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
Mandatory transparency about the ultimate beneficial owner(s) of the enterprise
The new legally required transparency as to the ultimate beneficial owners of an enterprise is an important additional action point in the M&A practice after completion of an acquisition (“post-closing action”). What? Belgian Companies, (international) non-profit organisations, foundations, trusts and legal entities that are comparable to trusts, have the following new obligations under the Belgian “Law of 18 September 2017 on the prevention of money laundering and terrorism financing and on the restriction of the use of cash”: The Law adds to the Belgian Companies Code (Articles 14/1 and 14/2) and to the Belgian NPO and Foundations Law[1] (Articles 58/11 and 58/12) the obligation to obtain and hold adequate, accurate and current information about the so-called “ultimate beneficial owners” of the enterprise. The Law also provides for the creation of a central register of ultimate beneficial owners (UBO register). The aforementioned enterprises must record in this UBO register information about their ultimate beneficial owners, and inform the ultimate beneficial owners
The new Belgian CAC also introduces a new governance model for public limited companies (‘NV’)
The draft of the new Companies and Associations Code (CAC) includes a new governance model for public limited companies (‘naamloze vennootschappen’, abbreviated into ‘NVs’). Henceforth, companies will have the choice between three governance models: the already existing monistic model; the sole director model; and the dualistic model consisting of a management board and a supervisory board. The new CAC also broadens the possibilities for appointing the managing director and defining his/her/its powers. Monistic governance model – weakening of the ad nutum withdrawal Publicly listed companies governed in accordance with the monistic model are managed by a traditional board comprising at least 3 directors (2 if the company has fewer than 3 shareholders). The rule stating that these directors may be removed ad nutum (i.e. immediately) by the shareholders’ meeting continues to apply in principle, but it will no longer be a public policy decision. According to the new CAC, the shareholders’ meeting may grant a notice period or severance pay.