When are you an enterprise? And what does that mean?

Analyse

With the reformed business law, which came into force on 1 November, the distinction between a trading company and a civil company has disappeared. And on top of that, the notion of 'business' has been greatly expanded.

What does all this mean?

1. From now on, the notion of 'business' will serve as a new starting point instead of the notion of 'merchant'.

The distinction between a trading company and a civil company disappears, and the notion of ‘enterprise’ is greatly expanded.   

As a result, all businesses will henceforth be subject to corporate law, such as inter alia solvency law (Book XX of the Code of Economic Law), evidence for enterprises (see link), provisions relating to the Crossroads Bank for Enterprises CBE and accounting operations.

From now on, an enterprise will be:

  • Any natural person who independently performs a professional activity

    This is in principle any self-employed person within the meaning of social security law, with the exception of his or her cooperating spouse.

    Consequently, this also includes sole proprietorships, business managers of a company, directors, practitioners of a liberal profession, artists, etc.

    An activity that purely fits within the normal personal assets management of a natural person, will not be regarded as an enterprise.   

  • any legal entity:

    These are not only all companies, but also associations and foundations, even if they do not pursue an economic goal.

    Legal entities governed by public law are excluded unless they offer goods or services on the market. Any authorities, as well as the State and its decentralized services are also excluded.

  • Organizations without legal personality that pay out their profits.

    They include partnerships.

    Non-profit organizations without legal personality that actually make no profit distributions to their members or to persons who exercise a decisive influence on the organization, are excluded.  

    De facto associations that do not make profit distributions are not enterprises as defined by law either. 

The term 'organization without legal personality' is used to also include other organizations without legal personality that actively participate in legal transactions in a foreign form in the notion of enterprise.

2. From now on, enterprises will fall under the jurisdiction of the Enterprise Court

The Commercial Court is replaced by the 'Enterprise Court'.    

The Enterprise Court is competent for everyone who falls under the new notion of enterprise, unless:

  • In disputes with an entrepreneur-natural person that relate to actions that are apparently foreign to the enterprise.  In the event of doubt, the Enterprise Court is however competent. 
  • It concerns a dispute that falls under the special jurisdiction of another court.       

The new and broader notion of enterprise will have as a result that more entrepreneurs will be eligible to be appointed commercial court judges.

3. Temporary trading companies will be temporary companies

This is the result of the abolition of the notion of  'merchants'.

In the contracting world it is customary that a temporary association is formed to jointly conclude contracts with a future owner.

In drafts concerning the reform of corporate law it is proposed to abolish the temporary company altogether. If that were to happen, it will be possible to call on the form of a partnership for the formation of such a temporary company. Nothing prevents partners from setting up a partnership with commercial objects for a definite period of time or for a particular expiring project. A temporary trading company, and now a temporary company, is actually a partnership existing for a limited period of time.

4. All partners of a partnership are jointly and severally liable

Where in the past only the partners of a trading partnership were jointly and severally liable for partnership debts, this will henceforth apply to all partnerships. 

Deviating from this joint and several liability will be possible by providing for an explicit stipulation for such purpose in a contract with third parties. It is therefore extremely important to provide for such a stipulation each time a contract with third parties is concluded.   

5. The fate of the Commercial Code

The Commercial Code will be dismantled more and more to finally disappear altogether. Many provisions move to other codes of law, such as the Code of Economic Law and the Civil Code.   

6. Conclusion

As you have been able to read, the legislation on enterprises has changed considerably.

On the one hand, this is positive because the law fits in better with the current enterprise management.

On the other hand, entrepreneurs must remain very vigilant and ensure that they continue complying with the new legislation. That is why it is wise to have agreements checked to see if they do not entail adverse consequences.

In addition, there are many companies that used to function in the form of a civil company, such as practitioners of a liberal profession (doctors, lawyers, architects, accountants, etc.),   property companies, agricultural companies, etc. 

These companies have now fully become enterprises, and are subject to corporate law. They can henceforth also be declared bankrupt.  Until now, this was not possible.      

They must remove the words “civil company in the form of a commercial company” from their bylaws. This amendment to the bylaws is only necessary if another change is required. Nevertheless, it is advisable to drawn up minutes of a general meeting and refer to the change in the law, whereby it is determined that the civil character of the company disappears.     

All documents emanating from the former civil company must also be adapted. We are thinking of purchase orders and invoices, letters, announcements and deeds. And do not forget to check your website.

Would you like to learn more about this subject?

Contact our experts or telephone +32 (0)2 747 40 07
Leila Mstoian

Leila Mstoian

Partner
Alain De Jonge

Alain De Jonge

Partner
Leo Peeters

Leo Peeters

Partner
Koen De Puydt

Koen De Puydt

Partner
Toon Rummens

Toon Rummens

Partner
Maxiem Devos

Maxiem Devos

Senior Counsel