To Opt-In or not To Opt-in? That is the question (K law)

Author: Frank Cleeren (K law)

Publication date: 05/04/2019

On 1 January 2020 the new Belgian Company Code (BCC) will apply to all existing companies.

A company can however decide to apply the BCC as early as 1 May 2019 by modifying its articles of association and making use of the “opt-in” mechanism.

What does this mean? Below are a number of reasons why a company might consider to opt-in:

+ More dividend distributions are possible (a private limited liability company will also be able to distribute interim dividends)

+ The possibility of having only one shareholder for a private and public limited liability company

+ More discretion to allocate profits and introduce multiple voting rights

+ Broader field of application for the contribution of labor

+ The so-called leonine clause becomes more limited in scope (i.e. a shareholder can be exempted from any losses and is excluded from certain enterprise risks)

+ A public limited liability company can be managed by one director

+ A public limited liability company can be managed by a dual board (i.e. a supervisory board and an executive board)

+ Withdrawal by/exclusion of shareholders at the expense of the company’s assets becomes possible

+ Enforceability between the parties on price determination clauses of shares in the event of disputes

+ Broader application of written resolutions

+ Less restrictions on share buybacks

+ Rules on the dismissal of directors ad nutum become less strict

+ Shares of a private limited liability company can be freely transferred

+ Simplification on the rules to call the general meeting.

Choosing for an opt-in brings along some consequences, such as:

– The application of tighter rules on the appointment of directors

– The introduction of a liquidity test in the event of distributions in a private limited liability company

– The permanent representative of a director must always be a physical person

– The occurrence of joint director’s liability in the event of negligence

– A hold harmless clause in the event of director’s liability will no longer be possible

– Stricter abstention rules in the event of a conflict of interest apply.

K law will gladly assist you in this process. Please also visit our website.

Read the original article here