The Pre-contractual Information in the Framework of Commercial Cooperation Agreements Act 2005 protects the economically weaker party in certain commercial partnership agreements. Although this legislation is not unique, it often gives rise to surprise, disbelief and specific questions.
The starter public limited liability company was supposed to be the corporate vehicle for tough economic times - a home-grown alternative to the UK limited company and Germany's 'mini-Gmbh'. However, it is arguable that its limited advantages fail to outweigh its drawbacks. If so, where do the problems lie?
A law has been passed whereby at least one-third of members of boards of directors of listed companies (and certain autonomous state undertakings) must be "of the minority gender" - in the case of most companies, this means women. Companies affected by the law should be aware of their main obligations and the penalties for non-compliance.
Several members of Parliament have proposed legislation that would further restrict the variable remuneration awarded to directors and other senior managers of listed companies and autonomous state enterprises. Although it is far from certain that the proposals will become law, they clearly indicate that the battle over big bonuses is far from over.
A new act transposes the EU Shareholders' Rights Directive into Belgian law. It aims to strengthen shareholders' rights and solve problems relating to cross-border voting. Its provisions remove some of the obstacles that have deterred shareholders from participating in general meetings, such as geographical distance and short notice periods, by encouraging the use of new technologies.
The Unilateral Termination of Exclusive Distribution Agreements of Indefinite Duration Act will soon celebrate its 50th anniversary. The act grants Belgian distributors significant protection against unwanted or early termination of distribution agreements. However, since the act became law, the protection it offers to distributors has gradually been eroded.
The sales black-out period is once again a hot topic in the Belgian media. The Market Practices Act prohibits announcements of price reductions for certain goods in the three weeks before the annual January and July sales periods. Ongoing litigation at both national and EU level is expected to decide whether this black-out is compatible with the EU Unfair Commercial Practices Directive.
The Companies Code lays down a procedure that must be followed when a company's net assets fall below one-half or one-quarter of its share capital due to losses sustained. Particularly in times of economic downturn, directors should be aware of the procedure and possible recovery measures, as well as the penalties for non-compliance.
The Companies Code contains relatively stringent requirements for the board of directors of an unlisted Belgian company limited by shares if one of the directors has a conflicting pecuniary interest. Although two recently published judgments have shown some flexibility in the application of conflict of interest rules, directors and other stakeholders should be aware of the rules and the potential penalties for non-compliance.
The UNIDROIT Convention on International Factoring is in force in Belgium. It governs the assignment, by a supplier to a factor, of receivables arising from commercial contracts for the sale of goods (including the supply of services) between the supplier and its customers. Although its regime is largely uncontroversial, one aspect - the overruling of 'no assignment' clauses - has been the subject of a government declaration.
Interim dividends can be distributed by the board of directors or the general shareholders' meeting of a company limited by shares. Controversially, the Commission for Accounting Standards has previously advised against the distribution of any interim dividend by the general meeting between the end of the preceding financial year and the approval of the annual accounts for that financial year by the general meeting.
The new Act on Market Practices and Consumer Protection is now in force. It restructures the old Trade Practices Act and introduces significant new provisions, notably on joint offers. Although the new act was intended to complete the implementation of the EU Unfair Commercial Practices Directive, there are concerns that the rules on price reductions and black-out periods are inconsistent with EU law.
The Corporate Governance Act introduces new rules for publicly quoted companies and some state-owned companies. It aims primarily to strengthen remuneration controls, introducing new checks and limits on salary packages and setting performance-related elements in a long-term context. It also contains new rules on individuals who are banned from acting as director following bankruptcy or a criminal conviction.
The Supreme Court has ruled that circumstances which were not reasonably foreseeable at the time of the conclusion of an agreement and which increase the burden of the agreement disproportionately can, in certain circumstances, be considered an 'impediment' within the meaning of Article 79 of the UN Convention on Contracts for the International Sale of Goods.
The 2009 Corporate Governance Code was issued against the background of the financial crisis and applies to all companies incorporated in Belgium whose shares are admitted to trading on a regulated market. The main amendments to the first edition relate to executive remuneration, the board of directors' monitoring role and the roles of chairman of the board of directors and chief executive officer.
A foreign company that opens a Belgian branch office must comply with certain publication formalities. However, all too often companies fail to comply with these requirements and complete the process correctly. This update considers the requirements to submit annual and consolidated accounts and to publish information in the Official Gazette
Most companies in which the liability of the shareholders or members is limited to their contribution must file accounts with the National Bank of Belgium online. Failure to do so on time results in an automatic fine. Moreover, a presumption of joint and several liability applies to all directors and damage suffered by third parties will be held to be the result of non-compliance unless the company can prove otherwise.
By introducing a new law on audit committees, the government has sought to reinforce the quality of financial reporting. Most large Belgian companies already have an audit committee, but all such companies should review the new criteria, particularly the rule that independent directors may not have had significant business relationships with the company.
The Brussels Court of Appeal recently ruled on a private sale held by the INNO department stores in the black-out period which precedes the two annual sales periods, during which no price reductions can be announced or suggested. It held that these black-out periods fall outside the scope of the EU Unfair Commercial Practices Directive.
Royal Decree 10/2008, implementing EU Directive 2006/68/EC, has come into force, substantially modifying the Belgian Companies Code in respect of contributions in kind, purchase of own shares and financial assistance. The decree applies to all forms of limited liability company and simplifies the procedure for contributions in kind.