Following the decisions taken in the framework of the fight against the spread of coronavirus in Belgium, companies face significant difficulties in the course of pursuing their activities.
Some measures have been adopted in order to limit the impact of the imposed restrictions on companies aimed at preventing the spread of the virus. In this regard federal and regional governments were granted extraordinary powers so as to take all relevant measures to urgently prevent and handle any problematic situation regarding coronavirus and its consequences. Those powers include, among others, the possibility to adapt applicable legal rules in all matters which may be impacted by the crisis and for which they are competent.
The following developments provide a non-comprehensive overview of
- financial incentives put in place to help companies overcome temporary financial issues
- special provisions adopted in order to allow the holding of general meetings and meetings of the management body with regards to the current social distancing rules
- new options for the adjournment of seizures and bankruptcies
- amendments relating to the passing of notarial deeds
- new rules applying to the deadlines in the context of bringing legal actions to courts and ongoing civil procedures.
As the situation is constantly evolving, executive and legislative powers are continuously adapting and extending these measures, so that this present analysis relates to the measures in place at the time of writing and shall be updated according to the legislative and regulatory developments.
Closure premium – The governments of the Brussels-Capital Region, Walloon Region and Flemish Region are planning to grant premiums to companies forced to shut down their business as a consequence of the measures taken in the course of the coronavirus crisis. The terms and conditions for these grants, the application deadlines and the amount of the premiums have been set by each of the three Regions.
Deferred repayment of credits – Companies may request a deferment of credit repayment for a maximum period of six months.
During this period of time, companies will not be required to repay their credits in capital, although interests remain payable in full. The loan period is therefore extended up to the duration of the deferment period.
This option is available for (i) credits with a fixed repayment schedule (ii) cash facilities and (iii) fixed advances. It is conditional upon, among other things, payment difficulties due to the decline in turnover, the decrease of activity, the introduction of temporary or complete lay-offs, and the mandatory shut down measure imposed in order to minimize the spread of the virus. Companies wishing to benefit from the deferral must be based in Belgium and may not already benefit from repayment delays for ongoing credits, taxes or social contributions.
In practice, any company applying for deferred repayment terms must contact their bank which will ask for supporting documentation in order to follow up on this request. Banks are not authorized to bill any booking fees nor administrative fees for handling the application.
Public guarantee granted in the context of new loans – A new law empowers the federal executive power to grant a public guarantee for new loans and credit lines for a maximum period of one year to viable non-financial companies, SMEs, self-employed workers and non-profit organisations. The royal decree determining the terms and conditions for granting the guarantee shall be issued soon. Equivalent measures are anticipated at regional level.
VAT, payroll tax, property tax and other taxes – The federal government has also planned other fiscal incentives for companies, such as:
- The deferral of payroll taxes, VAT, corporate income taxes, social security contributions, property taxes for the fiscal year 2020;
- The deferral of tax return filing for corporate income taxes, VAT and the annual client list;
- An interest-free period or waiver of fines for the non-payment of social security contribution debt, income tax, corporate income tax, VAT etc.
Temporary unemployment – Specific measures in the area of employment law, such as the implementation of temporary unemployment rules, have been adopted. Due to the density and technicality of these measures, we refer to other contributions in this respect.
General meetings and collegial management bodies
Optional and temporary measures have been adopted for meetings which shall or should have been held or convened between the 1st of March 2020 and the 3rd of May 2020.
Convening notices that have already been sent may be modified in order to benefit from these measures. Furthermore, meetings convened prior to the 3rd of May 2020 may be held in accordance with the new rules even if held after their adoption.
General meetings – Two options have been implemented:
- Hold the meeting under specific terms and conditions related to the coronavirus pandemic
The management body may impose on participants of all general meetings to exclusively exercise their rights either by correspondence voting to be sent prior to the meeting using a form provided or published online or by proxy sent prior to the meeting, and as the case may be to a single proxyholder designated for this purpose by the management body.
These measures are deemed to limit physical attendance of participants at general meetings, which shall henceforth take place with a reduced number of attendees (i.e. members of the management body and, as the case may be, members of the bureau of the assembly, the auditor and the single proxyholder) or even, if minutes do not have to be drawn up before a notary public, without any physical attendance at all (for example by conference call or video conference).
It is furthermore possible to hold a general meeting remotely by means of an electronic communication channel, as referred to in article 7:137 of the CSA even if such possibility has not provided for in the company’s articles of association.
- Defer the general meeting until things get back to normal
The management body may choose to defer the ordinary general meeting at a later date (when the situation has returned to normal), even though it has already been convened. In this regard, a deferral of teen weeks for a certain number of decisions to be taken by within statutory periods, such as the requirement to submit the annual accounts to the general meeting within six months since the end of the financial year or the requirement to file the annual accounts and other documents with the BNB within 7 months following the end of financial year has been scheduled.
The management body may also defer any special or extraordinary general assembly already convened, except when (i) applying for the alarm bell procedure if the net assets are negative or threatening to become negative, or (ii) convened by the auditor or shareholders pursuant to the new companies and associations code.
Collegial management body – The collegial management body may, notwithstanding the relevant statutory requirements:
- Take all decisions by means of an unanimous written procedure or
- Hold its meetings and deliberate by means of telecommunication mediums such as conference calls or video conferences, except for decisions that have to be drawn up and certified in due legal form (in which case the physical attendance of a representative, whether a member or non-member of the management body, is required).
Seizure and bankruptcy proceedings on hold
The government has approved relief measures for companies facing financial difficulties as a result of the coronavirus crisis, provided they were in good standing until the 18th of March, by protecting them (as a debtor) against seizing measures and bankruptcy proceedings. Companies covered by the new legislation will automatically and temporarily benefit from these legal relief measures.
This means that:
- The company is protected against seizing measures
- The company cannot be declared bankrupt upon request of its creditors (but still upon request of the public prosecutor or with the agreement of the debtor itself)
- Ongoing contracts may not be terminated due to payment default
- Insolvent companies are temporarily not obliged to file for bankruptcy
- Deadlines within judicial reorganisation plans are automatically extended, and
- It is up to commercial courts to decide whether a company as a debtor may be granted such a deferral and relief measures when they are invoked as a judicial defence.
This does not mean that companies receive carte blanche to take undue advantage of the situation: Judges of the relevant commercial court may at any time, at the behest of a creditor, lift the temporary deferment.
The scheme does not apply to companies which were already bankrupt prior to the crisis, but only to companies still in good standing on the 18th of March who may encounter financial difficulties because of the coronavirus crisis.
Signing of notarial deeds is postponed until the end of the measures taken by the federal government to fight the spread of the coronavirus, except for urgent deeds.
For companies, will be considered as being urgent without having to provide any further justification all those deeds which have direct economic consequences for companies as they relate to (i) transactions which have an impact on the financial wealth of the company (capital increases, capital reductions, contributions and reimbursement of contributions, mergers, demergers and change of corporate form,…); (ii) deeds that should be concluded within a certain period of time due to elapse (e.g. approval of annual accounts) or deeds that should be concluded prior to the end of the financial year; (iii) transactions for which specific documents that have already been drawn up are due to expire (e.g. convening notices to general meetings,…).
In addition to the cases referred to above, a matter may also be considered as urgent depending on the specific circumstances of the case.
A draft bill of law has been filed in order to, inter alia, make it possible to execute remotely authentic notarial proxies (e.g. as required for certain real estate property transactions) by means of video conferencing or to execute a (non-authentic) proxy for the digital signing of notarial deeds, as long as for each of these cases certain conditions are met, including the (already) existing mandatory rules for the validity of electronic signatures.
Extensions of deadlines – Limitation periods and other deadlines for the filing of judicial acts with civil law courts due to expire between the 9th of April and the 3rd of May 2020 included are extended ipso iure for a period of one month after the end of this period. This also applies to procedural deadlines, appeal deadlines as well as for the exchange and filing of written submissions.
Deadlines for subsequent time limits are automatically pushed back in accordance with the duration of these extensions. Specifically, the first deadline is extended until the 3rd of June 2020 and the following deadlines are deferred accordingly.
Parties may however, upon mutual consent, decide to stick to the initial calendar, or agree on new deadlines and agree on a new binding calendar on an amical basis.
If a procedure is urgent, the relevant court may, upon a motivated request, rule out the extension of the procedural deadlines.
Written procedure – Proceedings which have been set for a court hearing due to take place between the 11th of April 2020 and the 3rd of June 2020 included, and where all parties have already filed written submissions, will automatically be taken into deliberation by the judge on the basis of these submissions and bundle of evidences, without hearing the parties.
Written procedure therefore becomes the rule under these exceptional measures.
A party may object to the written procedure by informing the judge in writing no later than one week prior to the court hearing. In this case, the judge may decide to hold a hearing session, by means of video conference as the case may be, to adjourn the case to an undetermined date, or take the case without hearing the parties. His or her decision is not subject to appeal. The judge may further request the parties to provide oral arguments, by way of video conference as the case may be, on certain specific matters of the case.
If all parties are opposed to the written procedure, the case shall be deferred to an undetermined date or to a given date, depending on the availability of the relevant jurisdiction.