Investing in Wallonia | Setting up a business | Legal structure

In the initial stages of entering a foreign market, it is often worthwhile to opt for a basic legal structure that allows for flexibility and minimum administration, before going on to establish an incorporated legal entity that is representative of the business sector in question.

unincorporated structures

Travailleur indépendant (self-employed individual):
In Belgium, sole proprietorship is not considered an autonomous entity. The legal status of self-employed individuals is therefore based on a set of diverse texts, as there is no single law that deals with all aspects of their legal status. Sole traders (who must be individuals) carry out the activities of the business in their own name. They personally manage and control the company. Moreover, the concept of share capital does not apply as the assets of the company are merged with the assets of the self-employed individual.

Bureau de représentation (representative office):
A bureau de représentation or representative office is an auxiliary structure of the foreign company that it represents. It therefore has no legal relationship with third parties, and all documents are signed on behalf of the parent company. It acts as a basic "observation post", allowing contacts to be made on the ground, while also carrying out advertising activities and providing market-specific information. Representative offices are subject to Belgian laws and regulations in the social, fiscal and statistical domains. They are not permitted to partake in sales activities.

Succursale (branch office):

A succursale or branch office (or "operational office") is an offshoot of the company. It does not have a separate legal status to the company, however it does have a certain autonomy in the area of sales and decision-making. Unlike a representative office, a branch office is permitted to carry out sales activities, thereby facilitating the building of customer relationships. However, as it does not have a separate legal status, it acts in the name and on behalf of the company. The laws applied to the branch office will always be the laws of the parent company.

However, all branch offices set up in Belgium are still subject to Belgian laws and regulations in terms of any documents they may have to prepare (for example, signing of employment contracts, commercial practice regulations, director liability, compliance with VAT regulations). The advantage of setting up a branch office is that there are no capital financing charges. However, a certain number of formalities need to be fulfilled when setting up the office (file details with commercial court register and BCE register of private companies), and while the office is in operation (hold updated accounts, lodge consolidated accounts for the French company with the Belgian national bank).

corporated structures

Limited companies

Société privée à responsabilité limitée - SPRL (private limited company)

A société privée à responsabilité limitée or private limited company is undoubtedly the most suitable company structure for businesses in the SME sector. Similar to companies with share capital, partners benefit from limited liability. This structure offers the management stability associated with partnerships as it is almost impossible to remove a managing partner who is named in the articles of association.
For more information on the main characteristics of an SPRL, click here.

Société privée à responsabilité limitée unipersonnelle - SPRLU (sole-member private limited company)

A variant of the private limited company structure, the main characteristics of a société privée à responsabilité limitée unipersonnelle are as follows:

1. It consists of a sole partner,

2. It must fulfill the same conditions as an SPRL, with a number of specific additional rules relating to the sole partner,

3. The sole partner exercises the powers granted by the general shareholders' meeting and cannot delegate these powers,

4. If the sole partner is a legal entity, it is jointly and severally liable with the SPRLU for any commitments entered into by the company with third parties, notwithstanding any stipulations to the contrary, until such time that another partner joins the company.

For more information on the main characteristics of an SPRLU, please click here.

Société anonyme (S.A) (public limited company):

The société anonyme (public limited company) is by far the most popular company structure in Belgium. It is the only type of company with share capital that can trade shares publicly. An S.A. is therefore an open structure, unlike the SPRL structure.

Advantages:

• Shareholders' liability is limited to the extent of their contribution,

• There can be numerous shareholders,

• The company can call on external financing,

• In principle, registered shares (shares which must be filed with the register of shareholders) and bearer shares are freely transferable. However, the extent to which they can be transferred may be restricted in the articles of association (clause establishing approval requirement, or pre-emptive right of other shareholders).

Conditions:

• There must be at least two shareholders (individual or legal entity),

• The subscribed capital must amount to at least 61,500 euros,

• At least one quarter of each share corresponding to a cash contribution or to a divisible contribution in kind must be paid up at the time of incorporation (or share issue), such that the total amount paid up is equal to at least the minimum capital:

• Example 1: If the share capital is 61,500 euros, the shares must be paid up in full
• Example 2: If the share capital is 123,000 euros, the share capital to be paid up is 61,500 euros, in which case a quarter of each individual share value must be paid up.
• Divisible cash contributions in kind must be paid up immediately. In all other respects, the cash contribution scheme is the same as the scheme applied to an SPRL (company auditor's report etc.),
• Cash contributions must be paid into an account held with a financial institution on behalf of the incorporated company,
• A business plan must be drawn up,
• The shareholders must appoint a statutory auditor.

Representation within the company:

• The company must have at least three directors (these do not have to be shareholders).

For further information on the main characteristics of an SA, please click here.

Société coopérative - S.C. (cooperative society):

A société cooperative or cooperative society is defined as a company that has at least three shareholders and has the option of increasing its share capital according to the earnings and expenses of the shareholders:

• Its main characteristics relate to its variable capital (all or in part) according to the earnings and expenses of the shareholders, and its operational flexibility,
• Nominal shares can only be transferred between shareholders (unless there is a non-assignment clause) or to third parties provided they are named in the articles of association or they belong to a category provided for in these articles of association,

• Regardless of what form it takes, a société cooperative must consist of at least three individuals. These can also be legal entities.

There are two types of cooperative society: SCRL and SCRIS.

Société coopérative à responsabilité limitée - SCRL (limited cooperative society)

An SCRL or limited cooperative society is quite similar to an SPRL (private limited company) but it allows greater freedom when it comes to drawing up the articles of association.

For further information on the main characteristics of an SCRL, please click here.

Unlimited companies

Société en nom collectif - SNC (general partnership):
A société en nom collectif is a general partnership consisting of at least two shareholders which is set up for the purposes of carrying out a commercial activity under a business name. Although there are few formalities required by this type of structure, it is not very common since shareholders have joint unlimited liability as to the commitments of the company. However, an SNC structure is very suitable for those working in a liberal profession.
For further information on the main characteristics of an SNC, please click here.

Société en commandite (limited partnership):

1- Société en commandite simple - SCS (limited partnership)
A société en commandite simple is a company consisting of one ore more shareholders with joint unlimited liability as to the commitments of the company, and one or more financial backers, each of which are liable to the extent of their contributions. This type of company is particularly suited to individuals who want to set up a business but do not have sufficient funds at their disposal.
For further information on the main characteristics of an SCS, click here.

2- Société en commandite par actions - SCA (limited partnership with share capital)
The limited partners within a société en commandite par actions (limited partnership with share capital) are shareholders whose share capital is freely transferable. The advantage of setting up this type of limited partnership is that control of the company, which resides with the limited partners, is separated from management of the company, which stems from the powers granted to the active partners. This structure is therefore mostly used in portfolio management or within the context of inheritance transfers.
For further information on the main characteristics of an SCA, please click here.

Société coopérative à responsabilité illimitée et solidaire - SCRIS (cooperative society with joint unlimited liability) :
A société coopérative à responsabilité illimitée et solidaire is an enhanced form of general partnership. It is a very interesting corporate structure for groups of companies, or if setting up shared subsidiaries and holding companies (no minimum capital requirement).

It is also very popular with family companies and/or small companies as it offers greater flexibility when compared to limited cooperated societies. This is because the legal provisions apply on a non-pre-emptory basis only, that is, they are only mandatory in the absence of statutory provisions.

For further information on the main characteristics of an SCRIS, please click here.

useful addresses  

- Website for Belgian Foreign Affairs, Foreign Trade and Development Cooperation
http://www.diplobel.fgov.be
- Company vade mecum listing all of the formalities required to set up a company as well as the rules of operation for the different types of company.
http://www.mineco.fgov.be
- The shared website of the Institute of Chartered Accountants and Fiscal advice and the Institute of Company Auditors
http://www.accountancy.be
- Portal to public and private Belgian websites, focused on tax issues but also deals with social and property matters:
http://www.taxup.com