Code on Companies & Associations

Listed Companies

Published on 7th Dec 2018

The new Code on Companies and Associations ("BCCA") is here. Having entered into force on 1 May 2019, it has major implications for Belgian listed companies. In this article, we will focus on how the BCCA impacts (i) the process for raising new funds, (ii) the possible governance models, (iii) the possibility for introducing double voting rights for “loyal” shareholders and (iv) the purchase of own shares.


By way of introduction, we note that the terminology applicable to listed companies will be simplified in the BCCA: the terms used throughout the BCCA will be “listed companies” and “public-interest entities”. The concept of a "company making or having made a public call on savings" has disappeared.

Raising new funds


More flexibility on pricing

When the preferential subscription right of existing shareholders is cancelled to the benefit of identified persons who are not employees, the issue price currently cannot be lower than the average closing price of the last 30 days. This Belgian restriction is unique and often triggers difficulties when applied in the international financial markets. The rule is particularly complex to apply to listed companies operating in sectors with higher share price volatility (e.g., technology or life sciences sectors).

The price restriction has therefore been abolished. Instead, more information needs to be provided by the board of directors. Moreover, if an identified beneficiary of the cancelled preferential subscription rights has more than 10% of the voting rights, such a shareholder cannot participate in the vote relating to the cancellation of the preferential subscription rights. If the cancellation is decided upon by the board of directors, the director representing this shareholder cannot participate in the decision.

Other practical improvements

Under the new BCCA, it has become possible to use the authorised capital to issue shares without nominal value below the par value of the existing shares.
Capital increases by listed companies often take place in two separate acts, a conditional capital increase at the launch of the operation followed by a confirmation of the capital increase on closing. Going forward, persons other than directors can confirm the completion of a capital increase in the presence of a notary.


The new BCCA introduces a single set of rules for all convertible bonds, whether the conversion right is with the bondholders, the issuer or automatic. Also convertible bonds with a conversion window of more than ten years have become possible.

Early conversion rights upon capital increase in cash and early redemption are no longer set out in the BCCA and need to be governed by the terms and conditions of the convertible bonds.

The terms and conditions of the bonds or the bondholders' meeting can appoint a representative for the bondholders. The powers of the representative need to be determined in the terms and conditions of the bonds and can include the power to agree on changes to the terms and conditions on behalf of all bondholders. The law also expressly provides that the representative can be appointed as security agent in case the bonds are covered by security interests.

Going forward, listed companies no longer need to obtain a "nihil obstat" from the FSMA in relation to the special board report to be prepared for the issue of convertible bonds. There is one exception: the FSMA still needs to be involved if the convertible bonds are issued to one or more identified persons who are not employees.

The rules governing the meeting of bondholders are also modernised and can largely be modified or set aside by the terms and conditions of the bonds.

Subscription rights

Contrary to convertible bonds, the maximum exercise period for subscription rights of ten years is maintained in the new BCCA. This maximum period is reduced to five years in case the subscription rights are mainly issued to identified persons other than employees. This was already the case previously, but the definition of "employee" has been extended in the BCCA to include directors and any persons working on the basis of a management agreement. It has also clarified that the five year limitation does not apply if the preferential subscription right is unanimously waived by all shareholders. This clarification is only helpful for non-listed companies.

Under the new BCCA, it is possible to provide in the terms and conditions of the subscription rights that holders will not be able to exercise their subscription rights in the case of a capital increase in cash whereby the legal (or a contractual or synthetic) preferential subscription right applies.

Going forward, listed companies no longer need to obtain a "nihil obstat" from the FSMA in relation to the special board report prepared for the issue of subscription rights. There is one exception: the FSMA still needs to be involved if the subscription rights are issued to one or more identified persons who are not employees.


New governance models

Companies have the option to choose between a monistic governance system (as was the case previously), combined or not with an informal management body, or a real two-tier governance structure.

In a two-tier governance structure, the powers of the board of directors are divided between a supervisory board and an executive board. One is not allowed to be a member of both boards. The shareholders appoint the members of the supervisory board, which in turn has the exclusive authority to appoint the members of the executive board. The supervisory board also has the power to decide on the remuneration package of the members of the executive board. Membership on either board cannot be covered by an employment contract.

In a two-tier board, the CCA provides that the supervisory board has the exclusive power to: supervise the executive board (including granting discharge and starting liability claims), call the shareholders' meeting and set the agenda, draw up the annual accounts and prepare the annual report, use the authorised capital, purchase own shares, measures of financial assistance and draft the special reports that are required when issuing securities or restructuring the company. Only for these exclusive powers can the supervisory board represent the company vis-à-vis third parties.

All other powers lie with the executive board, who are therefore exclusively responsible for the operational activities of the company and for generally representing the company towards third parties.

Both in a monistic and in a two-tier governance structure it remains possible to delegate daily management powers. The definition of daily management is now included in the BCCA and includes (i) acts or decisions that do not exceed the needs of a company's daily life, as well as acts and decisions that (ii) due to their minor importance or (not "and") (iii) due to their urgent character do not justify the intervention of the board.

As the Comm.VA/SCA is abolished, the BCCA allows for listed NVs to have one single director. The sole director then needs to be an NV having a board of directors.

Independent directors

  • The previous criteria for qualifying as an independent director has been replaced by a general principle and a reference to the criteria set out in the (revised) Corporate Governance Code. In line with the "comply or explain principle" of the Corporate Governance Code, a company is able to explain why a director who does not meet the criteria should still be considered independent. If the shareholders' meeting accepts this, the director can be appointed as independent director.
  • It is no longer  permitted to pay any variable remuneration to independent directors. Other than this exception, the existing rules on directors' remuneration are largely maintained in the BCCA.

Conflicts of interest

The rules on conflicts of interests as currently set out in Article 523 BCC do not change for listed companies. This is different for private companies where – similar to the existing rules for listed companies – conflicted directors are no longer be allowed to participate in the relevant decision. In companies that opt for a two-tier governance structure, the matter needs to be escalated to the supervisory board if a member of the executive board is confronted with a conflict of interest.
The rules relating to conflicts of interests between a listed company and its controlling shareholder(s) are reinforced (current Article 524 BCC). Previously, transactions between the listed company and its subsidiaries fall outside the scope of the intragroup conflict of interests rules. This is no longer be the case for transactions with subsidiaries that are held for more than 25% by the controlling shareholder.

Another novelty that the BCCA introduces for intragroup conflicts of interests is its application to proposals by the board of directors to the shareholders' meeting for a capital increase in kind by a controlling shareholder. The same applies for mergers, splits or similar transactions with a company held at more than 25% by the controlling shareholder. The new rule is in line with recommendations from the FSMA on the matter.

Other interesting novelties

  • The principle that the mandate of a director in an NV/SA can be terminated at any time (ad nuntum) and without compensation will become a fall-back rule. This rule can be set aside by the shareholders or the Articles of Association.
  • Written board resolutions are permitted beyond urgent situations, both for the executive board and the supervisory board.

Double voting right for "loyal shareholders"

Listed companies can give a double voting right to so-called "loyal" shareholders who hold shares for an uninterrupted period of more than two years. The shares need to be fully paid up and in registered form so that the uninterrupted possession can be evidenced by the share register.

The introduction of the double voting right needs to be approved by the shareholders' meeting by a majority of two third of the votes.

The double voting right is not be taken into account for calculating whether the 30% threshold for launching a mandatory takeover bid has been exceeded. The same applies for calculating the 95% threshold for a squeeze-out. The double voting right does, however, have an impact on the transparency obligations as shareholders are required to notify any – active and passive – crossing of applicable thresholds when obtaining or losing double voting rights.

Purchase of own shares

The rules governing the purchase of own shares have been substantially modified to make them more flexible and easier to apply:

  • The shareholders' meeting can authorise the purchase of own shares with a 75% majority (instead of 80%, as is currently the case).
  • The 20% limit is abolished. Going forward, only the amount available for distributions will limit the purchase of own shares
  • Treasury shares will not qualify for dividend distributions.
  • An authorisation by the shareholders' meeting is no longer required to transfer treasury shares. The BCCA does, however, expressly provide that all shareholders must be treated equally, so that all shareholders should receive the same opportunity to acquire treasury shares. The Articles of Association can authorise the board of directors to sell the shares to an identified party who is not an employee.

Looking beyond the BCCA: We also draw your attention to the changes that have been made to the European Shareholders Directive (EU) 2007/36/EC as regards the encouragement of long-term shareholder engagement. Deadline for implementation under Belgian law is 10 June 2019. Look out for our updates in 2019.


* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

Connect with one of our experts

Interested in hearing more from Osborne Clarke?