New under the Belgian code of companies and associations: the employment status of corporate mandate holders

The new Belgian code of companies and associations (BCCA) entered into force on 1 May 2019 and immediately applied to all legal entities incorporated as from that date. 

On 1 January 2020, its mandatory provisions will become applicable to all Belgian legal entities (ie including those incorporated prior to 1 May 2019), and all existing Belgian legal entities will have to align their articles of association with the BCCA upon the first amendment of their articles of association following 1 January 2020, and at the latest by 1 January 2024.

This post focuses on the employment status of corporate mandate holders (CMHs) in two common types of legal entity: the limited liability company (naamloze vennootschap/société anonyme, NV/SA) and the private limited liability company (besloten vennootschap/société à responsabilité limitée, BV/SRL).

New governance systems under the BCCA

The BCCA recognises three governance systems in the NV/SA:

1. the one-tier system, whereby the NV/SA is managed by a board of directors;
2. the two-tier system, whereby the NV/SA is managed by a supervisory board (raad van toezicht/conseil de surveillance) and a management board (directieraad/conseil de direction); and
3. the sole director system, whereby the NV/SA is managed by a single director.

The BCCA provides that the BV/SRL is managed by one or more directors who can act as a collegiate body.

Finally, both the NV/SA and the BV/SRL can entrust one or more persons (director or non-director alike) with the legal entity’s day-to-day management.

Employment status of CMHs: self-employed vs. employee

The BCCA now explicitly provides that CMHs in NV/SAs and BV/SRLs cannot, in their capacity as CMH, be bound by an employment contract.

Therefore, as a starting point, CMHs have to register as a self-employed contractor and pay social security contributions under the self-employed social security regime. In practice, however, if the CMH is not remunerated, no social security contributions need to be made.

This confirms the position regarding the social status of CMHs that was developed by case law and doctrine under the former Belgian companies code (BCC).

However, the position developed by case law and doctrine under the BCC did not extend to members of the management body (directiecomité/comité de direction) of an NV/SA, for which it was not excluded to perform their tasks under an employment contract.

This is no longer possible for members of the management board in the two-tier system under the BCCA. Hence, NV/SAs that appoint a management board may have to amend their contractual relationships with the members of such body.

Duality of functions

As was the case under the BCC, it remains possible for CMHs to have additional roles in the same legal entity.

The CMH will be able to perform an additional role under an employment contract as long as:

1. there is a clear distinction between the tasks performed as a CMH and employee;
2. employer’s authority can be exercised over the CMH in their role as an employee; and
3. as an employee, the CMH receives remuneration.

Whether or not these conditions are met depends on the particular circumstances of each case.

What legal entities need to do

When incorporating a new legal entity under the BCCA, or when aligning their articles of associations with the BCCA as from 1 January 2020, Belgian legal entities have to carefully consider the employment status of their CMBHs to ensure that:

1. these CMHs act as self-employed contractors in their capacity of CMH;
2. the contractual relationship with members of the management board in a two-tier system are reviewed and, where necessary, modified to ensure compliance with the BCCA; and
3. the conditions for a duality of functions are fulfilled if these CMHs have another role in the same legal entity.