on 1 May 2019. This implies that newly incorporated companies whose deed of incorporation has been deposited at the registry on or after 1 May 2019, will be governed by the new CAC. For existing companies, a transition period is provided for until 1 January 2020. Until that date, they will still be governed by the former Companies Code. From 1 January 2020, the mandatory provisions of the CAC (including the additional provisions unless derogated from in the articles of association) will become applicable. The legislator enables existing companies however to be governed by the new CAC even before 1 January 2020 by using the ‘opt-in’ mechanism. If they decide to do so, the CAC will become applicable in its entirety. Indeed, it will not be possible to only apply part of the Code. The opt-in must be achieved by amending the articles of association, stipulating that the company decides
Conversion of an abolished legal form: when and with or without application of the conversion procedure?
The Company and Associations Code (CAC) reduces the number of legal forms and abolishes many of the currently existing legal forms. Within the category of companies without legal personality, the ‘tijdelijke handelsvennootschap’ (’société momentanée’) and the ‘stille handelsvennootschap’ (’société interne’) both disappear. Indeed, the same objective can be achieved through the form of the ‘maatschap’ (’société simple’), whether by setting up a ‘tijdelijke maatschap’ (’société simple momentanée’) for a limited period of time or a specific project, or a ‘stille maatschap’ (’société simple interne’) led by a manager who is acting in his own name. Within the category of companies with uncomplete legal personality (‘onvolkomen rechtspersoonlijkheid’/’personnalité juridique imparfaite’), the ‘coöperatieve vennootschap met onbeperkte aansprakelijkheid (CVOA)’ (‘société cooperative à responsabilité illimitée (SCRI)’) and the ‘economisch samenwerkingsverband (ESV)’ (‘groupement d’intérêt économique (GIE)’) disappear as they are similar to the ‘vennootschap onder firma (VOF)’ (‘société en nom collectif (SNC)’). The ‘landbouwvennootschap (LV)’ (‘société agricole (SAGR)’) is also abolished by the CAC. But in
Opposability of statutory or conventional transfer restrictions
A shareholder sells his shares to a third party without having given to the other shareholders priority to acquire these shares pursuant to the right of first refusal included in the articles of association. Is this transfer to a third party valid? Or is it possible to oppose the transfer restriction to the third party-buyer? The Code for Companies and Associations stipulates that transfer restrictions included in the articles of association (such as right of first refusal, standstill provisions, tag along, clause of approval, etc.) are always opposable to third parties. The new Code thus confirms the majority opinion in jurisdiction and legal doctrine. Statutory transfer restrictions are opposable even if the third party has acted in good faith (i.e. he did not know about the transfer restriction) and even if the transfer restriction has not been recorded in the share register despite the obligation to do so (see also blog “Mandatory recording of transfer restrictions in the share register”).
Mandatory recording of transfer restrictions in the share register
The Code for Companies and Associations includes the obligation to record the transfer restrictions arising out of the articles of association in the share register. This obligation must be complied with by the company’s governing body. It aims at informing the third party-transferees as fully as possible of the existing transfer restrictions. As the transfer of nominal shares only becomes opposable to the company and third parties after having been recorded in the share register, it is to be expected that third party-transferees will always consult the share register, at the latest when recording their transfer. Transfer restrictions which are not deriving from the articles of association, but from a shareholders’ agreement for instance, only have to be recorded in the share register when one of the parties so requests. How does it work in practice? In our opinion, it is not necessary to copy the entire clause related to the transfer restriction in the share register, but it
Update: additional postponement of the mandatory transparency about the ultimate beneficial owner(s)
In our blog post of 21 December 2018 we informed you about the new legally required transparency as to the ultimate beneficial owners of enterprises, by means of registration in the so-called UBO-register. According to the royal Decree of 30 July 2018, the information concerning the ultimate beneficial owners of the entreprise had to be registered for the first time at the latest on 30 November 2018. After a first postponement of the deadline, until 31 March 2019, the FPS Finance announced that entreprises are allowed to postpone the registration until 30 September 2019. This blog post has been updated on 23 September 2019: see link. Kim Van Herck and Margaux Van Hove, intui attorneys kim.vanherck@intui.be / margaux.vanhove@intui.be http://www.intui.be