No, INPAs will not disappear!
Over the last year, there have been many rumours about the new companies and associations Code and, more in particular about the fact that the Belgian Federal Government intended to abolish the international non-profit association(hereafter: “INPA”) as a legal form. On June 4, 2018, the Belgian Federal Government has filed the bill introducing the new companies and associations Code (hereafter: “New Code”). It results from KOAN Law Firm’s assessment of the New Code that the rumours have only been a storm in a tea cup. Indeed, INPAs will not be abolished and that is excellent news.
Why is this excellent news? Because the INPA as a legal form offers a unique flexibility with respect to the structuration of the internal governance of an organisation. Each international organisation having its own needs in terms of political balance, controls, bodies, etc., such flexibility is often vital.
What is changing and how does the New Code impact INPAs?
KOAN Law Firm’s assessment of the New Code reveals that the INPA is the Belgian non-profit legal entity being subject to the least changes.
Book 10 of the New Code has been dedicated to the rules that are solely applicable to INPAs. These new rules even fit on one page. More specifically, the sole novelty in Book 10 lies in the fact that a couple of new powers will be legally entrusted with the general assembly.
However, most of the changes that will affect the INPAs will result from the general rules (i.e. Books 1, 2 and 3) which will apply to all legal entities governed by the New Code.
Amongst these changes, the following are the most significant:
- Possibility to carry out unlimited commercial activities;
- Adoption of the registered seat theory;
- Rules regarding the content of the internal regulations;
- Capped liability for directors;
- Additional rules regarding the liquidation of legal entities;
- New grounds for nullity; and
- The thresholds determining if an INPA is a large or very large INPA have been increased.
It results from the changes listed above that all INPAs will have to amend their articles of association in order to comply with the New Code.
In practice, what should INPAs do?
The bill introducing the New Code is currently being examined by the House of Representatives. This means that undoubtedly further changes will be made to the new rules governing INPAs. The Belgian Federal Government would like that the New Code enters into force as from January 1st, 2019. Should this be the case, the mandatory provisions laid out in the New Code will apply to existing INPAs as from January 1st, 2020. Existing INPAs will have until January 1st, 2024 to amend their articles of association in order to comply with the New Code. However, we strongly recommend that INPAs already amend their articles of association within one or two years after the entry into force of the New Code to avoid a risk of contradiction between the New Code’s provisions and the articles of association of the INPA which will lead to legal uncertainty.
By Antoine Druetz, partner, and Alix Degrez, associate at KOAN Law Firm
If you have any questions or concerns related to the New Code and/or non-profit law, Alix DEGREZ, associate and Antoine DRUETZ, partner, will gladly assist your organisation.