Public limited company

In the case of  a public limited company (NV), the focus is on the bringing together of capital, rather than on the characteristics of the individual shareholders. The public limited company is, therefore, a capital company.  Larger companies, in particular, choose the public limited company form.

You set up a public limited company through an authentic deed at a notary. This can be done through this platform.

Incorporation formalities

Before you can sign the deed of incorporation, a number of preparatory formalities must be completed.

Founders

You can incorporate a public limited company alone or with two or more persons. Both natural persons and legal persons can incorporate a public limited company.

Financial plan

If you wish to incorporate a public limited company, you must draw up a financial plan. In the financial plan, you set forth which sources of financing you shall use to endow the public limited company with capital. This financial plan has a statutorily required minimum content. The financial plan is an important document, because a judge shall use it in assessing the founder’s liability in case of a bankruptcy. For that reason, founders often seek assistance from an accounting professional for drawing up the financial plan. You hand over your financial plan to a notary, who shall  keep it on file. You can also upload that financial plan onto this platform.

If your public limited company goes bankrupt, you will be able to prove with the financial plan that you have sufficiently thought through the risks of your business and the sources of financing which you would need for such an activity.

Contribution

For each share in the public limited company, you will have to contribute something. You can proceed with a contribution in cash or in kind. In the case of a contribution in kind, a certified auditor shall have to assess the contribution. In a public limited company, you cannot proceed with the contribution of labour[WR1]  or services (e.g. know how).

These contributions constitute the capital of a public limited company. The company’s creditors can levy an attachment on this capital if the public limited company can no longer meet its obligations. In that sense, the capital of the public limited company constitutes a sort of guarantee for the creditors that the public limited company can meet its total obligations up to at least a certain amount. The minimum capital of a public limited company is legally set at 61,500 EUR, so that, at least such an amount will have to be brought into the public limited company.

If your public limited company has an apparently insufficient capital to conduct its business operations for a period of two years, then you, as the founder, bear what is known as “founder’s liability”, if a judge orders the bankruptcy within three years after the company’s incorporation.

As a shareholder, your founder’s liability is, nevertheless, limited to the contribution you have committed to yourself at the time of incorporation. It is possible not to bear any founder’s liability as a founder, if you appear, under the deed, as an ordinary subscriber/investor/shareholder, although there are conditions related thereto. Ordinary subscribers cannot possess together more than two-thirds of the capital, must proceed with a contribution in cash and cannot enjoy directly or indirectly any special advantage.

Articles of association

The articles of association of a public limited company are a reflection of the rules to which the company is subject. From a legal-technical point of view, they are, however, much more complex, because, depending on the case, the articles of association can also govern the rights and obligations between shareholders mutually, between shareholders and the company, between directors and the company and between the company and other third parties.  The articles of association must comply with the law.

In order to ensure that third parties have access to a minimum set of information about the company, the law imposes a number of mentions which need to be included compulsorily in the articles of association.

Set forth below is a brief description of these legally compulsory information in the articles of association. To the extent permitted by law, the parties can also govern additional matters in their articles of association.

1. Legally compulsory information to be included in the articles of association

a) Legal form, name and office
The articles of association must mention the legal form of the company (NV) and its name. This name must be unique, since a legal person must bear a name which differs from any other legal person.

In the articles of association, you also include the Region where the office of the company is situated. It is not required to include the address of the public limited company in the articles of association, in which case the address would be published by extract in the Annexes to the Belgian Official Gazette. In this manner, it can be easily changed, if needed, afterwards.

b) Shares and profit-sharing certificates
In the articles of association, you must further clarify the following matters with regard to shares:

• whether the shares are registered shares or dematerialized shares
• the number of issued shares
• whether the shares are shares with or without par value
  • If there are shares with par value, you must indicate the par value
• Transfer restrictions

If there are classes of shares, you must also indicate the number of shares per class, or if they are registered or dematerialised shares, the possible transfer restrictions and the rights for each class.

It the public limited company issues profit-sharing certificates, you must indicate in the articles of association:

• The number of issued profit-sharing certificates
• The rights of these profit-sharing certificates
• Transfer restrictions.

If there are classes of profit-sharing certificates, you must also indicate the same data for each class.

c) Term
In the articles of association, you must also write whether your public limited company has an indefinite or fixed term.

d) Capital and authorized capital
For a public limited company, you also must indicate the amount of capital in the articles of association. For a public limited company, the capital cannot be less than the legal minimum capital of 61,500 EUR. If the public limited company has an authorized capital, you must also indicate the authorized capital in the articles of association of the public limited company. For the amount of the authorized capital, the management body can proceed with a capital increase. The precondition is, however, that the general meeting must have rendered the management body preliminarily competent in such regard in accordance with the articles of association.

e) Financial year
In the articles of association of your public limited company, you must indicate the start date and  end date of the financial year.

f) Establishment of reserves, profit allocation  and distribution of the liquidation balance
If the public limited company applies specific rules to constitute reserves, it must indicate these rules  in its articles of association. In any case, the public limited company must indicate that it establishes  each year a legal reserve which amounts to 5% of the net profit, until the legal reserve amounts to 10% of the capital.

The way in which the profits and liquidation balance are distributed, must also be indicated in the articles of association. You shall, however, have to take into account that the manner of distributing the profits and liquidation balance is in accordance with the membership/shareholder rights associated with the shares.

g) Directors and their powers
A public limited company can be managed by a sole director, a traditional board of directors or a dual management (with both an Executive Board and a Supervisory Board). Irrespective of which of these three management forms you choose, you must obligatorily indicate a number of things in the articles of association with regard to the chosen management form. If the public limited company also opts to include a day-to-day administration in its articles of association, then mainly the same key points also apply. Thus, the articles of association determine:

• The number of (executive) directors;
• How you will appoint or remove them;
• Whether the (executive) directors are competent to represent the public limited company as a body, alone or jointly;
• The extent of their powers;
• How the powers are divided between the different organs.
• Where appropriate, the power of the Supervisory Board and the manner in which it exercises such power.

h) Objects
In the articles of association, you must  also  indicate the objects of the public limited company. The objects of the public limited company are mainly a description of the activities which the company may carry out or not carry out.

Through the platform, you can select the desired activities. If you do not find any appropriate category or are not sure where to classify your business activities, do not hesitate to consult your notary for advice.

i) Annual meeting
The articles of association of the public limited company must also contain information with regard to the annual general meeting. Therefore, you must indicate the place, day and time of the annual meeting. Apart from that, you must also stipulate in the articles of association under which conditions shareholders can be admitted to the general meeting and under which conditions they may exercise their voting rights.

2. Optional information to be included in the articles of association

In addition to the information to be mandatorily included in the articles of association, there are also a large number of other matters you can establish on an optional basis in the articles of association, such as:

• the creation of classes of shares with different rights;
• the effect of the pre-emptive right under the  articles of association;
• the rights and obligations of the usufructuary-shareholder and the bare owner-shareholder;
• the possibility for a written or electronic general meeting;
• the transfer of shares and transfer restrictions;
• the remuneration of directors;
• complex constructions in the field of representation and internal management;
• ….

A notary can familiarize you with the legal possibilities, so that the articles of association are as “tailor-made”  as possible. The notary can also further explain to you the different legal options.

Language

The deed of incorporation and other company documents of the public limited company are drawn up in one of the official languages of the language area where the company has its registered office. Non-compliance with this obligation leads to the nullity of the deeds.

For a company which is incorporated in the bilingual region of Brussels-Capital (the 19 municipalities of Brussels), the deeds and documents may be drawn up either in Flemish, or in French, or in bilingual form (e.g. in 2 columns).

For a company which is incorporated with an office in the Flemish-speaking region, even in a municipality with language facilities, all deeds and documents must be drawn up compulsorily in Flemish.

For a company which is incorporated with an office in the French-speaking region, all deeds and documents must be drawn up compulsorily in French.

For a company which is incorporated with an office in the German-speaking region, all deeds and documents must be drawn up compulsorily in German.

Identification of persons

When you take part in the incorporation as a founder or ordinary shareholder, or are designated as director, you must  be identified in the deed.

This identification comprises your last name and first names, your place and date of birth and your domicile. In addition to this, your unique identification number is also included, which is your Belgian national register number, if you have one, or otherwise your number in the bis-register of the Crossroads Bank for Social Security. If you don’t  have that number yet, it’s not a problem:  the notary will arrange that for you in the course of the preparation of the incorporation and register you in the bis-register.

Formalities after the incorporation

After having signed your deed of incorporation, you must still fulfil a number of formalities before the public limited company can conduct its business activities.

The notary will file the deed of incorporation and the excerpt of the deed of incorporation at the registry of the commercial court where the office of the public limited company is located, within thirty days after the signing of the deed. Within ten days after the filing, the publication of the excerpt in the Annexes to the Belgian Official Gazette takes place.

In addition to this, the public limited company must be registered with the Crossroads Bank for Enterprises. Through this registration, the authorities are informed that your company shall participate in legal transactions as an undertaking.

The text of the articles of association shall also be filed separately in a database of articles of association which can be publicly consulted

Therein, the provision in the articles of association with regard to the power of representation of the directors shall also be included and can be consulted.

All these formalities are performed by the notary after the signing of the deed of incorporation and occur completely electronically. Consequently, you do not have to do anything in such regard yourself.

The public limited company shall, furthermore, have to apply for a VAT-number. This application shall have to be issued by the  company itself.

Management

Forms of management

In the public limited company, there are 3 possible forms of management:

• a board of directors, which consists of several directors which form together a body;
• a dual management, which consists of a supervisory board and an executive board; or
• a sole director.

You will have to choose one of these forms when drawing up your articles of association. Are you in doubt about what suits you most? Ask for advice about this from your notary.

The day-to-day administration of the public limited company can be assigned by the management body to one or more persons. The day-to-day administration comprises, on the one hand, decisions which do not go beyond the everyday life needs of the company. On the other hand, it concerns decisions which do not require intervention by the management body, because they are of lesser importance or not very urgent.

Conditions

In principle, the general meeting can appoint any legally capable person as director. There are, in other words, no legal appointment conditions. The directors can be either legal or natural persons, they may or may not be shareholders, and also their nationality is of no importance. The articles of association of the company in question can, however, go beyond and establish certain appointment conditions, provided that the general meeting still keeps a freedom of choice as regards the appointment.

Although there is great freedom with regard to the appointment of directors, the law still imposes restrictions in specific cases. That is, for example, the case for companies which conduct regulated business activities or listed companies. Moreover, some persons cannot be appointed director, because of their position, such as public officials, magistrates, military personnel,….

A legal person which is appointed director, must always designate a permanent representative. That permanent representative is charged with the performance of the director’s mandate in the name and on behalf of the director-legal person. Outside of the fact that this permanent representative must be a natural person, there are also no special appointment conditions which apply here. It is, however, not possible to be appointed to the management body both in one’s own name and in the capacity of permanent representative.

Powers

The management body may perform all acts which are useful or expedient for the realization of the objects of the company, except those for which, by law, the general meeting is competent. The articles of association can limit the power of the management body and can possibly transfer some powers to other bodies.

The management body is authorized to represent the public limited company towards third parties.   If the public limited company has a dual management model, the supervisory board, or respectively the executive board, can represent the company in all matters for which the supervisory board, or respectively the executive board, is competent. The articles of association can, nevertheless, grant the power to one or more directors to represent the company alone or jointly.

The management body can assign the day-to-day administration to one or more persons. The day-to-day administration comprises, on the one hand, decisions which do not go beyond the everyday life needs of the company. On the other hand, it concerns decisions which do not require intervention on the part of the management body, because they are of lesser importance or not very urgent.

Disqualifications applicable to Directors

In some cases, the judge can impose a prohibition on exercising the function of director. Such a prohibition can be imposed on the occasion of a criminal conviction, or within the framework of a judicial dissolution or a bankruptcy. The violation of a director’s disqualification can be sanctioned by a prison sentence and a fine.

Disqualification from a profession deriving from criminal law
The judge can impose upon a person who is convicted as an offender or accomplice for certain criminal offenses as additional punishment the prohibition on performing during a specific period a director’s mandate or a function with the power to bind the company. The judge can also prohibit a person from performing a director’s mandate at a Belgian branch of a foreign company. This prohibition can be imposed upon both natural and legal persons. The criminal offenses in question concern, among other things, the  falsification of documents, bribery, extortion, fraud, breach of criminal tax  provisions. The complete list of criminal offenses can be found in art. 1 of the Royal Decree of 24 October 1934 regarding the injunction imposed upon some convicted persons and bankrupt persons prohibiting them from exercising  some offices, professions or activities. The term of the criminal disqualification from a profession is determined by the judge who imposes it and cannot be less than 3 years or more than 10 years.

In addition to this, the criminal court judge can impose the prohibition, in case of a fraudulent bankruptcy or misuse of corporate assets, on conducting  trade personally or through an intermediary.   This prohibition can also not be less than 3 years and more than 10 years.

If a person has been convicted abroad of one of the above-mentioned criminal offenses, the Indictment division can still pronounce the disqualification from a profession.

Disqualification from a profession within the framework of a judicial dissolution
The commercial court can impose a disqualification from a profession upon a director who refuses to cooperate with the liquidation of a judicially dissolved company. Upon the closing of the liquidation, the prohibition can be imposed, in that case, on exercising the position of director personally or through an intermediary. If the dissolution of the company was pronounced abroad, this power accrues to the commercial court of Brussels. The term of this disqualification from a profession cannot exceed 3 years.

Disqualification from a profession deriving from insolvency law
If a business goes bankrupt and the judge finds that an apparent major error by the bankrupt person has contributed to the bankruptcy, the court can impose a prohibition upon the bankrupt person from running a business personally or through an intermediary. This prohibition can also be imposed upon  a director of a bankrupt business whose removal was not made public one year before the declaration of bankruptcy or upon the person who actually managed the business (without having been appointed as director). In addition to this, the prohibition can also be imposed on performing any mandate which entails the power to legally bind a legal person. The court shall establish the term of the prohibition, subject to  a maximum of 10 years.

If the bankruptcy was pronounced abroad, the insolvency court of Brussels is authorized to impose such a prohibition.

The court can also impose the prohibition on exercising the function of director upon directors of a bankrupt company who have not given their full cooperation to the bankruptcy trustee. In such  case, the duration of the imposed disqualification cannot exceed 3 years.

Register
The existence of a disqualification from a profession has not (yet) been indicated in the Crossroads Bank for Enterprises or another central register. The information about this can only be found in the Belgian Official Gazette.

Closing a business

A company can be dissolved in three ways:

• by a dissolution automatically by law  (e.g. after the expiry of the term of the company);
• by a judicial decision; or
• voluntarily by a decision of the shareholders.

During the dissolution, a liquidator will sell the assets of the company to pay off the creditors with the proceeds. The balance which remains after payments to the creditors, accrues to the shareholders of the company. Upon the conclusion of the liquidation, the company loses its legal personality and ceases to exist.

A voluntary dissolution can also occur in a simple manner through the procedure of dissolution and liquidation in one deed. Through this procedure, the shareholders decide unanimously to dissolve at a moment in which all debts have already been paid  to the creditors. No liquidator is appointed and the remaining assets accrue, after the dissolution, automatically to the shareholders.

Additionally, it is also possible that the company may be declared bankrupt by the commercial court. The bankruptcy order can be issued if the company can no longer pay its debts and no longer obtains  credit from its creditors.