One for all and all for one: The written procedure and the requirement of unanimity

I.            Introduction

Following the COVID-19 pandemic and the resulting lockdown, the Belgian legislator introduced a provision into the companies and associations Code of March 23, 2019 (“Code”) that allows members of (international) non-profit associations (“(I)NPAs”) to make decisions in writing. This provision can serve as an essential tool for (I)NPAs to facilitate decision-making, particularly in situations that require prompt action and in an international context. However, this procedure comes with a crucial condition: unanimity among the members.

Based on our observations that the requirement for unanimity is often misunderstood and inadequately applied by many (I)NPAs, this article will closely examine the unanimity requirement in the context of the written procedure. It will also provide practical guidance on how to effectively implement this procedure to enhance decision-making within (I)NPAs.

II.           The scope of the written procedure

For both the non-profit associations and international non-profit associations the Code provides that “The members may, unanimously and in writing, take all decisions that fall within the powers of the general assembly, with the exception of amendments to the articles of association. In this case, the formalities of convening a meeting do not need to be completed. […]".

There are three main points to consider regarding the scope of decisions that can be made by the members of (I)NPAs:

• Decisions under General Assembly competence: The written procedure can be utilised for all decisions falling under the competence of the General Assembly. This includes the approval of annual accounts, the appointment or revocation of the statutory auditor, and other powers specifically granted to the General Assembly by the Code or by the articles of association (AoA);
• Exclusion of amendments to the AoA: The Code explicitly excludes the use of the written procedure for amending the AoA, which must be decided during a physical, hybrid, or virtual meeting. This exclusion is significant, and is explained by the fact that amendments to the AoA require discussions among members, which cannot occur in a written format. This ensures that critical changes to the governance of the (I)NPA are thoroughly debated and considered. Moreover, a significant number of legal scholars argue that the written procedure should also be excluded for the dissolution of an (I)NPA, as this process is considered akin to amending the AoA;
• Tailoring the written procedure: In their AoA, (I)NPAs can tailor the scope of the written procedure and exclude other types of decisions from this method. This flexibility allows organisations to adapt their governance processes to better suit their specific needs and operational contexts.

III.          Unanimity: a key requirement

Unanimity is a crucial requirement in the context of the written procedure. According to the Code, for a decision to be adopted via this method, ALL members:

• Must agree to use the written procedure, meaning that 100% of the members must participate; and
• Must vote in favor of the proposed decision(s), meaning that 100% of the votes must be in favor.

It is important to emphasize that both conditions must be met for the decision to be adopted. If a single member does not participate in the written procedure or abstains, or votes against the decisions submitted, the required unanimity is not achieved, and the decision is not adopted.

If the (I)NPA does not comply with this unanimity requirement, any parties with an interest in the decision could challenge the validity of the decision taken via the written procedure in court, and the court could declare the decision null and void.

Furthermore, it is essential to stress that:

• The AoA of (I)NPAs cannot deviate from this unanimity requirement by establishing a different or lower participation quorum or voting majority for the written procedure; and
• The silence of a member cannot be interpreted as consent or approval. All members must actively engage in the written decision-making process and explicitly approve or vote in favor of the proposed decisions.

IV.          The unanimity dilemma

While this unanimity requirement ensures complete consensus among the members despite the absence of deliberations, it also renders the written procedure inapplicable in many situations. Due to the specificities of their membership (e.g., the number of members, such as societies with thousands of members, and the level of member involvement, where part of the membership may not be actively engaged), (I)NPAs may struggle to meet this unanimity requirement. As a result, for these (I)NPAs, the written procedure becomes ineffective, even though they could particularly benefit from it.

For instance, large societies with memberships composed of thousands of members dispersed around the world could greatly benefit from the flexibility of the written procedure, allowing more members to participate in important decision-making processes (e.g., elections, approval of annual accounts) even if they cannot attend meetings.

V.           Practical considerations for using the written procedure

While the written procedure may not be suitable for many (I)NPAs, if it is to be used, here are several good governance and practical recommendations regarding its implementation:

• Include the written procedure in your AoA: Although the written procedure provided for by the Code can be applied regardless of whether it is mentioned in the AoA, our experience shows that (I)NPAs often overlook this option or apply it incorrectly when it is not explicitly included. While it is not mandatory to specify the written procedure in the AoA, doing so can enhance awareness and compliance;
• Ensure adequate member communication: All members should be adequately informed about the proposed decisions, including the rationale and implications;
• Set clear deadlines: Establish a clear deadline for members to submit their responses, and inform them that failure to respond will imply a rejection of the decision;
• Maintain thorough documentation: Keep comprehensive records of members' responses, the final decision, and any supporting materials. Proper documentation serves as evidence of compliance with the unanimity requirement and can be crucial in the event of disputes.

Finally, while the written procedure can be useful for urgent decisions or flexibility, it is advisable to avoid relying solely on it for all decisions of the General Assembly. According to good governance principles, it is essential for the General Assembly to convene (in person or online) to discuss and debate before making decisions.

VI.          Conclusion

It is essential to clearly understand and correctly apply the requirement of unanimity. While this requirement ensures consensus among members, it can also limit practicality for (I)NPAs, particularly those with large memberships. Finally, the use of written procedures should be balanced with in person discussions to enhance decision-making and uphold the principles of good governance.

If you have any questions or concerns related to direct tax or non-profit law, Antoine DRUETZ, Partner will gladly assist your organisation.