Belgian association law is about to change significantly, and the impact of this reform cannot be overestimated. Given the extensive upcoming changes, the new Code will affect every single company and association based in Belgium in various ways. All associations will need to review their statutes and governance processes in light of the challenges arising and opportunities created by the new reform. Here are seven key facts you need to know to prepare.
This article is authored Morgane Vansnick, Association Administrator, and Benita Lipps, Head of Association Management at Interel Europe.
1. What Law Is Affected?
Associations with a seat in Belgium are currently governed by the law of 27 June 1921 on associations (ASBL), international associations (AISBL), and non-profit organisations. This law was last amended by the Act of 2 May 2002. This legal framework will be completely replaced by a new Code of Companies and Associations.
2. Why the Reform?
While many European and international associations chose Belgium as their official home, the legal requirements in the region are rigid and complex. The main goals of the reform are to simplify the existing legal framework and to give those organisations affected greater flexibility for their internal operations. The philosophy driving the reform will ideally make Belgian company law more attractive for both Belgian and foreign investors.
3. What Has Happened to Date?
On 20 July 2017 the Belgian Federal Council of Ministers approved a draft bill introducing a complete new Code of Companies and Associations. On 4 June 2018 the draft Code on Companies and Associations was presented to the Belgian Parliament. The draft law has already been discussed in a Commission of the Chamber of Representatives, the last meeting having taken place on 16 July 2018. However, no date has been announced yet for the vote in the Parliament.
4. What Will Change?
Although the full text of the new Code has not yet been agreed upon, some changes can already be foreseen based on publicly-made available drafts:
More Opportunities to Raise Funding: By virtue of the new rules, associations will be able to conduct any type of activities without limitation, including profit-making activities. All profits must be reinvested in the social objective of the association to distinguish associations from enterprises. In addition, any change in association activities has to be reflected in the association statutes. As long as an association has not adapted its statutory purpose, it can only carry out ancillary economic activities.
Clearer rights for Association Members:The rights and obligations of members will have to be explicitly included in the statutes. Moreover, the members’ right to defend themselves in case of resignation or exclusion from the association is more clearly formulated: the law requires that they are heard.
More Defined Mandate for Association Directors: In the new law, the General Assembly is responsible for clearly determining the terms of board members’ mandates (remuneration, contribution to insurance, non-cash benefits, conditions to end a mandate, etc.). It will not be possible to confer this exclusive competence to another body. Moreover, a legal person with a board member mandate within an association must designate a natural person as permanent representative from now on.
Clearer Rules on Association Administration: When signing an act that commits an association, the capacity in which the representative is acting must be clearly stated before or after their signature under the new law. Moreover, board members can use the legal address of the head office of the association for everything related to their mandate, avoiding as a result to divulge their private address.Finally, the membership register can be kept in electronic form from now on.
Clear Majority Rules Concerning the Decision-Making Processes:The new law foresees that decisions madeby General Assemblies are adopted by a simple majority of the attending and represented members, to the exclusion of absentees, blank votes and abstentions.A two-thirds majority is applied to statutes amendments, in which case abstentions will also be recorded.
One Court for All: The end of the divide between civil and commercial company law will lead to the development of a single court called the Company Court [tribunal de l’entreprise/ondernemingsrechtbank], which is currently the Commercial Court. This court will include specialised judges who are familiar with the association sector for litigations involving associations.
Obligatory Registration in the Crossroads Bank for Enterprises (CBE):Associations will have to actively register via the recognised one-stop-shop for companies at the CBE as “company subject to registration”. This will only apply from a date that will be set by the King and after which the association will have 6 months to register. The registration is free for associations.
Income Tax: From a tax point of view, little change is expected as associations can already be subject to corporate income tax under the current legal settings.
No Changes Expected regarding Volunteers:ASBLs can still benefit from the help of volunteers for activities linked to its social objective. There may be some impact on volunteering arrangements, but more details will be required to evaluate this further.
To find out more: Here is the full text of the draft law (in French and Dutch) for your review: http://www.dekamer.be/FLWB/PDF/54/3119/54K3119001.pdf
Keep a look out for Part 2 which will be published tomorrow September 26th 2018 on www.meetingmediagroup.com.
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