The new Belgian Code of Companies and Associations (“CCA”) has introduced the possibility to contribute labour into a private limited liability company (BV/SRL) and a cooperative company with limited liability (CV/SC).
The new provisions allow one to contribute (future) labour or services into a company in return for shares.
The contribution of labour or services is considered as a contribution in kind and requires a report to be drafted by the management body and by the auditor, respectively.
This new innovative possibility creates opportunities in several areas such as:
- management incentive plans (MIPs): management of a company can be incentivized by being granted shares in (and thus the opportunity to share in the profits) the company;
- start-up companies: it can be agreed between the parties that the founder (who has all the know-how but no cash) contributes his or her labour, and that an investor contributes cash, both in return for shares in the company.
In the context of this new possibility, the Accounting Standards Commission (CBN/CNC) has issued a draft opinion for consultation (https://www.cbn-cnc.be/nl/adviezen/inbreng-in-nijverheid-bij-besloten-vennootschappen-en-cooperatieve-vennootschappen-ontwerp). The draft opinion focuses on the accounting treatment of the contribution and more in particular on whether or not the contribution can be accounted for as equity of the company.
Feedback and suggestions on the proposed opinion can be submitted until Tuesday 22 October 2019.
PwC Legal will keep you up to date once the final opinion is published.