Corporate law

• US law


  Common law system, law developed through court cases
• EU law


  Civil law system, law is mainly codified and inspired by Roman law
• Most companies in the US are Delaware companies
• Delaware corporation


  • Company legally registered in Delaware but may conduct business in any state
  • Delaware began adopting laws in the 19th century to attract businesses away from other states
• If a Belgian company is active in Belgium but managed in France

  French law is applicable
• Incorporation Theory


  Applicable law is the law of the country where the company has been incorporated
• Real Seat Theory


  Applicable law is the law of the country where the company is effectively managed
• A non-profit can't provide a dividend to its members, while a company can
• Lion Clause


  Can exclude a shareholder from participating in the losses but not from participating in the profits of a company
• Meeting of the incorporators before the notary public

  Financial plan must cover at least two financial years and will only be used if the company goes bankrupt within 3 years
• Changing the articles of association


  Must go through the notary public
• Contribution of industry/labor is not possible in capital companies as it isn't considered economically valuable
• Procedure for contribution of a building to the capital/equity of a company

  1. Report by the incorporators

  2. Report by the statutory auditor

  3. Report by the incorporators finalized
• Quasi-contribution


  Instead of contributing something into the capital, an incorporator/director/shareholder sells something to the company and receives money, not shares
• Shares


  • Nominal value = amount of capital / # of shares
  • Face value = not mentioned in articles of association
  • Equity value = equity of the company / # of shares issued
• Tag along right


  Other shareholders have the right to offer their shares against the same conditions when a shareholder is selling to a third party
• Drag along right


  A shareholder willing to sell can force the other shareholders to sell their shares to the same third party
• Changing the articles of association


  Always requires approval by the general meeting, even though it also requires going through the notary public
• Financial Assistance


  Credit provided by a company to help acquire its own shares, can be a loan, advances, etc.
• Governance structures


  • Sole Director
  • Monistic Governance (Board of Directors)
  • Dual Governance (Supervisory Board and Executive Board)
• Collegial Organ


  Decisions are taken by majority
• Full authority


  The Board of Directors has all competencies except those reserved for the General Meeting
• Infringements of the BCCA (Code of Companies and Associations) result in collective liability, the only way to escape is to inform the General Meeting and have your dissenting opinion recorded
• Several liability


  Individual liability for infringement of the BCCA
• For a simplified merger, there will be no issuance of new shares because the company entirely owns the acquired one
• Consequences of a merger

  • Transfer of all assets to another company (merger by acquisition)
  • Transfer of all assets to a newly formed company (merger by incorporation)
  • Simplified merger where a company is entirely acquired by another with no new shares issued
• Retroactivity or retrospective law allows a merger to be implemented legally on a certain date but for accounting purposes from an earlier date
• De-merger consequences include transfer of all assets and liabilities, the de-merged company ceasing to exist, and the shareholders of the de-merged company becoming shareholders of the acquiring company
• Corporate Law - Summary
• Abbreviations


  • ≠
  • #
  • π
  • EC
  • K
  • AoA
  • GM
  • BoD
• Sources of Corporate Law

  • Code of companies and associations
  • Civil code
  • European directives
  • Jurisprudence
  • Legal doctrine
• Most important EU directives

  • 2nd directive of 13 December 1976 on the protection of capital
  • 3rd directive of 9 October of 1978 on the merger of public liability companies
  • 4th directive of 25 July 1978 on the annual accounts of companies
  • 6th directive of 17 December 1983 on the de-merger of public limited liability companies
• EU Directives


  • Provide an efficient and modern legal framework
  • Give (group of) companies a competitive advantage against other world players
• Communication from the Commission to set out objectives to harmonise and modernise corporate law within the EU
• Groups consulted by the Commission

  • SLIM – Simpler legislation for the Internal Market
  • High Level Group chaired by Mr. Jaap Winter
• EU law


  Civil law (based on Roman law), legislation is main source of law
• US/UK law


  Common law, case law is main source of law
• Delaware


  Well-developed corporate law and court cases, most companies in US are Delaware companies, more predictable – more certainty for companies
• Incorporation theory


  Applicable law = law of country where the company has been incorporated
• Real seat theory


  Applicable law = law of country where the company is effectively managed