Unlike the Companies Code, which since 1993 has provided for detailed arrangements for mergers and demergers of companies, there is no provision in the non-profit associations law that governs the merger or demerger of associations and foundations. In practice, people therefore needed to rely on a range of legal acts, each of which was the subject of a statutory regulation, in order to achieve the same result. In simplistic terms, the merger or demerger of associations and foundations could be seen as a dissolution and liquidation of one or more associations and foundations, with the transfer of their assets into one or more other (newly established) associations and foundations.
Contribution free of charge of universality or branch of activity
This last aspect in particular often gave rise to legal uncertainty, with regards to the opposability of this contribution to third parties. As such, on 30 December 2009, the legislator introduced a new Article 58 in the non profit associations law, which provided for the possibility for associations and foundations – just like companies – to automatically transfer all or part of their assets to one or more other associations and foundations in a way that is opposable to third parties. However, the (expensive and time-consuming) procedure laid down in Article 770 of the Companies Code needed to be fulfilled for this purpose.
Instead of incorporating a coordinated text of the similar application of these articles in the non-profit associations law, the legislator opted to make a mere reference to the Companies Code, and to include a list of amendments that had to be taken into account in the process. It goes without saying that this made the text less readable.
A similar arrangement is now incorporated into Book 13 of the new Companies and Associations Code (the “CAC”), which covers the restructuring of associations and foundations. However, even now the legislator has failed to include a coordinated text of the procedure in the new CAC.
The arrangement for mergers and demergers
A completely new element is that the new CAC now also provides for a special arrangement for mergers and demergers of associations and foundations. The procedure in this respect is similar to that for mergers and demergers by acquisition in companies, albeit simplified on a number of points.
In this way, the legislator offers an unambiguous response to the discussion and legal uncertainty that existed in practice.
The next contribution will cover Book 14: Conversion of companies, associations and foundations.