Article 2:59 of the Belgian Code of Companies and Associations (“BCCA”) provides that the management body of a legal entity (a company, a not-for-profit organisation, a foundation etc.) has the power to issue internal regulations, subject to prior authorisation through the articles of association.
However, the legislator set some limits as to the content of such internal regulations by providing that internal regulations may not contain the following:
- 1°any provisions contrary to mandatory legal provisions or to the articles of association;
- 2°any provisions relating to matters for which the BCCA requires a provision in the articles of association;
- 3°any provisions affecting the rights of shareholders/members, the power of the bodies or the organisation and functioning of the General Meeting.
For cooperative companies, however, article 6:69, §2 BCCA provides that internal regulations may contain additional provisions regarding the rights of the shareholders and the functioning of the company, including those matters as referred to under article 2:59, 2° and 3°, provided that the internal regulations are approved by a decision taking into account the same special presence and majority requirements as the ones that must be met to amend the articles of association. Consequently, the articles of association of a cooperative company can derogate from these limitations.
The Constitutional Court has now annulled article 2:59, 3° BCCA, the reason being that any difference in treatment between cooperative companies and other entities governed by the BCCA (public/private limited liability companies, not-for-profit organisations, foundations etc.) was not justified (Court Decision of 15 October 2020, no. 135/2020).
As a result of this annulment, internal regulations may now contain provisions "affecting the rights of shareholders or members, the powers of the bodies or the organisation and operating procedure of the General Meeting". However, the Constitutional Court also stated that this is only allowed on condition that such internal regulations are approved by a decision taking into account the same special presence and majority requirements as the ones that must be met to amend the articles of association.
Although, at first sight, this might not have a big impact on companies, it will certainly affect other legal entities, such as (international) not-for-profit organisations, which often choose to include certain aspects relating to the rights of their members and the functioning of certain bodies, such as their Board, working groups and task forces, in internal rules and which had been restricted in doing so because of article 2:59, 3° BCCA. In future, they will have to meet the presence and majority requirements applicable to amendments to the articles of association.
For more information, do not hesitate to reach out to us.