New and contemporary tools for Belgian companies - Ernst & Young - NW

New and contemporary tools for Belgian companies

Recently, a number of changes have been made to the Belgian Companies Code (Belgische Wetboek van Vennootschappen). These changes provide companies with the tools to react more efficiently to ever changing market circumstances. A number of stringent provisions with regard to the protection of the capital of companies, strongly criticised by the business community, have been relaxed.

The revised regulations now offer companies a number of important opportunities so that they may effect reorganisations in a more simple and effective manner, no longer having to deal with heavy and time-consuming legal procedures.

Changes have been made with regard to the following subjects:

• Easing of the procedure for non-monetary contributions
• Easing of the procedure for acquiring shares in its own capital
• Introduction of the possibility of financing the acquiring of its own shares by third parties

Non-monetary contributions
Traditionally, it was a requirement in the event of a non-monetary contribution in the capital of the company to have an audit report drawn up by the statutory auditor or company auditor. This often concerned assets of which the value could already be deducted from other sources or which had been valued recently. In addition, this obligation impeded a quick settlement of the contribution, as a result of which companies would sometimes find themselves in financially difficult situations. For that reason, the legislator has procured a number of cases in which this audit report may be dispensed with.

The report by an independent expert will no longer be required if it concerns a contribution in the form of tradeable securities (for instance listed shares), assets which have already been valued by an expert (for instance immovable property which has been appraised recently) and assets of which the value can be deducted from annual accounts which have been audited (for instance a loan of which the nominal value is shown in the annual accounts).
It must be noted that an audit report will still be required in these cases if an important change occurs in the value of the asset. Moreover, minority shareholders may demand a valuation by an expert under certain circumstances.

Acquisition of shares in its own capital
The stringent rules which apply to the acquisition of shares in its own capital by a company have long been an impediment for reorganisations of companies. The new rules attempt to address the complaints in this respect and have been relaxed in a number of areas. The most important change concerns the raising of the maximum number of shares which may be acquired. Formerly, only 10% could be acquired; these days, companies are permitted to acquire 20% of their shares.

Financing its own shares
Financing its own shares whereby, for instance, a company grants a loan or a guarantee to the person who wishes to acquire its shares, was always prohibited in the past. This provision has long been criticised because it was a serious impediment in many reorganisations. However, under the new regulations these kind of operations are permitted and the company will therefore be able to advance means, grant loans or give security with a view to the acquiring of its shares or profit-sharing certificates. However, the legislator does impose a specific procedure. The transaction will take place under the responsibility of the Board and must be effected against fair market conditions.

Contemporary tools 
The new measures provide companies with contemporary tools, with which they are better able to handle the challenges of the future. A number of important new opportunities offer the possibility to gain a competitive lead on important international players and they also enable companies to comply with their needs in a faster and more efficient manner.