Book 1 of the CAC, entitled ‘Preliminary provisions’, primarily contains definitions. We have listed the most important definitions below.
Company, association and foundation
The first definitions are those of company, association and foundation.
The distinction between company, association and foundation has been simplified. The object of companies is to distribute at least part of its profits to its partners, whereas any distribution by associations or foundations to founders, members, directors or any other person (except for the disinterested purpose set out in the articles of association) is strictly prohibited.
The pursuit of profit distribution is therefore the only distinguishing criterion; the performance or not of profitable activities no longer matters.
Types of companies, associations and foundations
Please refer to the first edition for a list of the types of companies, associations and foundations.
The CAC now also provides definitions of contribution in cash, in kind and in effort.
A major reform is the allowance of the contribution in effort in the BV (private limited company), which may provide an interesting new tool in the context of start-ups and scale-ups. For more information on this topic please refer to the newsletter about BVs.
Listed companies and public-interest entities
The legislator no longer distinguishes between ‘companies soliciting public funds’ and ‘listed companies’. The CAC refers to listed companies and, in a broader context, public interest entities.
To be considered a listed company under the CAC, shares, profit-sharing certificates or depositary receipts must be traded on a regulated market. The listing of other securities (e.g. bonds) therefore no longer implies that a company is listed according to the CAC. This is another major reform.
Control, parent companies and subsidiaries
The definition and presumption of control remain unchanged, as do the provisions with respect to consortium, affiliated and associated companies, participation and shareholding structure.
Size of companies and groups
The distinction between small groups, large groups and groups of limited size remains unchanged in the CAC.
Another new element is the introduction of a definition of staff in Books 5 (BV – private limited company) and 7 (NV – public limited company). The concept is broader than that of employees in the meaning of employment law. In addition to natural persons bound to a company via an employment contract, ‘staff’ also includes:
- natural persons bound by a management agreement;
- legal entities that are linked to a company or its subsidiary(ies) by a management agreement or similar agreement, whereby that legal entity is represented by one single natural person, who is also its controlling partner or shareholder;
- the directors, managers, members of the board of directors and the supervisory board of a company or its subsidiary(ies), including legal entities whose permanent representative is also their controlling partner or shareholder.
The legislator’s aim is to simplify the issue of securities to staff, which we will cover in a future edition. Please note: the definition (hence also the intended simplification) only applies to BVs and NVs (private and public limited companies, respectively).
A new element is that the CAC, just like the Judicial Code, now also provides rules on calculating time limits:
- time limits are calculated from midnight to midnight,
- from the day following the day of the deed or the event that has caused it to take effect, and they include all days including Saturdays, Sundays and public holidays;
- the expiry date is included in the time limit;
- if the expiry date is a Saturday, Sunday or a public holiday, then the expiry date moves to the subsequent work day;
- ‘work days’ are any day except Saturdays, Sundays and public holidays.
Ultimate beneficial owner
As regards the definition of “ultimate beneficial owner(s)”, the CAC refers to the individuals described in the Act of 18 September 2017 on the prevention of money laundering and terrorist financing and the restriction of the use of cash. For more information about ultimate beneficial owners, please refer to our previous newsletter.
General criminal provision
In general, the CAC places less focus on criminal provisions. Such provisions were not applied often under the current Companies’ Code anyway. The reference to Book 1 of the Criminal Code: ‘criminal offences and punishment in general’ has been kept, but the legislator clearly prefers civil sanctions, i.e. nullity or liability.
Our next edition will cover Book 2: Common provisions for all legal persons.
Monard Law Team