New legislation modifies the Belgian companies and associations Code
Since early 2020, due to the COVID19 pandemic and the containment measures imposed by governments across Europe and worldwide, many questions arise regarding the organization of general assembly meetings under Belgian law.
During the first wave of the ongoing pandemic, the Belgian government adopted measures via the issuance of the Royal Decree # 4 dated April 9, 2020 (hereafter: “Royal Decree”) to enable companies and associations to (i) postpone their annual general assembly meeting for a limited amount of time (i.e. an extension of 10 weeks) and/or (ii) organize their general assembly meetings, albeit only to a certain extent, virtually.
However, the possibilities introduced by the Royal Decree had a temporal scope and could only be applied to meetings which were convened or held between March 1, 2020 and June 30, 2020. As a result, Belgian companies and associations still experience major practical problems in organizing their general assembly meetings.
In order to address this matter, a new act containing various temporary and structural provisions on justice in the context of the fight against the spread of the COVID‑19 coronavirus (hereafter: “Act”) was adopted on December 20, 2020 to modify (amongst others) the Belgian companies and associations Code of March 23, 2019 (hereafter: “Code”). With respect to non-profit associations (hereafter: “NPA”) and international non-profit associations (hereafter: “INPA”), this Act enables by law (i) the organization of virtual general assembly meetings, (ii) the right for the members to cast upfront votes by the members and (iii) the decision-making through written resolutions of the members.
How does this new legislation impact you?
- Virtual general assembly meetings
The new Act introduces the possibility to organize virtual general assembly meetings, even without any authorization in the articles of association. In this respect, the board of directors needs to decide to grant the right to the members to participate to the general assembly “at distance” by means of an electronic means of communication made available by the association. Furthermore, a number of strict conditions apply to guarantee amongst others the identification of the members, the active participation of the members to the meeting and the exercise of the voting rights.
In case the NPA or INPA does not dispose of adequate electronic means of communication to enable the active and real-time participation of the members to the deliberation and the possibility for them to ask questions, the board of directors must motivate in the convening notice why this is not available. The possibility to make use of this leniency is only applicable until June 30, 2021.
An important nuance however is that only the members, directors and the statutory auditor can virtually participate to the general assembly; the members of the bureau can only physically participate to the meeting. Depending on the specific case at hand, it is possible that the “bureau” only consists of the president chairing the meeting. Consequently, strictly speaking the virtual general assembly is in fact a semi-virtual general assembly with the bureau (which could be limited to the president only) being the only one who is physically present.
This is a positive development for NPAs as this settles the ongoing legal debate in this respect. For INPAs, the positive news is that the possibility to organize a virtual general assembly should no longer be explicitly foreseen in the articles of association. However, for both NPAs and INPAs, the requirement that the members of the bureau can only join in physically actually reduces the possibility to organize a full virtual general assembly to a semi-virtual general assembly.
- Upfront voting mechanism
The new Act also introduces the possibility to set-up a statutory upfront voting mechanism for the members, whereby the members can cast their vote before the general assembly meeting takes place. This mechanism can however only be applied if it is foreseen in the articles of association.
For associations, this was a rarely used method which was already made temporarily available by the Royal Decree. An important restriction is however that it cannot be used unless it is foreseen and regulated in detail in the articles of association.
- Unanimous (!) written resolutions
Finally, the new Act introduces the possibility to take decisions of the general assembly through unanimous written resolutions of the members, even without any authorization in the articles of association. This procedure can however not be used for modifications of the articles of association.
This is a positive development for NPAs as this settles the ongoing legal debate in this respect. However, for both large NPAs and INPAs having a lot of members, the requirement that the written resolutions are to be taken unanimously (by unanimity of all members) is actually restricting and will be very challenging, if not impossible to organize in practice.
When does this new legislation enter into force?
The new Act has been adopted on December 20, 2020 and was published in the Belgian Official Journal on December 24, 2020. The modifications to the Code have therefore entered into force as from December 24, 2020.