The new Code of Companies and Associations (CCA) – Book 8: Recognition of companies

The new Code of Companies and Associations (CCA) – Book 8: Recognition of companies

Book 8 is a new addition to the Code of Companies and Associations (“CCA”) and did not exist as such in the Companies Code. A number of company types are being abolished that nevertheless creep back into the CCA via a recognition, namely the agricultural holding and the recognition of the cooperative company, whether or not as a social enterprise. It also address the forest grouping company.

The forest grouping company

The first article of Book 8 revises Article 1 of the Law of 6 May 1999 promoting the establishment of civil forest grouping companies, updating it given the abolition of the distinction between civil and commercial activity. The recognition is made by the Minister of Finance, with the words “forest grouping” (acronym: GF/BG) added to the name of its legal form upon recognition as a forest grouping company.

The agricultural holding

A more important change is, of course, the abolition of the “agricultural holding” legal form. Given the streamlining of the number of company types as envisaged by the CCA, it was decided to link the advantages of an agricultural holding, largely in respect of the Agricultural Holdings Act, to a special recognition by a competent Minister for Economy as a term for a number of company types, these being the SNC/VOF (agricultural holdings recognised as a SNC/VOF abbreviated as “SNCEA/VOFLO”), the limited partnership (agricultural holdings recognised as a SComm/CommV abbreviated as “SCommEA/CommVLO”), the private limited company (agricultural holdings recognised as a SARL/BV abbreviated as “SRLEA/BVLO”), and finally the cooperative company (agricultural holdings recognised as an SC/CV abbreviated to “CSA/CVLO”).

Recognition of the cooperative company, whether or not as a social enterprise

Cooperative companies can be recognised in application of the Law of 20 July 1955 setting up a National Council for Cooperative Societies, which confers a number of fiscal advantages. This approach is in line with what is described above for agricultural holdings (i.e. not a special legal form, but instead a recognition within an existing legal form as verified by the authorities against their conditions for application). The inclusion of the recognition in the CCA draws a distinction, including in the nomenclature, between a cooperative company conforming to the requirements of Article 6:1 and those that also conform to the conditions for recognition alongside this.

Companies with social objectives as provided for in Articles 661 – 667 of the Companies Code are also classified within the legal form of a cooperative company by means of a recognition, in line with the approach laid out above.

A cooperative company can be recognised as a social enterprise where it meets the following conditions:

  • its main goal, as a general interest, being to bring about a positive societal impact on people, the environment or society;
  • any material gain distributed to its shareholders, in any form, may not, under penalty of nullity, be higher than the interest rate established by the King in application of the Law of 20 July 1955 setting up a National Council for Cooperative Societies, Social Enterprise and Agricultural Holdings, as applied to the actual amounts paid by the shareholders for the shares;
  • upon liquidation, the capital that remains following discharge of the liabilities and repayment of the contributions made by the shareholders but not yet repaid, must, under penalty of nullity, be intended for a purpose that matches its property as a recognised social enterprise as closely as possible.
  • A cooperative company whose primary goal does not consist of offering its shareholders an economic or social advantage for their personal or professional requirements, but is recognised as a social enterprise, may add the words “recognised as a social enterprise” to the name of its legal form, which is abbreviated to “SC/CV recognised as ES/SO”.

A cooperative company whose primary goal does not consist of offering its shareholders an economic or social advantage for their personal or professional requirements, but is recognised as both a cooperative company and a social enterprise, may add the words “recognised” and “social enterprise” to the name of its legal form, which is abbreviated to “recognised SCES/CVSO”.

Sanction

A company that adopts a recognition in its name that it has not been granted may be legally dissolved.

Where the conditions for recognition are not being observed, it falls to the competent recognition authority to take the appropriate measures, such as withdrawal of the recognition. For a recognised SCES/CVSO, involving a double recognition, it is possible that only one of these will be withdrawn. A recognised SCES/CVSO that loses its recognition as ES/SO, and whose primary goal is not to offer its partners an economic or social advantage in the context of their personal or professional requirements, will inevitably lose its recognition as SC/CV as well, however.

The Business Court has jurisdiction here.

Next contribution

A later contribution will examine Books 9-10: The ASBL/VZW and AISBL/IVZW

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