Abstract
The Belgian law on groups of companies is the result of several legal sources: the companies acts, accounting regulation, financial regulation and case law have developed elements of group law without leading to an overall definition of group law. The group reality, composed of separate legal entities, controlled by the leading company is widely recognised. Each of these entities will individually be subject to its own legal regime, subject to control of the group or parent leadership. The control is essentially defined as the power to appoint the majority of the board of the subsidiary or to determine its activity. Control allows the parent to require the subsidiary to adopt decisions in the parent’s or the group’s interest, potentially creating a conflict of interest. Different legal instruments have been developed to balance the interests of the group and those of the subsidiary, to protect the subsidiary and its creditors.
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Notes
- 1.
This was the so-called “autonomie de la fonction bancaire”, reducing the presence of the holding company in the bank to one director. It is related to the idea that the bank should be run exclusively in its own interest. The rule was abandoned in 1994.
- 2.
See articles 5 to 11 of the Companies Code of 7 May 1999.
- 3.
See L. 23 March 2019, Off Journal, 4 April 2019. Here referred to as Comp.L.
- 4.
Article 1.14 and 1.16, Comp.L.
- 5.
See Royal decree of 29 April 2019, implementing the Comp.L.
- 6.
See for an overview: European parliament, Company law, http://www.europarl.europa.eu/factsheets/en/sheet/35/company-law.
- 7.
Applicable in Belgium on listed companies and on consolidated accounts. Other companies follow Belgian GAAP.
- 8.
A new corporate governance code has been published, applicable from 2020 on: https://www.corporategovernancecommittee.be/sites/default/files/generated/files/page/2020_belgian_code_on_corporate_governance.pdf. Listed companies have to state that they apply the Corporate governance as indicated by Royal decree: Article 3.6.
- 9.
See the Proposal for an Eighth Council directive of 10 April 1984, OJ, L.126 of 12 May 1984.
- 10.
Article 1-26 Comp.L.described the small group on the basis of employees (250), turnover (35 m euro) and balance sheet total (17m euro). They are exempted from publication of consolidated accounts: article 3-25.
- 11.
See article 3:22; 3.25 and 3.26 Comp.L. exonerate small groups from the obligation to publish consolidated accounts. Listed companies are excluded from this exception.
- 12.
See 3.22 Comp.L.
- 13.
See the royal decree of 29 April 2019.
- 14.
This would be the case for the obligation to establish consolidated accounts, article 13:22 Companies Law.
- 15.
Or “Besloten vennootschap” “societe à responsabilité limitée” Book 5 Comp.L., according to the new terminology.
- 16.
Article 3.1 e.s. Comp.L. Listed companies have to include a compliance statement with the corporate governance code, a statement on their diversity policy and a report on the remuneration practice, article 3.6 3. These requirements have been formulated as applicable to the parent company only.
- 17.
Royal Decree of 29April 2019 implementing the Comp.L.
- 18.
Article 5.6; 7.5 Comp.L.; extended to shares subscribed by a subsidiary.
- 19.
Article 7.221 Comp.L.
- 20.
See the annex for the main sources on Belgian group law.
- 21.
See: EBOR; Forum Europaeum Corporate Group Law (2002), High Level Group of Company Law Experts (2002), Reflection Group (2011).
- 22.
Article 1.14 Comp.L.. The European accounting directive art 22(2) EU Directive 2013/34 defines the group for consolidation purposes in wide terms referring to “that undertaking (a parent undertaking) has the power to exercise, or actually exercises, dominant influence or control over another undertaking (the subsidiary undertaking); or that undertaking (a parent undertaking) and another under taking (the subsidiary undertaking) are managed on a unified basis by the parent undertaking.”
- 23.
Article 1.18,Comp.L.
- 24.
Article 1.19, Comp.L.
- 25.
Article 3.24, Comp.L. stating that each of the participating companies are considered to be consolidating company.
- 26.
Article 1.14. Comp.L.See the definition of de facto control Companies Law Article 1.14 referring to the factual situation where a shareholder has exercised the majority of the voting rights in two subsequent general meeting. by the parent and its subsidiaries.
- 27.
In case of bank, a duty to avert systemic risks may be accepted as a duty of even the passive shareholder. In practice, the prudential supervisor will normally prod the passive shareholder into action. For a duty for the parent to support a subsidiary: Malherbe a.a, o.c. 1625. See differently in general company law: Dieux (2017), p. 7, referring to Van Ommeslaghe (2005).
- 28.
Article 1.14 Comp.L.
- 29.
The existence of a single undertaking or single economic entity can be derived from the action of several entities without links as shareholders: see e.g. ECJ, Goldman Sachs Case T-419/14, 12 july 2018; ECJ, C-440/11P, 11 July 2013 Portielje.
- 30.
See article 1.20 Comp.L. “ verbonden of geassocieerde vennootschappen”- “sociétés liées et associées”, defined as “ controlled companies, controlling companies, companies part of a consortium or companies which are controlled by any of the foregoing.”
- 31.
“Société mère ou filiale”, “moedervennootschap, dochtervennootschap”.
- 32.
Article 1.22, Comp.L, such as shares owned by other subsidiaries, or shares subject to agreements relating to their disposal or the exercise of rights attached.
- 33.
See article 7:53, § 2. Comp.L.
- 34.
Article 7.57 Comp.L.
- 35.
See: Shermann & Sterling, ISS, ECGI, Proportionality between Ownership and Control in EU listed companies, 2006,http://ec.europa.eu/internal_market/company/docs/shareholders/study/final_report_en.pdf.
- 36.
On the subject: High Level Group of Company Law Experts (2002), Ch. V: Groups and Pyramids, at pp. 94–100. This will be different for the assessment of that shareholder under the fit an proper test in banking: here reality will prevail.
- 37.
Article 7.143 Comp.L.
- 38.
See FSMA, https://mcc-info.fsma.be/fr/quest-ce-quun-actionnaire-détenant-le-contrôle-de-la-société, adding that the requirement should apply in the last and the penultimate general meeting.
- 39.
See Vander Elst,Chr., Shareholders as Stewards: Evidence from Belgian General Meetings (January 1, 2013). SSRN 2270938.
- 40.
See Gent, 3 January 2017, TFR 2017, afl. 521, 392 and http://tfrnet.larcier.be/ (23 May 2017), nt. WOUTERS, P., where the owner of one share was held to be controlling as he determined the policy, was the only person knowledgeable of the activity, while control was stable and continuous.
- 41.
See Law of 1 April 2007.
- 42.
See ECJ, C-186/12,20 June 2013 Impacto Azul Lda, but national legislation can declare parent companies liable for the debt of their subsidiaries, as example from Portuguese law.
- 43.
See ECJ (European Court of Justice), C-440/11 P, 11 July 2013 (Commission v. Stichting Administratiekantoor Portielje and Gosselin Group NV); ECJ, General Court, T-543/08, 11 July 2014 (RWE and RWE Dea v. Commission), attributing to a parent activities of a subsidiary that carries out, in all material respects, the instructions of the parent. See: ECJ, 10 April 2014, Joined Cases C-247/11 P and C-253/11 P.
- 44.
See European DIRECTIVE 2014/59/EU of 15 May 2014, e.g. article 7 on the group recovery plans of 15 May 2014.
- 45.
See article 7:96, 7:102 of 7:115, Comp.L.
- 46.
See e.g. Brussel, 19 June1978, J.T., 1978, 494.
- 47.
This regime applies to the “de facto groups” (Faktische Konzerne).
- 48.
The original Rozenblum case related to a transfer of assets between companies owned by the same shareholders, but without economic justification, a violation of French criminal law: Rozenblum Cass. crim. 4 February 1985, JCP ed G II, 1986, p. 20585, note J. Didier. Among the other French cases see; (Cass. Crim. fr 14 February 1993, Bull Joly, 1993, 225, note Jeantin; (Cass. crim. 2 December 1991, n° 90-87563). In other cases, reference was made to at least ‘un lien logique minimal’: CA Paris 14 February 1984, Juris-Data N° 021620; see also Cass. crim. 9 December 1991, Rev Sociétés 1992, 358. For Belgium: Brussels, 15 September 1994, 275, J. Tribunaux, 1993, 312, TRV, 1994, 275, nte A. Francois (Wiskemann case).
- 49.
Article 492bis Criminal Code, declares criminally liable, directors, including de facto directors who have used in a fraudulent way and for their personal interest, the assets or the reputation of the company, although they knew that this would be significantly detrimental to the company, its shareholders or its creditors.
- 50.
What this reference to the group interest implies deserves further analyses: is it the parent’s interest, or that of the entire group of companies, or even that of one single other subordinated entity? Technically, several legal provisions only take into account the interest of the other party involved in a transaction or decision.
- 51.
See for an overview, Dieux (2017), in: In het vennootschapsbelang, Liber Amicorum H. Braeckmans, p. 91.
- 52.
Conac (2013), p. 194.
- 53.
Comp. article 442-6-I-5 of the French Code de Commerce.
- 54.
Article 1 Companies Law 2017; comp. the previous definition in the Civil code, still applicable in France (article 1833 Cc), according to which the company should act in the common interest of its members. The Corporate governance code clarifies that is the “Long term interest” of the company.
- 55.
See about this remedy, see the articles 2.63 e.s. 2.68e.s Companies law (“de l’exclusion” and “du retrait”).
- 56.
See article 2.51. Comp.L., declaring that each member of the board or of the management is held to the “proper execution” of his mandate. “In case the continuity of the enterprise is being endangered, the board is due to deliberate on measures to safeguard the continuity for at least 12 months”, article 2.52. Comp.L.
- 57.
Article 7.157 Comp L.
- 58.
Article 2.56 Comp.L.
- 59.
Article 2.56 Com.L. The liability would limited to decisions, or actions “which manifestly are outside the margin on which normally careful and prudent directors in the same circumstances could have different opinions.”
- 60.
Article XX.225 and 226, Code on Economic Law, also applicable to AML fraud. The liability ceiling would not be applicable; see article 2.58 Comp. L. for other cases where there would be full liability.
- 61.
See e.g. Comm Mons, 12 November 1979 JT 1980,265.
- 62.
Article 2.57, applicable both to liability towards the company, as towards third parties. Measured on the basis of turnover and balance sheet total.
- 63.
Article 2.57 § 3Comp.L. for the different cases of exclusion from the limitation on liability.
- 64.
See article 3.32 Comp. L.. Disclosure about subsidiaries may raise questions of confidentiality, see: Dieux, une obligation de discrétion”, §14 Liber Amicorum Herman Braeckmans, November 2017.
- 65.
See FSMA, Stori, or Storage of Regulated Information https://www.fsma.be/nl/business-link/stori.
- 66.
Article 7.116 (6) Comp. L.; adde: article 3.33; 3.34; 3.38; 3.40, Comp. L on the consolidated reporting on the payments to government for the protection of the original forest, on the basis of article EU directive 2013/34.
- 67.
Article 7.116 Comp. L.
- 68.
Article 7.82 Companies Act for the SA, 5.69 for the BV, Comp. L.
- 69.
See Article 2,63 e.s and 2,68 Comp. L., which are part of the section on dispute resolution. See further 5.154 for withdrawal from the company itself under the BV regime.
- 70.
See article 2.63 to 2.65 Comp. L.; the judge could impose non-competition conditions, or require the acquiring party to terminate guarantees the defendant has given to the companies.
- 71.
Article 2.69, Comp. L.
- 72.
See Royal decree 27 April 2007 (Squeeze out). The Constitutional Court, in its decision of 14 May 2003, held that this is not a breach of the principle of equal treatment; Rechtskundig Weekblad, RW 2003-04, 808; TRV 2003, 471, nt. Wauters, M.
- 73.
See article 5.76 for the BV, 6.64 Coop.V and 7.96 for the NV. Comp. L.
- 74.
For details see article 7.115 Comp. L.
- 75.
This regime is not applicable to relations with 95% subsidiaries: article 7.96 §3 Comp. L..; see article 7.97; for other exceptions in the group context; less than 1% of asset value, usual conditions clause; also article 7.115 Com.L.
- 76.
Article 7.97,Comp. L.
- 77.
On the basis of 7.96 and 7.97; comp for the BV 5.76, Comp. L.
- 78.
Article 5.77, Comp. L.
- 79.
Article 5.78; 7.97 Comp. L.
- 80.
Art. 7.97 § 3 Comp. L.: this provision can be considered as including the corporate opportunities. See De Wulf (2002), p. 705 et seq.
- 81.
Art. 7.97 § 3 Comp. L: This provision is considered to include corporate opportunities. See De Wulf (2002), p. 705 et seq.
- 82.
Article 5.16, 5.144. 7.18, Comp. L.
- 83.
Article 2.56, Companies Law, n.61, and this notwithstanding the joint and several liability of the directors. Comm Brussels, 3 February 1988, JT, 1988, 516.See for the French law: article 442-6-I-5 of the French Code de Commerce. Brussels 3 February 1988, Journal de Tribunaux, 1988, 516. See; on the legal effects of legitimate anticipation of someone’s behaviour: Dieux (1995).
- 84.
See e.g. article 2.71 § 2; article 2. 84 Comp. L., as to the appointment of the liquidator.
- 85.
Shadow director: See Braeckmans and Houben (2012), Vennootschapsrecht, Chapter 4.
- 86.
See “abus de droit”: Dieux, Les groupes de sociétés, nt 56, Braeckmans and Houben, Vennootschapsrecht nr 62, p.46 See Comm Mons, 12 November 1979, Journal des Tribunaux, 1980, 265.
- 87.
As laid down in article 7-8 Loi sur les Hypothèques, part of the Civil Code. This famous principle goes back to the writings of Aubry and Rau.
- 88.
Article 2.56, Comp.L. see n.61.
- 89.
Similarly, XX.227 Code Economic Law, applicable to anyone who had had effective decision making power in the insolvent company, what might include the parent company.
- 90.
See: Constitutional court, nr. 139/2009, 17 September 2009.
- 91.
Fr Cassation 24 March 1997, Revues des Sociétés, 1997 554, ann P. Didier.
- 92.
Often referred to as: “confusion des patrimoines”.
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Annex
Annex
1.1 Collective Publications
Centre d’Etudes des groupes d’entreprises:
-
La reconnaissance des groupes de sociétés en droit fiscal, (1987)
-
Droits et devoirs des sociétés mères et de leurs filiales, (1985)
-
Discontinuité des entreprises (1983)
-
Aspects juridiques des comptes consolidés (1980)
-
Aspects des groupes d’entreprises (1989)
Commission droit et vie des affaires, Faculté de droit de l’Université de Liège, Les groupes de sociétés, U. Liège, 1973.
Forum Europaeum ‘Proposal to Facilitate the Management of Cross-Border Company Groups in Europe’ ECFR (2015), pp. 299–306.
Groups of companies in the EEC, Berlin (Ed. Wymeersch), 1993.
High Level Group of Company Law Experts (2002), Ch. V: Groups and Pyramids, at pp. 94–100.
ECLE European Company Law Experts, A Proposal for the Reform of Group Law in Europe, EBOR, 2017, 1-49.
ICLEG, The EU Commission “Informal Company Law Expert Group” (ICLEG), March 2016.
-
Report on information on groups, March 2016 (P.H.Conac, reporter)
-
Report on the recognition of the interest of the group, October 2016 (M. Winner, reporter)
Intragroepsrelaties: Tendensen in het bedrijfsrecht’, nr. 15 (15e Dag van de Bedrijfsjurist van 18 november 2004).
In het vennootschapsbelang, Liber Amicorum Herman Braeckmans, 2017.
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Wymeersch, E. (2020). National Report on Belgium. In: Manóvil, R.M. (eds) Groups of Companies. Ius Comparatum - Global Studies in Comparative Law, vol 43. Springer, Cham. https://doi.org/10.1007/978-3-030-36697-1_23
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