New obligations imposed on common law companies

Market : Belgium

On 1 November the new company law comes into force under which common law companies, known as ‘simple companies’, will make their appearance as businesses.  The result of this is that common law companies, created before or after 1 November, will soon have to comply with certain obligations which other companies have.

Following this reform of company law, simple companies will be obliged:

1. To register with the Banque Carrefour des Entreprises before they start operating

Existing companies currently have until 1 May 20191 to hold their Annual General Meeting and register. Otherwise, the company risks a fine of up to EUR 10,000.

Registration is free, at any business counter. The information to be submitted includes the following: Name of the simple company; address of its registered office; date of its creation; names and addresses of its founders, corporate officers or authorized representatives; nature of its business; and data relating to the company’s bank accounts.

One result of registration is that part of the company’s information will be public, on the SPF Economie database, and therefore available to everyone. However, while your company’s articles of association may be kept private, the amount of the capital contributions cannot be.

This obligation does not change the character of the company without legal personality.

2. To apply an accounts management system which differs depending on their turnover (excluding VAT): 

  • ≤ €500,000: Simplified accounting (a purchases ledger, a sales ledger, a financial ledger and an inventory of assets)
  • > €500,000: Double entry bookkeeping

In principle it seems that simple companies will continue to be exempt from filing and publishing their accounts with the Banque Nationale de Belgique.

Their accounts must be kept for at least seven years.

Companies which started operating before 1 November will have to comply with this accounting obligation in time for the 2020 accounting year at the latest2.

In addition, the common law company’s shareholders are currently severally liable to third parties in equal shares but from 1 November they will be jointly liable to third parties. This means that if one of the shareholders fails, the others will be responsible for his share.

Conclusion: 

Common law companies (soon to be called ‘simple companies’) which start operating before 1 November will have to submit to the two obligations mentioned above before the deadline imposed by the King of Belgium.

While such companies which start operating after 1 November will have to comply with these two new obligations before they open for business.

1. This deadline is subject to review.
2. Ibid.