The Corporate reform brings independents, associations and companies under the same umbrella of “Enterprise” that may go bankrupt

1. Subject and context

The law reforming the corporate law (hereafter: the “Law”) was approved on 15 April 2018 and published on 27 April 2018 in the Belgian Official Gazette.

The draft bill emerged in a context of modernization of both civil and economic law, wherein the Belgian Minister of Justice took various measures to create a more attractive business climate for entrepreneurs and foreign investors in Belgium.

A consequence of the Law is the harmonization of many obligations and rules that will apply to companies, associations, foundations, doctors, architects, lawyers and any person or organization falling under the definition of “Enterprise” (cf. below) in the sense of the Law.

2. Key aspects of the reform

The Belgian Commercial Code which dates back to 1807 (!)  and of which almost all articles have been repealed over time in the context of other reforms, is completely dismantled and included in the Belgian Code of Economic law which already includes a large part of the economic legislation.

Outdated concepts like “commerçant” (free translation: merchant) and “acte de commerce” (free translation: merchant/commercial transaction) do no longer meet today’s economic reality and result in legal uncertainty when to be used to the modern concept of a business. Therefore, the Law definitely remove and replace them by the new concept of “enterprise”, which – in the sense of the Law – includes much more entities than the previous concept of “commerçant. According to Article 35 of the Law the “enterprise” is “each of the following organizations”:

a) “any natural person who carries on a professional activity as an independent”;

In this respect, it is important to point out that the activity of a natural person who is purely inspired by the normal management of its personal assets does not fall under the notion of “enterprise”.

b) “any legal person”;

By legal person, the Law refers to companies with legal personality (SA, SPRL, etc.), but also associations and foundations, even if they do not pursue an economic purpose.

The abovementioned Article 35, however, expressly excludes the legal persons under public law, with the exception of those that offer goods or services on the market.

c) “other organization without legal personality”

In this respect, the Law refers particularly to the “société de droit commun” (i.e. the company incorporated under ordinary law, which does not opt for a particular corporate form).

The aim is to confer a broad content to the concept of “enterprise” in order to cover all economically active actors, which was not the case with the former concept of “commerçant”. Moreover, this concept will serve as keystone and basis for determining the scope of many obligations that will be incumbent to any person or organization falling under the definition of “enterprise”, such as the duty to register at the Crossroads Bank for Enterprises (BCE/KBO), the duty to keep accounts, as well as the applicability of insolvency law, special rules with respect to the production of evidences in commercial law or the jurisdiction of the new Corporate court.

The replacement of the Commercial court by the Corporate court for commercial litigation is another key aspect of the Law.

3. Implications of the reform

Given the fact that the new concept of “enterprise” is, among others, the keystone of the jurisdiction of the Corporate court, (i) in the sense of the Law, doctors, lawyers, architects, farmers, non-profit organizations, etc. will be considered as “enterprise” and that, consequently, (ii) the Corporate court will be, in relation to its predecessor the Commercial Court, competent to hear disputes that may arise between -many more potential “enterprises”.

This new concept implies also some changes for the freelances and non-profit organizations, which will now face new insolvency, evidentiary and registration rules. Inevitably these changes already gave rise to a real debate between the defenders of a legal regime specific to non-profit organizations and the defenders of the reform who argue, on the contrary, that non-profit organizations have a huge stake in this changes, especially regarding their access to a court specialized in the law of legal persons with, among the judges, representatives who will handle their files, namely non-professional consular judges from the associative world.

4. Entry into force of the Law

The Law shall enter into force on 1 November 2018 at the latest, unless the King determines a date of entry into effect that precedes it. Some provisions have their own date of entry into force as provided by Article 260 of the Law (e.g. the provisions concerning the registration rules for the associations without lucrative purposes shall enter into force at a date to be fixed by the King).

The reform, that clearly demonstrates a desire for harmonization and modernization of the corporate law, on one hand, and the extension of competences ratione personae of the Corporate court, will now have to handle the many practical and organizational issues that may arise.

In case you would like any advice concerning the rules and obligations that may change for you, EY Law advocaten-avocats is happy to assist you.