Doing business in Belgium: Advantages and Risks

Doing business in Belgium: Advantages and Risks

Novius is a law firm providing business legal advice, mainly in the areas of tax, corporate, insolvency and estate planning. Michael Boudry is a corporate lawyer at Novius and advises entrepreneurs and companies on corporate strategy, corporate restructuring, M&A, transactions and corporate litigation. Michael's approach is client-focused who likes to think outside the box and go the extra mile to deliver a practical result for his clients.

Is Belgium a competitive place to do business compared to other European Union countries?

In Belgium we have a well-developed infrastructure, a highly skilled workforce, numerous leading research centres, the development of new technologies and a multilingual environment. All this, combined with our central location within Europe and our logistical facilities (including the ports of Zeebrugge, Ghent and Antwerp), ensures that we have many advantages for international trade in Belgium.

The figures do not lie. According to the Belgian Foreign Trade Agency, Belgium is the fourth largest exporter in the European Union (after Germany, the Netherlands and Italy) and the eighth largest exporter in the world. On the import side, Belgium ranks 5th in the European Union (after Germany, the Netherlands, France and Italy) and 13th in the world.

Belgium also enjoys a politically stable environment. At both federal and regional level, the government is strongly committed to supporting businesses.

For example, since 2017, the corporate tax rate has been reduced in two stages from 34% to 25% (and under certain conditions to 20% for the first bracket of EUR 100,000 of taxable profit). At the same time, incentives, subsidies and tax support measures (e.g. in the context of financing start-ups, innovation, research and development, etc.) are being used. In addition, a number of far-reaching and important modernisations of economic, company and civil law have been undertaken. One of the aims was to bring the legal framework more into line with the modern needs of businesses. Overall, therefore, Belgium can be said to have a fairly favourable business environment.

What is the impact of the Belgian Companies Code 2019 on companies?

The Belgian Companies Code underwent a major reform in 2019 in order to modernise and simplify company law. The new code limited the number of company forms and provided a more flexible framework.

One consequence was that existing companies had to revise their articles of association to comply with the new law by 31 December 2023.

According to the Belgian Federation of Notaries, at the end of April 2023, around two-thirds of existing companies still had to comply, which led to a rush on notaries in (especially) the last quarter of 2023. It can be assumed that many companies will not meet the deadline of 31 December 2023 (which, incidentally, will not immediately lead to sanctions, but possibly to the invalidity of certain clauses of the articles of association).

What changes has the new Belgian Companies Code 2019 brought?

As mentioned above, the legislator’s intention was to modernise and simplify Belgian corporate law.

All in all, as far as I am concerned, this has not resulted in any particularly revolutionary, changes to company law. Nevertheless, some changes are quite significant in practice.

For example, a major change was the abolition of the concept of minimum share capital in the private limited company (BV/SRL). The requirement to actually pay up capital at the time of incorporation has also been abolished. On the one hand, this removes some financial barriers, making it easier to set up a (limited liability) company. On the other hand, it means that the financial planning at the time of incorporation becomes more important.

Thanks to the flexibility of the new law, the private limited company (BV/SRL) has become more than ever the reference company (even for large companies). In particular, this company can now issue all the securities that can be issued within a a public limited company (NV/SA) (with the exception of dividend-right certificates) and can also be listed on the stock exchange.

Another important change was the increased flexibility in governance structures and decision-making processes.

For example, a public limited company (NV/SA) can now include a single shareholder (e.g. a holding company). It is also now possible to have a single director in a public limited company (NV/SA). In addition, digital communication, digital meetings and electronic decision-making (which had its breakthrough in the days of Corona) are increasingly encouraged and accepted.

Not to be overlooked is the financial cap on directors’ liability in the new code.

One change that has received less attention is that it is now possible for any type of company to adopt internal regulations, if the articles of association so provide. This is a welcome technique to regulate the internal kitchen in a way that binds both the company and its organs, and to strike a balance between the articles of association on the one hand and shareholders’ agreements on the other.

What are the different types of vehicles/legal forms for doing business in Belgium?

In general, a distinction can be made between companies with full legal personality and companies without (full) legal personality.

The main difference is the limited or unlimited liability of the shareholders. And, of course, the extent to which the company is regulated (including with regard to financial reporting, profit distribution, liability, formalities and disclosure, etc.).

The choice between an incorporated and an unincorporated company depends on many factors. Ultimately, however, the specific needs of the proposed activity must always be taken into account. Obviously, it is preferable not to carry out a high-risk activity in a company with unlimited liability.

Among the limited liability companies, the most common are the public limited company (NV/SA), the private limited company (BV/SRL) and the cooperative society (CV/SC).

These companies can only be formed by notarial deed. There are strict reporting requirements and the liability of shareholders is generally limited to their contributions.

Among the unlimited liability companies are the partnerships. Partnerships include the simple partnership (maatschap/société simple), the general partnership (VOF/SNC) and the limited partnership (CommV/SComm). These partnerships are formed intuitu personae and entail unlimited and joint and several liability of the partners (in principle, with the exception of the “silent partner” in the limited partnership).

These companies are less formal and can be formed by private agreement. Unfortunately, in practice, lack of knowledge or bad advice (at the time of incorporation or later, e.g. at the time of sale) often leads to undesirable situations (especially in the event of insolvency).

Are there capital requirements to be taken into account when setting up different types of companies?

As mentioned above, the new Companies Code has completely abolished capital requirements for the private limited company (BV/SRL). A minimum capital of at least EUR 61,500 is required for the formation of a public limited company (NV/SA).

However, indifferent of the minimum capital requirement the limited liability companies must always have a sufficient initial capital at the time of incorporation to conduct the proposed activity for a period of two years.

The amount of this initial capital must be substantiated in the financial plan. This initial capital must be fully plegded and – unless otherwise provided for in the memorandum and articles of association – must in principle be fully paid up at the time of incorporation. The responsibility for this also lies with the founder(s), whose personal liability has also been retained.

Are there any general requirements or restrictions on the appointment of directors, such as a local residence or nationality requirement?

From a company law perspective, there are few or no restrictions on directors or representatives of Belgian companies.

–              There is no statutory nationality requirement. However, nothing prevents the company’s articles of association from stipulating a nationality requirement.

–              No residency requirement. Directors who are resident abroad, irrespective of their nationality, are deemed to be resident (for the purposes of their directorship and for the duration thereof) at the address of the company’s registered office. However, local representation may be practical for administrative purposes or may be required by other legislation to obtain licences for certain activities (e.g. customs warehousing).

–              No age requirement. Again, the articles of association may provide for such requirements. Indeed, it does not seem appropriate that minors could be entrusted with a management mandate.

–              No educational or competence requirements. However, depending on the sector in which one operates (e.g. financial or insurance sector, regulated professions, etc.), there may be competence or training requirements.

It should be noted, however, that the directorship must be exercised by virtue of the self-employed status. This does not preclude a director from being an employee at the same time, for other duties and under the authority of a body or agent within the same company.

For listed companies, gender quotas should also be taken into account.

How is the company governed and managed, i.e. by directors or others? And how do they make decisions?

The operation and management of companies in Belgium varies according to the legal structure chosen.

In a limited company (BV/SRL) and a cooperative society (CV/SC), management is delegated to one or more directors.

In principle, the board of directors in these companies does not act collectively but competitively (each director can take all actions). The articles of association may provide that they form a college (i.e. decide by majority). What is often overlooked in practice, however, is that opting for a collegiate board also entails joint and several liability on the part of the directors.

Directors in these companies are in principle appointed for an indefinite period and can be removed at any time. Directors in these companies can also be appointed in the articles of association (which offers better protection against dismissal, for example if a director is also a minority shareholder and wants to retain some control).

In a public limited company (NV/SA), the management can be organised in different ways. One can opt for a “monistic” board (i.e. a board consisting in principle of at least three directors, or a sole director if the articles of association so provide) or a “dualistic” board (i.e. a supervisory board with an executive committee below it).

In public limited companies (NV/SA), the principle of collegiate management applies. This means that decisions are taken by majority vote. However, other arrangements are possible.

Directors in public limited companies (NV/SA) are appointed for a maximum of six years. A sole director may be appointed for an indefinite period and may also be appointed by the articles of association.

The day-to-day management of both private limited companies (BV/SRL), cooperative societies (CV/SC) and public limited companies (NV/SA) may be entrusted to one or more persons acting individually or jointly as a board. Exactly what this day-to-day management entails has been defined by the Supreme Court in the past, a definition that will be enshrined in law in 2019. It includes, on the one hand, decisions that do not go beyond the needs of the day-to-day life of the company and, on the other hand, acts or decisions that, because of their minor importance or urgency, do not justify the intervention of the governing body.

The principle of competitive governance applies to partnerships. This means that each director has full powers and can take all decisions in the name and on behalf of the company alone.

Much can be regulated in the articles of association or internal regulations regarding the composition, functioning or decision-making of the board of directors.

What about directors’ liability?

When thinking about directors’ liability, we should distinguish between internal liability (towards the company) and external liability (towards third parties).

Internal liability (to the company)

In relation to the company, directors have a legal duty to look after the interests of the company and to act loyally and in good faith.

In practice, this means, among other things, that directors have a non-compete obligation and a duty of discretion and confidentiality towards the company. The corporate opportunity doctrine, whereby directors must develop business opportunities within the company (and not misappropriate them for their own benefit), is also gradually finding its way into Belgian practice on the basis of the duty of loyalty.

Directors are liable to the company (on both contractual and non-contractual grounds) for damages caused by mistakes made in the exercise of their mandate, to the extent that their actions are manifestly outside the margin within which normally prudent and diligent directors in the same circumstances could reasonably disagree (i.e. the margin test).

Directors are also liable (jointly and severally) to the company for damages caused by breaches of the provisions of the Companies Act or the articles of association.

There is also a specific liability regime for undue financial gain from conflict of interest arrangements.

External liability (to third parties)

In relation to third parties, we speak of non-contractual liability based on common law principles where directors have not acted as a reasonably prudent and diligent director in the same circumstances (i.e. the general standard of care).

Specifically, directors’ external liability may be compromised in cases of late bankruptcy filings, neglect of managerial duties, acts to benefit themselves at the expense of the company, etc.

Directors are also equally (jointly and severally) liable to third parties for damages caused by violations of the provisions of the Companies Code or the articles of association.

There are also specific liabilities to third parties in the event of the company’s bankruptcy. This is the case for manifest gross misconduct that contributed to the bankruptcy, liability for social security debts, liability for unlawful trading, tax liability.

Limitation of liability

In certain circumstances, the discharge (by the general meeting or, where applicable, the supervisory board) covers the internal liability of directors. However, it does not cover external liability. Nor can it be invoked in the event of bankruptcy against the liquidator who brings a liability action for the benefit of the joint creditors.

In addition, as of 2019, the Companies Code provides for concrete financial caps for directors’ liability, depending on the company’s turnover and balance sheet total. However, these caps do not apply to repeated minor errors, serious errors, fraudulent intent or acts with intent to cause damage.

Can foreign companies do business in Belgium directly, i.e. without having to set up or register a legal entity?

It is indeed possible for foreign companies to do business in Belgium without necessarily setting up a separate legal entity.

This can be done through a representative office, an establishment unit or a branch. All of these vehicles require considerably less formalities. However, each has its own legal and operational implications.

A representative office is by far the easiest way to operate in the Belgian market.

A representative office is set up to represent the interests of a foreign company in Belgium, but cannot itself engage in commercial activities. Its activities are limited to market research, promotion, liaison between the foreign company and local parties and coordination of activities.

To develop commercial activities, one can opt for an establishment unit. The establishment unit is similar to a representative office, except that the establishment unit is registered with its own company/VAT number.

A representative office and an establishment unit do not have their own legal personality and are not subject to separate registration, publication or accounting obligations. Nor is a local legal representative appointed. This also means that all legal acts must be performed directly by and under the responsibility of the foreign head office.

To go one step further with commercial activities in Belgium, one can open a branch. Unlike the representative office and the establishment, the branch has a local legal representative. This legal representative also carries out legal acts. However, the branch does not have its own legal personality and still operates under the responsibility of the foreign head office.

A branch is subject to slightly more extensive registration, publication and accounting obligations (including the filing of the memorandum and articles of association and the (consolidated) annual accounts of the foreign head office). The branch is registered with its own company number/VAT number. All documents issued by branches contain a number of mandatory legal notices.

About Michael Boudry

As a corporate lawyer, I advise entrepreneurs and companies on corporate strategy, corporate restructuring, M&A, transactions and corporate litigation. My approach is client-focused. I like to think outside the box and go the extra mile to deliver a practical result for my clients.


About Novius

Novius is a law firm providing business legal advice, mainly in the areas of tax, corporate, insolvency and estate planning. Novius consists of a dynamic team that seeks pragmatic solutions for its clients in a confidential and discreet manner. Novius shares its passion for business with its clients and advises from a natural understanding of their needs, paying attention to the necessary details that make the difference. Novius therefore strives to demonstrate the highest quality and professionalism through a distinctive and flexible approach.

Michael Boudry
Partner, Novius Lawyers
Tel: +32 2 344 44 45  |  +32 5 628 80 81


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