The Belgian Association Law Reform

Part 2
26th Sep, 2018

This article is the second part of 7 Things Every Association Leader Needs to Know about the Belgian Association Law Reform which was published on on September 25, 2018. 

Morgane Vansnick, Association Administrator, and Benita Lipps, Head of Association Management from Interel Europe tell you everything you need to know about the new Belgian Association Law Reform.

5. How Will the Change Impact My Association?

Statutes:The change in law will require many associations to review and update their statutes. Changes in the roles and responsibilities of the board of directors may be required. Any references to outdated laws or bodies (such as courts) will need to be replaced.

Structures, Bylaws and Processes: Associations may want to take this as an opportunity to review their governance structures and processes. Anti-trust regulations may need to be reviewed, volunteering contracts rewritten, and liability clauses and insurances updated.

A Time to Explore New Legal Structures: ASBLs will be able to transform into AISBLs (international associations), and vice versa, and into corporative enterprises certified as social companies. The regulation on mergers and divisions will also apply to associations.

New Opportunities for Raising Income:: Diversifying income is both a key challenge and opportunity for 21st century associations. The change in law invites a review of the association’s funding model: is there an opportunity to raise additional income through events, commercial partnerships, or services to non-association clients?

Liability for Directors: Board members are responsible towards the association for gross mismanagement mistakes they make while fulfilling their mission. As a group, board members are also liable towards the association and others for damage resulting from violations of the Code of Companies & Associations or the association’s statutes, even in the absence of a collegiate administration body. This liability will range from €125.000 to €12 million depending on the association’s annual turnover and balance sheet total. Limitations on the contractual and statutory liabilities beyond legal regulations are prohibited. Exemption and warranty clauses given by the association to its board members are also prohibited. Moreover, board members remain subject to the particular liability regarding unpaid social contributions, VAT and income tax.

Stricter rules don’t apply to small associations in the cases of serious misconduct leading to the bankruptcy of the association and wrongful trading by board members who continue to lead an association that is irretrievably lost.

6. What Do We Need to Do to Prepare?

Identify weaknesses and opportunities: 2018 is a good time to review your statutes and bylaws and to update your governance to ensure it’s not just legally compliant, but also fit for the future.

Set a time plan: Governance changes take time and need to be well prepared. Set your time plan to ensure that your association is fully compliant with the new legislation in good time.

Invest in a Director’s Liability Insurance: Especially medium and large associations are strongly advised to take out a liability insurance for their directors to protect these key volunteers from financial risks.

7. What is the Timeline?

2018: Adoption of the draft law and first set of changes

This bill is expected to be adopted by the Federal Parliament over the course of 2018.

It is also important to note that some changes have already been implemented for associations. Since 1 May 2018, the insolvability law and the bankruptcy law can apply to associations. And as of 1 November 2018, litigations involving associations are judged before the Company Court.

2019: The new Code enters into force

The bill should enter into force in 2019. Associations founded in 2019 will have to comply with the new Code from the moment of their creation.

2020: Application of the new Code for existing associations

The mandatory provisions of the Code will apply to existing associations as of 1 January 2020 even if they haven’t adapted their statutes. After that date, associations that decide to change their statutes for whatever reason will have to make at the same time the necessary changes to comply with the new rules. If they fail to do so, directors will be liable and may be sanctioned.

2024: Ultimate deadline for adapting the statutes of associations

Existing companies and associations will have until 1 January 2024 to adapt their statutes to the new provisions, allowing them a long transition period. If associations miss this deadline, directors will be liable and may be sanctioned.

TBD: Registration in the CBE

The King will set a date after which associations will have 6 months to register in the CBE. Subscribe to out newsletter to be kept informed.

How Interel Association Management Can Help

As a professional association management practice, Interel’s European Association Management is well versed in designing effective and legally compliant association governance structures. We support European and international associations of all sizes to future-proof their statutes, bylaws and governance structures. Whether you need help with a strategic governance review, or support in optimising texts, structures and processes, Interel Association Management is a great partner to support you along the way. Feel free to contact them with any questions, ideas or comments, they’d love to help.

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