Recent changes to the Belgian Code of Companies and Associations: the Law of 27 March 2024

The “Law of 27 March 2024 on the digitisation of justice and miscellaneous provisions Ibis” (the Law) makes certain important amendments to the Belgian Code of Companies and Associations (the BCCA) in particular in relation to the company size criteria, the governance of listed companies and the transfer of significant assets by a listed company.

Company size criteria

The Law modifies the thresholds to qualify as a micro-company, a small company or a small group, which determine their reporting obligations. Such thresholds have been revised to take into account inflation and have been increased by about 25%, i.e.: 

  • To qualify as a micro-company, the entity must not exceed more than one of the following criteria:
    • A total balance sheet of EUR 450.000;
    • An annual net turnover of EUR 900.000;
    • An annual average of 10 employees.
  • To qualify as small, a company must not exceed more than one of the following criteria:
    • A total balance sheet of EUR 6.000.000;
    •  An annual net turnover of EUR 11.250.000;
    •  An annual average of 50 employees.
  • To qualify as small, a group must not exceed more than one of the following criteria: 
    • A total balance sheet of EUR 21.250.000;
    •  An annual net turnover of EUR 42.500.000;
    •  An annual average of 250 employees. 
  • To qualify as small, an association or a foundation must not exceed more than one of the following criteria:  
    • A total of revenue (excl. VAT) amounting to EUR 450.000;
    •  Total assets amounting to EUR 1.562.000;
    •  Total debts amounting to EUR 1.562.000;
    • An annual average of 5 employees. 

Governance of listed companies

The Law implements various measures with the aim to improve the confidence of third parties and shareholders in the management bodies of listed companies.

Firstly, a professional ban is introduced for persons who have been convicted for offenses listed in article 20 of the Banking Law of 25 April 2014 (“Bankwet” / ”Loi Bancaire”). Such offences include money laundering, insider trading or corruption. The purpose of this amendment is to align the regime applicable to listed companies with those rules already applicable to other financial institutions. This professional ban is applicable to any person appointed as director, member of the management board, member of the supervisory board, as well as any person entrusted with the daily management of a listed company. 

Another important change relates to the number of independent directors on the board of listed companies. As of the moment that the board of a listed company does not count at least three independent directors (anymore), the first general assembly that follows must set up a board of directors which complies with the aforementioned requirement. Failure by the general assembly to resolve this infringement will result in the suspension of all financial (or other) advantages granted to the directors by virtue of their mandate. 

The qualification as independent director also becomes more stringent. Under the previous system a person was only required to comply with the conditions set out in the Belgian Code on Corporate Governance (2020) to qualify as an independent director. This presumption of independence is now lifted and considered the minimum threshold to be reached. Therefore, the assessment of a candidate’s qualification as independent director goes from what was often regarded as a formality to a more in-depth examination of his independence when being proposed for the position. The board will be required to explicitly state that it sees no indication as to a lack of independence on the part of the candidate director. If the board wishes to present a candidate director whose independence could be called into question, the board must set out the indications it has which may cast doubt over the candidate’s independence. The board must also set out the reasons why it nonetheless considers the candidate to be independent, despite these indications.

Transfer of significant assets

In addition, a new regime is introduced regulating the transfer by a listed company of a significant portion of its assets (i.e. 75% or more of its total assets, as calculated on the basis of the last published annual accounts).

If a listed company wishes to make a significant disposal of its assets, it will require the approval by simple majority of the general assembly of shareholders. Furthermore, and to avoid a bypass of the procedure by a splitting of the transfer of assets, every transfer of assets which has occurred in the 12 months prior and which has not been approved by the general assembly of shareholders must be added up to determine whether the 75% threshold has been reached. 

The approval by the general assembly of shareholders will however not be required in case the assets concerned are transferred to a subsidiary, unless the person or entity which holds the direct or indirect control of the listed company also directly or indirectly owns a participation of at least 25% of the subsidiary, or a participation entitling such person or entity to at least 25% of the profits of the subsidiary to which the assets are transferred.

From a procedural perspective, the management body of the company will have to draw up a detailed report to be submitted to the general assembly. This report should justify the proposed transfer of assets, outline its consequences and explain the future of the listed company following the transfer. Failure to draft and submit such report will result in the nullity of the transfer decision taken by the general assembly. If the transfer of significant assets also qualifies as a transaction with a related party in the sense of articles 7:97 and 7:116 of the BBCA (“verrichting die verband houdt met een verbonden partij van een genoteerde vennootschap” / “opération concernant une partie liée à la société cotée”), the procedure set out in such articles will also apply. 

Finally, the decision of the general assembly to sell such assets must be filed with the competent enterprise court and be published in the annexes of the of the Belgian State Gazette. 

Entry into force

The compulsory appointment of three independent directors will apply for a particular listed company as of the first day of its second financial year starting after the publication of the Law (which occurred 29th March 2024). The new criteria to determine the size of companies, groups and association apply to any financial year starting after 31st December 2023. The remainder of the provisions within the Law have already entered into force on 8th April 2024.

Peter De Ryck
Clément Defechereux