Following several years of preparation, the new Belgian Code of Companies and Associations (the "BCCA") was finally adopted by the Parliament on 28 February 2019.
The BCCA substantially reforms the Belgian companies and associations law currently in force and aims to make the regime more flexible, simple and coherent. The BCCA will gradually enter into force, on 1 May 2019 for companies and associations incorporated as of that date, and on 1 January 2020 for currently existing companies and associations.
This BCCA is the most recent reform of the Belgian legal framework for (international) non-profit associations which has undergone substantial changes in recent years, for example, the widening of the scope of Belgian insolvency law to include (international) non-profit associations, the entering into force of the GDPR and the introduction of a register of ultimate beneficial owner(s).
Below you will find a brief overview of the key changes to the Belgian legal framework for (international) non-profit associations:
- BCCA – One code to rule them all: The BCCA integrates the current company code and the main association legislation into one single code. As a result, the general rules for companies (e.g. directors' liability and organisation of the members' meetings in writing) will in the future also apply to (international) non-profit associations and foundations.
The act of 27 June 1921 will be repealed.
- BCCA – To distribute or not to distribute, that is the question: Under the BCCA, the key determining aspect between companies and (international) non-profit associations will no longer be whether or not commercial activities are carried out, but whether or not profits can be distributed.
In the future, (international) non-profit associations may carry out all types of commercial profit-making activities without limitation and regardless of whether they conduct these commercial activities as their main or ancillary activity. They will, however, be strictly prohibited from distributing profits resulting from these activities to their founders, members and/or directors.
- BCCA – Directors' liability: The corporate rules regarding directors' liability, which previously only applied to companies, will also become applicable to directors of (international) non-profit associations.
Directors' liability under the BCCA will, as similarly for companies, be subject to a financial cap depending on the size, turnover and balance sheet total of the association. The cap will not apply to cases of fraud, repeated minor faults, gross negligence, willful intent, in a number of exceptions set out in the BCCA (e.g. liability in relation to VAT, corporate income taxes or social security contributions which remain unpaid).
- Who is your ultimate beneficial owner? Associations have until 30 September 2019 to register their ultimate beneficial owner(s) for the first time in the newly established register of ultimate beneficial owners. After the initial registration, the registered data needs to be kept up to date. Failing to make the required registrations may result in administrative and criminal fines.
- Being GDPR-proof, a new way of living: Since 25 May 2018, (international) non-profit association must comply with the GDPR which, in short, requires most associations to formalise the way they treat the data of their members, directors and third parties.
- The insolvent association: As from 1 May 2018, (international) non-profit associations have become subject to Belgian insolvency law. As a result, (international) non-profit associations can be declared bankrupt and may also apply for a judicial reorganisation procedure.
If you would like to have more information on the impact of the new BCCA or other legislative changes on your association, feel free to contact us.
