Company Formation in Belgium
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Belgium Company Formation
So you've decided to start your business to Belgium and research your market. Now it's time to decide how you will register and set up a business in Belgium. What is the best, most viable option for your company, your products and yourself? Which is the path of least resistance?
Here are some typical options when setting up a business in Belgium.
Public Limited Company (SA/NV) (Naamloze Vennootschap/Societe Anonyme)
This type of company is often chosen by large businesses when expanding into Belgium. It must be set up by two or more people who contribute a fixed amount of money to the business in return for shares. Liability is limited to the amount that is contributed. This is a business that is distinct from its owners, unlike that of a partnership or one person limited company. The assets of the owners are protected through a limited liability of shareholders and offer investors financial opportunities. The costs of setting up a corporation are higher than that of a partnership and there is more government legislation to consider.
The three bodies in this type of corporation are:
1.A general body of shareholders
2.A director, for which there must be at least three
3.A manager director, appointed by the directors and who runs the day to day business.
Limited Liability Company (BVBA/SPRL) (Besloten Vennootschap met Beperkte Aansprakelijkheid /Société Privée Responsabilité Limitée)
This type of business is set up by two or more people, who may only give up their interest in the business under certain conditions. It is favoured by family run businesses and Small to Medium-sized enterprises (SME). In return for shares in the company, the shareholders contribute a fixed amount and liability is limited to that amount. There are certain conditions to this type of business such;
- The minimum amount of capital that must be fully paid is €18,500.
- The minimum amount of paid-up capital is €6,200.
- There must be at least two shareholders.
There are two distinctive bodies in this type of business
1.The shareholders, which there must be two and can be private or legal persons.
2.The general manager, of which there can be one or more and who is appointed by the shareholders to run the business.
One-person Private Limited Company (EBVBA/SPRLU) (Eenpersoons Beslotenvennootschap met Beperkte Aansprakelijkheid/Société d'Une Personne Responsabilité Limitée)
When starting up a business in Belgium this one is suitable for SMEs or family run businesses as it can be set up by just one person or shareholder. Although there are similarities between this and a private limited company, such as the minimum amount of capital still being €18,550, there are main differences:
- The minimum amount of paid-up capital is €12,400
- Only an individual, not a legal entity can be a shareholder
Cooperative Company with Limited Liability (CVBA/SCRL) (Cooperatieve Vennootschap met Beperkte Aansprakelijkheid /Société Coopérative Responsabilité Limitée)
Set up by three or more people, who contribute a fixed amount financially to the business in return for shares. The liability is limited to the amount that is contributed. Often suitable for SMEs and family run businesses.
There are certain conditions to this type of business and are highlighted below:
- a fixed part of at least €18,500, fully paid
- a variable part, depending on the partners joining or departing
The fixed part of the capital must be at least €6,200 paid up.
It is made up of:
1.Three or more shareholders
2.One or more manager directors, who run the business.
Cooperative company with unlimited liability (CVOA/SCRI) (Cooperatieve Vennootschap met Onbeperkte Aansprakelijkheid/Société Coopérative Responsabilité Illimitée)
This is similar to the cooperative company with limited liability as it be set up by three or more shareholders but in this case it has unlimited liability. Often suitable for SMEs and family run businesses. Although they contribute an amount of money to the company there is no legal requirement.
The capital is therefore divided into;
- A fixed part defined in the articles of association
- A variable part that can change as partners leave or join
Like the limited liable company it is made up of;
1.Three or more shareholders
2.One or more manager directors, who run the business.
General Partnership (Comm VA/SNC) (Commanditaire Vennootschap op Aandelen/Société en Nom Collectif)
This type of company may be incorporated and set up with at least two partners. Partners are liable for any debts of that business, may result in bankruptcy of the partners should be business suffer with bankruptcy.
There are no restrictions on how the partnership is organised in the articles of association, provided that the partners are still liable and that the shares cannot be transferred without limitation (in particular shares cannot take negotiable form).
This type of cooperative partnership is often used by members of the liberal professions when setting up a business in Belgium.
Limited partnership (Comm V/SCS) (Gewone Commanditaire Vennootschap/Société en Commandite Simple)
Limited partnerships are slightly more complicated compared to other types when starting up a business in Belgium. They are broken down into general partners, who are jointly liable for business debts and limited partners, who are only liable for the amount their have contributed.
The general partners run the business through direction and managing, while the limited partner contribute only financially and cannot be involved in the running of the business.
Limited partnerships can be found in two forms;
- A partnership limited by guarantee, whose status is similar to that of an ordinary limited partnership (apart from the special status of the limited partners). This is essentially a private partnership.
- A partnership limited by shares, which functions in the same way as a company limited by shares (subject, among other things, to the same rules and requirements regarding capital).
Non-stock Corporation (Maatschap/Société de droit commun)
This type of business is made up of two or more shareholders. These shareholders are liable for the companies debts without limitation. Often used in a portfolio of properties, cash asset management and managing a family fortune. This form of company has no legal personality and is therefore transparent for tax purposes.
Charity/Company established for social purposes (VZW/ASBL) (Vereniging Zonder Winstoogmerk/Association sans But Lucratif)
This type of company can take the form of other companies but the shareholders are unable to make large profit or if any at all.
Click here to read about Import and Export in Belgium
Licensing in Belgium is the permission for someone else to use your intellectual property rights: either a patent, trademark, trade secret, or copyright. Different types of license include:
- Non-Exclusive License - A non-exclusive license implies that your intellectual property rights can be awarded to more than one licensee.
- Exclusive License - A little more complex because, although the license may not be exclusive to one licensee, it may be exclusive to a geographic location, a certain product, or limited area of use. For instance, you may grant a licensee exclusive use of the rights in France, yet grant another licensee its use in Germany.
- Patent License in Belgium - The allowance of another party to use your patented product, design or process.
- Trademark License in Belgium - Trademark licensing means permission is awarded to a licensee to sell a product or service. However, the licensor retains more control in order to ensure that quality is maintained. Quality control is in place to uphold the image of the brand / product / service / licensor, and therefore sustain customer confidence and satisfaction.
Franchising In Belgium
Franchising is the licensing out of a business name, product, technique, philosophy, trademark, etc, for a percentage of the income. Instead of setting up new outlets as part of your expansion, you license your existing business blueprint out to franchisees who then set up and manage it for you.
The benefits of franchising your business in Belgium include: more freedom, as the franchisee takes on major responsibilities; minimal expense; lower cost and higher profits; potential for fast growth; brand building.
Disadvantages of franchising a business in Belgium: although few, rely predominantly on your franchisees. They include: poor quality franchisees; franchisees not declaring all income; poor performance.
As Belgium is part of the EU it follows the same regulations as other EU countries. It is reasonably easy to set up a franchise here and you may find potential help and advice from the Belgium Federation of Franchising.