21.12.17 The 5 major changes you need to know about the new Business Law
The Belgian Federal Government has recently approved a draft legislation which aims to modernize our business law. The idea raised by the Minister of Justice was to create a general concept of ‘undertaking’ in order to improve consistency and avoid legal uncertainty, as the concept is currently used with different meanings in different legislations. In the draft legislation, the notion of ‘merchant’ (‘commerçant’ / ‘handelaar’) is replaced by the concept of ‘undertaking’ (‘entreprise’ / ‘onderneming’) which is more inclusive.
This change is of course not only a matter of terminology. By introducing an inclusive concept of ‘undertaking’, our business law should become more consistent and Belgium more attractive and competitive as a place of business.
The new business law will have the following major legal consequences for the economic actors:
1. Inclusive concept of undertaking
Every doctor, lawyer, architect but also every farmer or non-profit organization becomes an undertaking. The new concept indeed applies to:
- any natural person who performs a professional activity as a self-employed;
- any legal person, including non-profit organizations and foundations even if they do not provide goods or services, but with the exception of (i) public law entities that do not provide goods or services and (ii) the state and its decentralized entities;
- any other organization without legal personality, unless it does not make or intends to make a profit distribution.
This new definition is therefore based on formal criteria, while the old definition was based on the material criterion of the performance of a business activity.
2. Enlargement of the scope for commercial, company and insolvency regulations
As a result of this new concept of ‘undertaking’, a significant part of the economic legislation will apply to persons or entities falling under the concept:
- this enables undertakings to perform what used to be called ‘merchant acts’ (‘actes de commerce’ / ‘daden van koophandel’) without limitation because there is no more distinction between ‘civil matters’ and ‘commercial matters’;
- every undertaking will have to be registered and comply with accounting requirements. Even if the scope of these requirements already applies beyond the concept of ‘merchant’, important consequences will follow for the members of liberal professions which may be subject to the insolvency legislation and restructuring proceedings in the future.
3. Growing importance of the free evidence regime
The specific evidence rules which currently apply between merchants, such as the presumed acceptance of an undisputed invoice and the free evidence regime, will apply between and against every ‘undertaking’ (and therefore also between and against doctors, lawyers, architects etc.). However, when natural persons considered as undertakings under the new concept perform activities out of the scope of their business activities, they remain subject to the civil evidence regime when the burden of proof does not rest on them.
These modifications will be part of the New Book VII “Evidence rules” of the Civil Code, which means that the different evidence regimes currently laid down under the Commercial Code and the Civil Code will be gathered in the same code.
Under this New Book, the free evidence regime becomes more important: the threshold for the use of free evidence (‘preuve libre’ / ‘vrij bewijs’) is raised from 375,00 EUR to 5.000,00 EUR and the free evidence regime will apply to unilateral acts.
4. The Commercial Court becomes the Undertaking Court
The Commercial Court also follows the trend by becoming the Undertaking Court. As the concept of undertaking is now clarified and enlarged, jurisdiction issues (i.e. between the Undertakings Court and the Court of First Instance) are likely to be avoided, resulting in more effective proceedings. This enlargement also means that the new Undertaking Court has jurisdiction towards non-profit organizations which are not conducting an economic activity.
Therefore, the modification of the name of the Commercial Court into the Undertaking Court goes hand in hand with the new concept of undertaking.
5. Abolition of the Commercial Code
Finally, this modernization includes the abolition of the Commercial Code of 1807; or rather of its remaining fragments which are integrated under the Code of Economic Law.
Only Book II of the Commercial Code about maritime and inland navigation will survive, the title of this residual code being adapted into the “Code of determined maritime privileges and miscellaneous provisions”.
On 7 December 2017, the draft legislation has been filed at the Parliament and it should be enacted during the first half of 2018.
Together with other amendments to the Civil Code, the Company Code and the Judicial Code, this draft legislation is an effort to adapt to changing needs and clearly contributes to the modernization process of our legal framework for business.
|Lydian Commercial & Litigation Team|