Broader scope for law on financing of small and medium-sized enterprises

The law dated 18 December 2015 (the “Accounting Law”) entered into force on 9 January 2016. It has transposed into Belgian national law Directive 2013/34/EU on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings. Here, we will not focus on the obvious accounting aspect of this law, as we think the law’s incidental impact on the financing of small and medium-size enterprises (“SMEs”) seems particularly noteworthy.

To recap, a relevant law dated 21 December 2013 (the “SME Law”) had been enacted with the aim of regulating the granting of loans to SMEs, which placed a full set of constraints on the lender in order to enhance the protection of the borrower and balance their overall contractual relation. It covered obligations relating to, inter alia, the suitability test, pre-contractual information, early repayment and the use of unfair terms.

By way of context, the scope of the SME Law is rooted within Article 15 of the Belgian Company Code (the “Code”). The latter defines what qualifies as a “small company” and therefore as a beneficiary of the SME Law provisions. In this case, the Accounting Law made a number of changes to the structure of Article 15 of the Code. It addressed the formal criteria for setting thresholds and the way they should be construed.

A “small company” will be one that, on the financial year-end date, has not exceeded more than one of the following limits for the past two consecutive financial years: 

  • 50 workers employed, on an annual average basis (left unchanged);
  • EUR 9,000,000 of annual turnover, exclusive of VAT (formerly EUR 7,300,000);
  • a balance sheet total of EUR 4,500,000 (formerly EUR 3,650,000).

The Accounting Law also removed the exception under which a company having more than 100 workers employed on an annual average basis is unable to qualify as a “small company”. Moreover, it should be noted that a few changes have been made to the various calculation methods and to the specific situation dealing with a group of related companies.

Lenders should therefore be more vigilant. In the credit market, the updated notion of “small company” will result in more beneficiary enterprises coming under the protection of the SME Law.


Benoît Vandervelde (benoit.vandervelde@cms-db.com)

Romain Rolland (romain.rolland@cms-db.com)