» Choice between setting up a company and opening a branch office

An investor considering starting activities in Belgium can either set up a company or open a branch office.

The choice between exercising an activity in Belgium in the form of a company or through a branch office can have significant legal consequences. The optimal choice between the two alternatives depends on a number of economic and other factors.

In principle the final decision will be influenced by more than just tax considerations.
Below we give a brief overview of the legal differences, which can be important in searching for the most appropriate Belgian form.

Liability
By setting up a company the parent creates a separate legal entity. The liability of a Belgian subsidiary is limited to its own assets, so that the shareholders’ liability is limited to the amount of the contribution in the company limited by shares.

A branch office of a foreign company, on the other hand, has no separate legal personality. This means that the obligations incurred through such a branch oblige all the assets of the parent company, so that the parent is liable for all the debts and obligations of the Belgian branch office.

Applicable legislation
Due to the legal principal of unity with the foreign head office, the branch office will be considered as a foreign company rather than a Belgian company within the EU. This differentiation may be of essence in areas such as marketing and tariff rates.

A Belgian subsidiary, on the other hand, will in principle be subject to Belgian law, even if the company is controlled from outside of Belgium or incorporated according to foreign law. If the subsidiary’s business is conducted from a place located within the Belgian territory, Belgian law applies.

Setting up
The establishment of a subsidiary requires the drafting of articles of incorporation, which need to be enacted before a Belgian Public Notary.

To open a branch office in Belgium, publication is required in the Belgisch Staatsblad/Moniteur Belge (Belgian Official Journal) of the following documents:

• the deed of incorporation and modifying by-laws of the parent;
• the decision by the parent to open the branch office;
• the minutes of the appointment of the persons representing the parent in Belgium, and
•  the (consolidated) annual accounts.
  

These documents must be notarised, legalised and translated before they can be filed and published in the Belgian Official Journal.


» Different types of company forms

Any investor who wants to create a company in Belgium, will be required to select an appropriate legal structure. The most common types of companies are the limited company by shares (nv/sa), the private limited liability company (bvba/sprl) and the cooperative company (cv/sc).

For further information concerning other types of legal entities, corporations or partnerships do not hesitate to contact us.

The company limited by shares (nv/sa) 
In Belgium the nv/sa format is selected in particular for larger enterprises. The capital of such a company must amount to at least 61.500 EUR. At least three directors must be appointed. Where there are no more than two founders or shareholders, a board of two directors is sufficient.

Private limited liability company (bvba/sprl)
A bvba/sprl is particular interesting for small and privately held companies. Belgian corporate law provides relatively simple and flexible operating rules.
The minimum capital of the private limited liability company is 18.550 EUR, of which 6.200 EUR must be fully paid in at the time of constitution by the founder (one or more). The shares of a private limited liability company are always registered. The bvba/sprl is managed by one or more business managers.

Cooperative company (cv/sc)
The cooperative company is a very flexible company form. There are two types of cooperative companies: one with unlimited liability (cvoha/scris) and one with limited liability (cvba/scrl). The cvba/scrl is set up by means of authentic deed (involvement of a notary). At least three partners are needed for the constitution.
The capital of the cv/sc has two parts:

• a fixed amount which must represent at least 18.550 EUR of issued capital and which must be paid in an amount of 6.200 EUR;
• a variable portion, which varies with the entry and exit of partners, capital increases or the taking back of shares.

One quarter of all capital contributions must be paid in.
The cv/sc is managed by one or more business managers.