On 7 December 2017, a Bill on the reform of business law (Wetsontwerp houdende hervorming van het ondernemingsrecht/Projet de loi portant réforme du droit des entreprises – the "Bill") was submitted to the Federal Chamber of Representatives. The Bill centres on a new definition of the concept of a "business" and amends to this effect the main Belgian legislation in the area of business law (See VBB on Belgian Business Law, regarding the draft version of the Bill, Volume 2017, No. 7, p. 3, available at www.vbb.com).
New concept of business
The Bill introduces a new, more inclusive, definition of the term "business" (onderneming/entreprise). The new definition will be inserted in Article I.1 of the Code of Economic Law of 28 February 2013 (Wetboek van Economisch Recht/Code de droit économique – "CEL") and is based on formal criteria.
The new definition of a "business" includes the following three categories of persons/entities:
- any natural person pursuing a professional activity on a self-employed basis. By contrast, activities of employees and activities of self-employed persons in the context of the normal management of their personal assets are not caught by the concept of business.
- any legal person, whether under private or public law. Legal persons under private law constitute businesses, irrespective of their statutory or actual activities. The concept of business thus also includes legal entities under private law which do not pursue an economic objective, such as associations and foundations. As regards legal persons under public law, the Bill excludes the following entities from the concept of a business: (i) entities of public law which do not offer goods or provide services on a market; and (ii) certain public authorities, such as the federal state, the regions, the communities, the provinces and the municipalities.
- any other organisation without legal personality, with the exception of organisations without legal personality which neither aim to provide benefits nor actually provide benefits to their members or to any other person with a decisive influence on the management of the organisation. This third category of businesses thus targets organisations with a for-profit purpose, such as the partnership under Belgian law (maatschap/société de droit commun) or for-profit organisations without legal personality under foreign laws which have their centre of main interests in Belgium. De facto associations will normally not be considered as businesses as they do not have a for-profit purpose.
The new concept of "business" will be of general application throughout all areas of Belgian business law. Certain areas of law will not, however, be affected by the new definition. Most importantly, the new definition will not apply to competition law, price regulation and market practices (books IV, V and VI of the CEL). For the purpose of these rules, the term business (onderneming/entreprise) will continue to be defined on the basis of a material criterion, i.e., as "any natural or legal person which permanently pursues an economic goal, as well as their associations".
In view of the new definition of a "business", the Bill deletes the obsolete and poorly defined concepts of tradesman (handelaar/commerçant), merchant (koopman/commerçant) and merchant acts (daden van koophandel/actes de commerce) from all legislation. In addition, the distinction between companies with a commercial purpose and those with a civil purpose will disappear.
The new concept of a "business" will affect the scope of application of many legislative texts, in particular the CEL, the Judicial Code and the Civil Code. The main consequences of the reform proposed by the Bill are summarised below.
First, the new concept will broaden the scope of application of the provisions on the Central Commercial Register (Kruispuntbank van Ondernemingen/Banque-Carrefour des Entreprises) and the accounting obligations laid down in Book III of the CEL. The new definition of "business" was already introduced in the new insolvency legislation by the Law of 11 August 2017 introducing a new Book XX "Insolvency of businesses" in the CEL (Wet van 11 augustus 2017 houdende invoeging van het Boek XX "Insolventie van ondernemingen", in het Wetboek van Economisch Recht, en houdende invoeging van de definities eigen aan Boek XX en van de rechtshandhavingsbepalingen eigen aan Boek XX in het Boek I van het Wetboek van Economisch Recht/Loi du 11 août 2017 portant insertion du livre XX "Insolvabilité des entreprises", dans le Code de droit économique, et portant insertion des définitions propres au livre XX, et des dispositions d'application au livre XX, dans le livre I du Code de droit économique) (See VBB on Belgian Business Law, Volume 2017, No. 7, p. 13, available at www.vbb.com).
Second, the Bill repeals Book XIV of the CEL on market practices and consumer protection with respect to practitioners of liberal professions. Following the introduction of the more inclusive concept of a business, the activities of liberal professionals will fall within the scope of the general Book VI of the CEL on market practices and consumer protection.
Third, the Bill modernises the rules of evidence that apply between and against businesses. The rules on evidence as currently laid down in the Commercial Code and applicable between merchants will be transferred to the Civil Code and will apply between and against any businesses, as defined above. Evidence between and against businesses thus remains free, meaning that evidence can be provided by all legal means. In addition, the Bill extends the rule that, between merchants, an accepted invoice is considered proof of a sale/purchase agreement to (i) any type of agreements; and (ii) any type of "businesses".
Fourth, the Bill transforms the Commercial Court (Rechtbank van koophandel/Tribunal de commerce) into the Business Court (Ondernemingsrechtbank/Tribunal de l'entreprise). The jurisdiction of this new court will be based on the new concept of a business. The Business Court will have jurisdiction to hear, at first instance, all cases between businesses, with the exception of cases falling within the special jurisdiction of another tribunal or court. Following the introduction of the new concept of business and the repeal of Book XIV of the CEL, the Business Court will also have jurisdiction to deal with injunction procedures initiated by practitioners of liberal professions. Furthermore, the Bill facilitates the introduction of legal actions by and against organisations without legal personality qualifying as a business through specific publication measures in the Central Commercial Register.
Further dismantling of the Commercial Code
Finally, the Bill further dismantles the Commercial Code. As noted above, the provisions of the Commercial Code defining the concepts of tradesman, merchant and merchant acts will be deleted and the rules on evidence will be transferred to the Civil Code. Moreover, the rules on the bills of exchange and promissory notes will be moved to the CEL. Following these amendments, only Book II of the Commercial Code on maritime and inland navigation will remain in effect. Consequently, the former Commercial Code will be renamed "Code on certain maritime privileges and miscellaneous provisions".
The entry into force of the Bill is foreseen for 1 November 2018, subject to transitional measures, in particular regarding the changes to the rules on the Central Commercial Register and the accounting obligations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.