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.

However, the articles of association may deviate from this general rule in two ways:

  • The articles of association may determine that the shareholders’ meeting cannot grant a notice period or severance pay.
  • The articles of association may determine that termination is only allowed subject to a notice period or severance pay.

If there are legal grounds (such as a serious criminal offence in the professional domain, tax fraud, etc.) dismissal ad nutum without notice or severance pay will still be possible, irrespective of other provisions in this regard established in the articles of association.

Sole director

The articles of association may also provide for a “sole director”, a governance model that is now restricted to partnerships limited by shares (‘commanditaire vennootschap op aandelen’), a company form that will disappear in the future.[1]

In this case, the articles of association may establish that this sole director, who, contrary to partnerships limited by shares, does not have to be a shareholder, must agree not only to every profit distribution and amendment to the articles of association, but also to his own dismissal. It also becomes possible to immediately appoint a statutory successor.

The dismissal of the sole director for legal cause is allowed insofar as the quorum and the majority required for the amendment of the articles of association are met. In addition, a specific procedure must be provided for under which any shareholders holding at least 10% of the capital of the public limited company (‘NV’) (3% in the case of a listed company) may request that the court dismiss the sole director for legal cause.

Dualistic governance

The articles of association may also establish a dualistic governance model, which is a two-tier system managed by two bodies:

  • A management board
  • A supervisory board

Both bodies are collegial bodies comprising at least 3 persons. The law provides for a clear separation of the powers of both bodies (unlike with the current management committee (‘directiecomité’), where there is a delegation of powers); it also establishes that no person may be member of both bodies at the same time.

The supervisory board is competent for the strategic management of the public limited company (‘NV’) and grants release from liability to the management board. This body is responsible for all the powers that the CAC confers on the board of directors (i.e. convening and preparation of the shareholders’ meeting, drawing up of the board reports, etc.).

The management board is competent for the operational management of the public limited company (‘NV’). This implies that the management board is responsible for all the powers that are not the exclusive power of the supervisory board.

The legally regulated management committee (‘directiecomité’), as we still know it today, will be abolished (with the exception of the special regime for credit institutions and insurance companies). The existing Articles 524bis et seq. of the Belgian Companies Code will continue to apply to existing management committees up until the date of amendment of the articles of associations, which must be completed by 1 January 2024 at the latest.

Daily management

The management body, irrespective of the form that has been chosen, may delegate its powers to one or more managing directors, who act separately or jointly as a collegial body (‘college’). If the company chooses to adopt the dualistic model, this power belongs to the management board rather than to the supervisory board.

The management body no longer needs the statutory authorisation to set up a daily management body. Henceforth, it derives this power from the law itself.

The new CAC introduces for the first time a legal definition of the term “daily management”. The opportunity has been taken to reverse the restrictive interpretation of this term made by the Belgian Supreme Court (‘Hof van Cassatie’). The following acts are now considered as being acts of daily management:

  • Acts or decisions limited to the company’s daily needs; or
  • Acts which, for reasons of minor importance or because of their urgency, do not justify the intervention of the management body (the Belgian Supreme Court (‘Hof van Cassatie’) decided in 2009 that both conditions had to be fulfilled cumulatively (“and” instead of “or”), which implied a significant restriction).


Pieter Van Braband, intui attorneys

[1]However, if the public limited company (‘NV’) appointing a sole director is also a listed company, the sole director must himself be a public limited company (‘NV’) governed by a collegial body.