Impact of the Code of Companies and Associations on the executive committee

08 Nov 2019

The recently introduced Code of Companies and Associations provides for three possible governance models in the public limited liability company (NV/SA) :

  1. solo director;
  2. one-tier governance, with a board of directors (raad van bestuur/conseil d’administration);
  3. two-tier governance, with a management board (directieraad/conseil de direction) and a supervisory board (raad van toezicht/conseil de surveillance).

The executive committee (directiecomité/comité de direction) as known under the previously applicable Companies Code has been abolished.

What does this mean for existing executive committees that were created under the Companies Code ?

The Code of Companies and Associations (“CCA”) provides that an executive committee created in accordance with article 524bis of the Companies Code (“CC”) can continue to exist until the articles of association (“AoA”) of the company are amended - at the very latest on 1 January 2024. With the amendment of the AoA, the executive committee will be effectively abolished.

It is therefore important that companies with an executive committee start thinking today about their future governance model.

What options are available ?

Below are a few options that are available to companies currently having an executive committee, to organise their governance going forward under the CCA.

As you will see, there is no one-size-fits-all solution, and the most appropriate option will depend on the specific situation of the company.

Option 1 - NV/SA with a two-tier governance structure

The CCA introduced a new two-tier governance model with a management board and a supervisory board. Although this may look similar to the governance model with an executive committee and a board of directors under the CC, there are important differences. First, it is not possible to be a member of both management bodies. Second, there is a clear distinction of powers: the supervisory board is only responsible for setting the general strategy and for supervising the management board. The actual management (and representation of the company in this respect) is entrusted (exclusively) to the management board.

Option 2 - NV/SA with a one-tier governance structure and categories of directors

One could consider working with a board of directors consisting of different categories of directors (one category representing the old board members and one category representing the old executive committee members), in which case the basic principles of decision making as a collective responsibility body (college/collège) need to be observed. Using special attendance and majority requirements is then allowed. Depriving one category of its right to take part in decision making for certain matters is not.

Option 3 - NV/SA with a one-tier governance structure and a daily management committee

The concept of “daily management” has been extended in the CCA: it covers matters that belong to the day-to-day activities of the companies, as well as matters that are either very urgent or of lesser importance and therefore do not warrant the involvement of the board of directors. Daily managers can form a collective responsibility body. It is possible to combine the positions of member of the daily management committee and of board member. However, the presumption of self-employed status does not apply to members of the daily management committee!

Questions ? Contact us !

 

Contact us

Bart Vanstaen

Advocaat Vennoot / Avocat Associé, PwC Legal BV/SRL

Tel: +32 473 52 62 49

Ive Serneels

Senior Managing Associate, PwC Legal BV/SRL

Tel: +32 492 74 39 80

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