The new Belgian Code of Companies and Associations (“CCA”) has introduced the prohibition for directors of an NV/SA, BV/SRL and CV/SC to be bound by an employment contract with the company for the performance of their directorship.
In the NV/SA, the same prohibition also applies to members of the management board and the supervisory board in the case of a two-tier structure.
Although this principle was not expressly included in the Companies Code, from a labour law and social security perspective, this was already applied in practice (*).
Does the prohibition in the CCA mean that it will no longer be possible to combine a director’s office with a position as an employee in the same company?
No - the prohibition is only applicable to the activities performed by the person in the capacity as a director of the company. It remains possible to have an employment contract with the company to perform activities in another capacity, i.e. activities that do not fall within the remit of the directorship, provided that:
- the directorship and the other position are distinct, and
- the other position is performed under the authority of the employer (i.e. the company).
Take, by way of example, a person who is a member of the board of directors and CFO. His/her day-to-day operational activities consist in managing the company’s finances. Besides such operational activities, as a member of the board of directors, he/she is involved in the overall (strategic) management of the company. As a CFO, he/she can have an employment contract (performed under the authority of the board or the CEO), but the position held as a director will be performed on a self-employed basis (possibly without additional compensation).
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(*) The self-employed status of members of the executive committee in the NV/SA, however, used to be subject to discussion under the Companies Code. The CCA also resolves this lack of clarity. As a result, companies that currently have an ‘old style’ executive committee should be careful when deciding to apply the CCA as this also implies the switch to a ‘new style’ management board (or, alternatively, a switch to a one-tier governance system). As mentioned, all members of the (management) board will also need to have a self-employed status for the performance of their office as a (management) board member.