1. Minimum Number of Shareholders

A company must have at least two shareholders who may be natural persons or companies. There is no legal requirement as to the nationality or residence of the shareholders. Therefore, up to 100% of the shares can be held by non-nationals or non-residents.

If a shareholder acquires all shares in an existing company there are no consequences as to the existence of the company but the sole shareholder will be required to sell at least one share to another person within one year (or, as the case may be, to transform the company into a private limited company ("S.P.R.L./B.V.B.A.") or to wind up the company within one year). If the sole shareholder fails to do so, he can be held personally liable for all liabilities incurred by the company as of the date on which he has acquired all shares.

2. Shareholders' Meetings

The shareholders' meeting is vested with certain specific powers reserved for the shareholders by virtue of the Belgian company laws (such as any amendment to the by-laws or the appointment of the directors and the statutory auditor). All other powers are vested with the Board of Directors.

At least one shareholders' meeting must be held each year at the time and place set forth in the by-laws to approve the annual accounts. The annual accounts have to be submitted to the annual shareholders' meeting within six months of the closing of the business year and filed with the National Bank of Belgium within one month of such meeting.

A shareholder who is unable to attend a shareholders' meeting may appoint a person to represent him at this meeting. Unless the by-laws provide otherwise, the proxyholder need not be a shareholder.

In the absence of any specific provision in the by-laws, shareholders' resolutions are usually approved by a simple majority of the votes cast, regardless of the number of shares present or represented at the meeting.

For certain important resolutions, however, quorum requirements (usually at least 50% of the company's capital) and majority requirements must be satisfied. The main majority requirements are as follows:

(a) 80 %: for any amendment to the purpose clause, acquisition or acceptance in pledge of own shares;

(b) 75 %: for any other amendment to the by-laws, including a capital increase or decrease, or a merger or a split, or the dissolution of the company;

(c) 25 %: for the dissolution of the company when the net assets have decreased, as a result of losses, to less than 25% of the capital.

As regards the quorum requirement (i.e., the number of shares that must be present or represented at the meeting), it should be noted that if the required quorum is not reached at a first meeting, a second meeting can be convened with the same agenda and can validly decide on the items on the agenda, regardless of the number of shares present or represented.

3. Board of Directors

A company is managed by a Board of Directors composed of at least three persons who may, but need not, be shareholders. The minimum number of directors is reduced to two if the company only has two shareholders. There is no legal requirement as to the nationality or residence of the directors.

Directors are appointed by the shareholders' meeting for a renewable term of maximum six years. However, unless the by-laws provide otherwise, whenever one or more vacancies occur on the Board, the remaining directors may temporarily fill such vacancy until the next shareholders' meeting which will make the final appointment. Directors may be removed at any time, without cause, by a simple majority vote of the shareholders.

A director who is unable to attend a Board meeting may authorize another director to represent him/her at this Board meeting.

4. Managing Director and General Manager

Daily management powers may be granted by the Board either to a director, who is usually referred to as the Managing Director ("administrateur delegue"/"gedelegeerd bestuurder"), or to another person, who is usually referred to as the General Manager ("directeur general"/"algemeen directeur").

There is no legal requirement as to the nationality or residence of the Managing Director or the General Manager. For practical purposes, however, it is advisable that this person be based in Belgium.

In addition, the Board of Directors may give specific powers, including banking powers, to any person of its choice.

5. Statutory Auditor

The annual accounts of a company which qualifies as a large company must be audited by a statutory auditor who must be a member of the Institute of Certified Auditors ("Institut des Reviseurs d'Entreprises" / "Instituut van Bedrijfsrevisoren").

A company qualifies as a large company when its average number of employees exceeds 100 (on an annual basis), or when at least two of the following criteria are exceeded:

(a) average number of employees on an annual basis: 50;

(b) annual turnover: BEF 200 million (exclusive of V.A.T.);

(c) balance sheet total: BEF 100 million.

If the company is part of a group which is required to file consolidated accounts, the above-mentioned criteria must be calculated on a consolidated basis, i.e., taking into account the company's affiliated companies.

Statutory auditors are appointed by the shareholders' meeting for a renewable term of three years. The amount of their remuneration must be determined at the time of their appointment. In companies where a statutory auditor need not be appointed, each shareholder has an individual right to audit the corporate books and accounts, and may request the assistance of an accountant.

The content of this article is intended to provide general information on the subject matter. It is not a substitute for specialist advice.

De Bandt, van Hecke & Lagae - Brussels (32-2) 501 94 11