Establishing a EU Business Association under Belgian law
The Brussels business property estate
Dirk Lontings, Partner Lontings & Partners
Wouter Neven, Counsel Lontings & Partners
n Freedom of association
n Foreign association active in Belgium
n Factual association
n International non-profit association (IASBL/IVZW or INPA)
n Domestic non-profit association (ASBL/VZW)
n Brussels property estate
n Acquiring property in the Brussels Region
I. Freedom of association
n Belgian Constitution, Article 27
n Law of May 24, 1921 guaranteeing the freedom of association
n Law of October 25, 1919 on international non-profit associations (INPA)
I. Freedom of association (continued)
Law of June 27, 1921 on domestic non-profit associations (ASBL/VZW)
if the members of the association wish the association to acquire legal personality
> on April 18, 2002 the Belgian Chamber of Representatives adopted a new law on non-profit entities revising the law of 1921 on domestic non- profit associations and revising and integrating the law of 1919 on international non-profit associations in the law of 1921
I. Freedom of association (continued)
n International treaties
II. Foreign association active in Belgium
n Legally possible for foreign association to establish presence in Belgium and be active from that presence
E.g. > representative office
> branch
n Number of EU Business Associations choose this modus operandi
n Practical problems since no formal registration with a public authority or publication requirements
E.g. > postal services
> banks
> lease/buy property
II. Foreign association active in Belgium (continued)
n Possible solutions are
q obtain so-called « Article 8 » certificate from Ministry of Justice under law of 1919
q obtain recognition under 1986 European Convention on the recognition of the legal personality of international non-governmental organizations
q obtain recognition under bilateral treaties
q New law on non-profit entities provides for publication requirements for Belgian « centers of activity » of foreign associations
III. Factual association
n Is contract between the members of the association governed by
q terms of the contract
q rules of civil law
n Is association without legal personality
< « association de fait » (misleading concept as the association does legally exist)
n Many EU Business Associations have adopted this form
III. Factual association (continued)
n Major advantages
q no specific compelling legal framework
q no government interference
q no publication requirements
q no financial reporting obligations
q Major disadvantages
q cannot as such own or have other rights on assets
q cannot as such enter into contracts
q association liabilities = member liabilities (equally shared by members unless contract stipulates otherwise)
IV. International non-profit association
(IASBL/IVZW or INPA)
n Law of 1919 was result of intensive legislative labor to perpetruate Belgium’s pre-eminence as the then most important center of international non-profit activity
Predates Law of 1921 on domestic non-profit associations (ASBL/VZW)
Vast majority of EU Business Associations have adopted this form
n Must have non-profit making aim of international utility
IV. International non-profit association
(IASBL/IVZW or INPA) (continued)
n Must be open to Belgians and foreigners alike; no requirement for Belgian national as member or director
n Has legal personality <-> factual association
n Is governed by Board of Directors and General Assembly
IV. International non-profit association
(IASBL/IVZW or INPA) (continued)
n Major advantages
q very short law
q large measure of contractual freedom
q legal personality granted by Royal Decree = quality mark/seal of approval
q can as such own or have other rights on assets
q can as such enter into contracts
q association liablities member liabilities
IV. International non-profit association
(IASBL/IVZW or INPA) (continued)
n Major disadvantages
q legal personality granted and certain modifications to by-laws approved by Royal Decree = government interference
q other modifications to by-laws approved by Ministry of Justice = government interference
q incorporation is time-consuming process
q publication requirements
q financial reporting obligations (including appointment of statutory auditor for very large INPAs)
V. Domestic non-profit association (ASBL/VZW)
n Non-profit making aim can but must not be of international utility
Number of EU Business Associations have adopted this form
n Is open to Belgians and foreigners alike; no requirement for Belgian national as member or director
n Has legal personality <-> factual association
n Is governed by Board of Directors and General Assembly
V. Domestic non-profit association (ASBL/VZW) (continued)
n Major advantages
q legal personality is ipso iure result of completion of publication formalities
q no government interference to adopt or modify by-laws
q quick incorporation process
q can as such own or have other rights on assets
q can as such enter into contracts
q association liabilities member liabilities
V. Domestic non-profit association (ASBL/VZW) (continued)
n Major disadvantages
q limited contractual freedom
q publication requirements
q financial reporting obligations (including appointment of statutory auditor for very large ASBL/VZW)
VII. Acquiring property in the Brussels Region
n Contractual possibilities
n Zoning & Environmental issues
VII. Acquiring property in the Brussels Region (continued)
n Contractual possibilities
q Purchase property
q Rent property
q Usufruct (« usufruit »)
q Right to build (« superficie »)
q Long term lease (« emphythéose »)
q Lease property
VII. Acquiring property in the Brussels Region (continued)
VII. Acquiring property in the Brussels Region (continued)
VII. Acquiring property in the Brussels Region (continued)
VII. Acquiring property in the Brussels Region (continued)
VII. Acquiring property in the Brussels Region (continued)
VII. Acquiring property in the Brussels Region (continued)
VII. Acquiring property in the Brussels Region (continued)
VII. Acquiring property in the Brussels Region (continued)