Code Red: Articles of Association Non-Compliant With The Code Means No Publications

Updated: Mar 13

The Belgian legislator has recently ended the transitional period for non-profit organizations (NPOs) to comply with the Companies and Associations Code. However, some NPOs are facing problems as the Dutch-speaking clerk’s office in Brussels refuses to accept filings from those who have not complied yet. This unexpected change not only puts directors at risk but also makes it difficult to follow other legal rules and affects the validity of published information. In this article, our partners at EY Law Belgium discuss the urgent need for NPOs to handle these regulatory challenges.

As all of you know by now, the Belgian legislator provided for a transitional period of four years allowing non-profit organisations (hereafter: “NPOs”) to bring their articles of association/statutes/bylaws (hereafter: “AoA”) into compliance with Belgian companies and associations Code of March 23, 2019 (hereafter: “Code”). Said transitional period has ended on December 31, 2023, at midnight. Whilst many NPOs did bring their AoA into compliance with the Code, a few NPOs still did not do it.

It came to our attention that recent developments have highlighted the urgency for these few NPOs to ensure their compliance with the Code. Indeed, the Dutch-speaking clerk’s office of the Enterprise Court of Brussels has started to refuse filings and publications in the Annexes to the Belgian Official Gazette for NPOs which did not yet make their AoA compliant with the Code. There is little doubt as to the fact that this policy of the Dutch-speaking clerk’s office will soon be followed and applied by the French-speaking clerk’s office of the Enterprise Court of Brussels or probably, at other clerk’s offices across the country.

The Clerk's Office: A De Facto Gatekeeper

The Belgian legislator has provided that if an NPO fails to bring its AoA in conformity with the Code, the directors (i.e., the members of the management body of your NPO) are personally and jointly liable for any damage suffered by the NPO or by any third parties resulting from this failure. It is worth noting that no other specific sanction than the liability of the directors is provided by the law of March 29, 2019, introducing the Code.

Moreover, even though a clerk’s office is de jure not authorised to make decisions on the content of documents to be filed and published, the Dutch-speaking clerk’s office of the Enterprise Court of Brussels seems to have arrogated itself as gatekeeper.

Dramatic Consequences for NPOs

Whilst this policy may seem harmless, it has significant implications for the concerned NPOs.

First, ironically, it prevents the concerned NPOs to be compliant with other legal provisions. Indeed, for instance, according to Belgian law, any change occurring within the composition of the board of directors of an NPO shall be within one month published in the Annexes to the Belgian Official Gazette and recorded in the UBO register. The law even provides that administrative fines can be imposed in case of violation of the obligation to update the UBO register.

Secondly, the purpose of the publications in the Annexes to the Belgian Official Gazette is to make the information published enforceable against third parties (e.g., who can represent NPOs towards third parties).

Last but not least, whilst filing documents with the clerk’s office is often perceived as an administrative burden, it has far-reaching consequences, especially in the context where professions/sectors are bound by Anti-Money Laundering (“AML”) and Know Your Customer (“KYC”) regulations. Banks, law firms, and insurance brokers, among others, are now in a position where they must enforce compliance among their clients. Failure to provide updated data and documents can lead to drastic measures, such as the blocking of bank accounts until the necessary documents are filed with the clerk’s office, published in the Annexes to the Belgian Official Gazette and recorded in the Crossroads Bank for Enterprises and the UBO register, and therefore also until the AoA are Code-compliant.

A Call To Action For NPOs

For NPOs, the message is clear: compliance can no longer be postponed anymore. The process of aligning the AoA with the Code does not occur from one day to another and requires careful planning and execution. Taking this into account, the time to act is now more than ever, for the concerned NPOs to avoid the pitfalls of non-compliance and ensure the possibility to perform the required administrative and publication formalities under the new policy of the clerk’s offices.

Conclusion: Better Safe Than Sorry

Considering the several adverse effects this new policy may have on the concerned NPOs, said policy should be the ultimate wake-up call for the latter to take action. Keeping in mind that the consequences of inaction can be severe and far-reaching, we strongly recommend starting your duties to be compliant as soon as possible.

If you have any questions or concerns related to non-profit law, Antoine DRUETZ, Partner, and his team will gladly assist your organisation.