Social enterprises in the EU (IVOR nr. 111) 2018/2.4.1:2.4.1 The Belgian company with a social purpose (VSO)

Social enterprises in the EU (IVOR nr. 111) 2018/2.4.1

2.4.1 The Belgian company with a social purpose (VSO)

Documentgegevens:

mr. A. Argyrou, datum 01-02-2018

Datum: 01-02-2018
Auteur: mr. A. Argyrou
JCDI: JCDI:ADS585751:1
Vakgebied(en): Ondernemingsrecht / Rechtspersonenrecht

As of 1 July 1996, all Belgian business organisations and corporate legal forms with a legal personality listed in Article 2(2) of the Belgian Companies Code of 1999 qualify for the status of a ‘company with a social purpose’, i.e. the VSO status.1 The VSO status is a legal label that all business organisations with a legal personality and corporate legal form in Belgium are eligible to acquire, if they pursue objectives, which do not aspire to any direct or indirect enrichment and/or financial benefit for the company’s partners (including shareholders and members).2 Acquiring the VSO status is subject to fulfilling certain cumulative legal requirements contained in Article 661 of the Belgian Companies Code of 1999. Those legal requirements must be inserted into the AoA of the social enterprise legal form.3 From the list of business organisations and corporate legal forms with a legal personality in the Belgian legal system, EU legal forms are excluded. They are not eligible to acquire the VSO status pursuant to Article 661.4 Additionally, Article 667 requires scrutiny of the proper implementation of the requirements included in Article 661. Following the filing of a claim by either a VSO owner and member, the public prosecutor, or an interested third party (stakeholder), such scrutiny of a VSO organisation will be undertaken by the Belgian courts. In such a case, the claim will allege that the AoA of a VSO breach the legal requirements stipulated in Article 661 of the Belgian Companies Code of 1999 if the mandatory statutory provisions are not included in the AoA, or if they are included that they are violated in practice by the VSO.5

According to Article 661, the pursuit of social objectives (which do not result in the direct or indirect enrichment and/or financial benefit of the owners of shares and members) is an essential requirement for the preservation of the VSO status. Article 661 prohibits the owners of shares and members of any VSO from adopting objectives in its AoA that may result in their enrichment by means of any financial advantage and/or economic benefit.6

What constitutes a social purpose is not defined per se in the Belgian Companies Code of 1999. Article 661 only outlines the purposes that do not qualify as a social purpose. The terms of Article 661(2) then require VSO owners of shares and members to define, in their AoA the social purpose they are pursuing in advance, together with the means and the activities that will be attempted to pursue the social purpose.7 Belgian legal scholars argue that the Belgian legislator formulated this provision in a negative manner to facilitate founders of a VSO, i.e. the founding owners of shares and members to include a variety of commercial activities without excluding ex ante activities.8 The preparatory background documents of the Belgian Senate indicate that the purpose should be ‘extrovert or altruistic’ and that it should be undertaken in pursuit of a social activity in order to be viewed as a social purpose.9 A report issued by the European Confederation of Workers’ Cooperatives, Social Cooperatives and Social and Participative Enterprises (hereafter ‘CECOP’) also notes that the social purpose ‘results from constitutive elements foreseen by the legislation and which must appear in the statutes’.10 However, it is implicit that even though the Belgian Companies Code of 1999 prohibits the pursuit of any objectives and relevant activities that may result in the acquisition of any pecuniary benefits for its owners of shares and members, it does not prohibit the pursuit of social objectives. Such objectives can be fulfilled by means of commercial and/or profit-making activities as long as the profits are not distributed to the owners of shares and members of the VSO, or if they are distributed, provided this is done to a limited extent only.11

Toon alle voetnoten

Voetnoten

Voetnoten

These are the partnership (Vennootschap Onder Firma, hereafter the ‘VOF’), the limited partnership (Gewone Commanditaire Vennootschap, hereafter the ‘GCV’), the private limited liability company (Besloten Vennootschap met Beperkte Aansprakelijkheid, hereafter the ‘BVBA’), the limited liability cooperative (Coöperatieve Vennootschap met Beperkte Aansprakelijkheid, hereafter the ‘CVBA’), the unlimited liability cooperative (Coöperatieve Vennootschap met Onbeperkte Aansprakelijkheid, hereafter the ‘CVOA’), the public limited liability company (Naamloze vennootschap, hereafter the ‘NV’), the partnership limited by shares (Commanditaire Vennootschap op Aandelen, hereafter the ‘CVA’) and the economic interest groups (hereafter the ‘EIG’). See Belgian Companies Code of 1999, arts. 2(2) and 661. See also the elaborations in mr. A. Argyrou, T. Lambooy,R. Blomme, H. Kievit, G. Kruseman and D.H. Siccama, ‘An empirical investigation of supportive legal frameworks for social enterprises in Belgium: A cross-sectoral comparison of case studies for social enterprises from the social housing, finance and energy sector perspective’ in V. Mauerhofer (ed), Legal Aspects of Sustainable Development: Horizontal and Sectorial Policy Issues (Springer International Publishing 2016) 151-185.

Art. 1 of the Belgian Companies Code of 1999 distinguishes companies with a social purpose by clarifying that: ‘[I]n de gevallen bepaald in dit wetboek kan de vennootschapsakte bepalen dat de vennootschap niet is opgericht met het oogmerk aan de vennoten een rechtstreeks of onrechtstreeks vermogensvoordeel te bezorgen.’ [Unofficial authors’ translation: ‘[i]n the cases provided for in this Code, the agreement may provide that the company is not established with a view to provide a direct or indirect financial benefit to the partners’]. The legislation mentions the term ‘vennoten’. However, considering that the VSO label can be legally adopted by corporate legal entities that have a share capital as well as by legal entities that have no share capital, and by cooperative (n 60) terms such as partners, shareholders and members cannot be used interchangeably. This is why we will refer to these as ‘owners of shares and members’ in this article.

Belgian Companies Code of 1999, art. 2(2) and art. 661.

ibid. Art. 661 excludes the European Company and the European Cooperative Society from acquiring a social purpose.

If the claim is upheld by the Belgian court following the proviso of art. 667, aVSO may be dissolved and deprived of its legal personality referred to in law as ‘ontbinding’ by a court’s decision. See Belgian Companies Code of 1999, art. 667. In that case, the VSO is unlawfully holding itself out as a VSO.

Art. 661(1) stipulates that VSO organisations should mention explicitly in their AoA that either the members seek: (i) no pecuniary benefit; or they seek (ii) pecuniary benefits to a limited extent only, i.e. subject to a regulatory cap applicable to VSO organisations; see Sub-section 2.7; Belgian Companies Code of 1999.

ibid art. 661(1) and (2).

A. Coates and W. Van Opstal, ‘The Joys and Burdens of Multiple Legal Frameworks for Social Entrepreneurship: Lessons from the Belgian Case’ (EMES Conference Papers Series 2009) 37 <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1432427> accessed 24 September 2017; L. Stolle, ‘De Vennootschap met Sociaal Oogmerk: Juridisch en Fiscaal Statuut, Modellen, Statuten en Wetteksten’ (Ced. Samsom 1996) 49; D. Coeckelbergh, ‘Ondernemen met de Vennootschap met Sociaal Oogmerk’ (Mys & Breesch 2001).

Parliamentary documents of the Belgian Senate, 1086, No. 2 (1993-1994) (8 March 1995) 300 <www.senate.be/lexdocs/S0543/S05430131.pdf> accessed 20 June 2017.

10.

CECOP (n 30) 6.

11.

Belgian Companies Code of 1999, art. 661(2); see the significant research conducted by Coates and Van Opstal in A. Coates and W. Van Opstal, ‘Embracing Social Economy Plurality with Multiple Legal Frameworks: An Evaluation of the Belgian Case’ (2nd International CIRIEC Conference on Social Economy, 2009) 37; see also A. Coates andW. Van Opstal, ‘An Analysis of the Design of Legal Frameworks for Social Enterprises’ in F. Degavre et al. (eds), Transformations et Innovations Économiques et Sociales en Europe: Quelles Sorties de Crise? Regards Interdisciplinaire (XXXes Journées de l’Association d’Economie Sociale 2010) 55-76.