3.1 Unlimited liability
As the branch does not constitute a legal entity separate from the foreign company, the latter is fully liable for all debts and liabilities arising from the conduct of the branch's activities. The liability of the foreign company extends to all of its assets and not only to those assets which have been entrusted to the branch to conduct its activities.
3.2 Duties and liability of the permanent representative
In addition to all powers which have been granted to him/her by the company, the permanent representative is required by law to carry out all disclosure formalities as provided for in Article 198 CLCC (Article 198, par. 6 CLCC). The permanent representative may face criminal sanctions if he/she does not comply with the disclosure obligations as imposed by law (Articles 201, par. 4 and 204, par. 2 CLCC).
The permanent representative's liability towards third parties is the same as that of a director of a Belgian company.
3.3 Accounting requirements
As a general rule, a foreign company which conducts business in Belgium through a branch must prepare accounting records and ledgers as well as annual financial statements for the activities of the branch in accordance with the Law of July 17, 1975 on Accounting and Annual Financial Statements of Companies. The accounting records and ledgers must be kept in Belgium (Article 1 of the Law of July 17, 1975).
3.4 Filing of financial statements
The annual financial statements of the branch need not be filed (Article 10 of the Royal Decree of September 12, 1983, as amended by the Royal Decree of December 30, 1991).
However, the foreign company must file with the National Bank of Belgium its own annual financial statements and, as the case may be, its consolidated financial statements in the format in which these financial statements have been filed under the law governing the company (i.e., including copies of Board and auditors reports relating to such financial statements, if any) (Article 198, par. 2 CLCC). This does not apply if the law governing the company does not require the company to file its financial statements.
This filing must occur within 30 days as from the approval of the financial statements by the shareholders and at the latest within 7 months after the close of the business year. For filing purposes, the financial statements must be translated into one of Belgium's official languages, i.e., Dutch, French or German, depending on the Belgian linguistic region where the branch is located. A special form must be signed by the permanent representative for such filing.
3.5 Works Council
A Works Council must be set up if the company has 100 salaried persons or more for the activities of its branch in Belgium. In that case, the company must appoint an auditor in Belgium to review the economic and financial information that must be supplied to the Works Council and to certify that such information is true and complete (Article 15bis of the Law of September 20, 1948).
3.6 Updating of documents and information
The foreign company must disclose any change to the documents and information disclosed at the time of opening of the branch (e.g., amendments to the Articles of Incorporation or to the By-laws), within 30 days as from the occurrence of such changes (Article 198, par. 2 CLCC). This does not apply to the financial statements, which must be filed each year.
In addition, the company must disclose the following information within 30 days:
(a) the winding-up of the company, the appointment, particulars and powers of liquidators, and the termination of the liquidation;
(b) insolvency proceedings, arrangements, compositions, or any similar proceedings to which the company is subject; and
(c) the closing of the branch.
Companies from non-EU Member States must disclose the amount of their subscribed capital once a year if such information is not contained in the Articles of Incorporation or the By-laws (see 2.3.1 (g) above).
3.7 Documents used by the branch
All documents used by the branch (e.g., letters, order forms, invoices) must state:
(a) the name, legal form and principal place of business of the company and, as the case may be, whether the company is in liquidation (Article 198, par. 5 CLCC);
(b) the register with which the company is registered abroad and the registration number (Article 198, par. 5 CLCC);
(c) the local Belgian Commercial Register where the company is registered and the registration number (Article 198, par. 5 CLCC and Article 39 of the Law on the Commercial Register);
(d) the company's VAT number (Article 30 of Royal Decree No. 1 of December 29, 1992); and
(e) the number of a bank account used by the company (Article 39 of the Law on the Commercial Register).
These documents may also contain any other useful information such as the address of the branch and telephone and fax numbers.
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
As the branch does not constitute a legal entity separate from the foreign company, the latter is fully liable for all debts and liabilities arising from the conduct of the branch's activities. The liability of the foreign company extends to all of its assets and not only to those assets which have been entrusted to the branch to conduct its activities.
3.2 Duties and liability of the permanent representative
In addition to all powers which have been granted to him/her by the company, the permanent representative is required by law to carry out all disclosure formalities as provided for in Article 198 CLCC (Article 198, par. 6 CLCC). The permanent representative may face criminal sanctions if he/she does not comply with the disclosure obligations as imposed by law (Articles 201, par. 4 and 204, par. 2 CLCC).
The permanent representative's liability towards third parties is the same as that of a director of a Belgian company.
3.3 Accounting requirements
As a general rule, a foreign company which conducts business in Belgium through a branch must prepare accounting records and ledgers as well as annual financial statements for the activities of the branch in accordance with the Law of July 17, 1975 on Accounting and Annual Financial Statements of Companies. The accounting records and ledgers must be kept in Belgium (Article 1 of the Law of July 17, 1975).
3.4 Filing of financial statements
The annual financial statements of the branch need not be filed (Article 10 of the Royal Decree of September 12, 1983, as amended by the Royal Decree of December 30, 1991).
However, the foreign company must file with the National Bank of Belgium its own annual financial statements and, as the case may be, its consolidated financial statements in the format in which these financial statements have been filed under the law governing the company (i.e., including copies of Board and auditors reports relating to such financial statements, if any) (Article 198, par. 2 CLCC). This does not apply if the law governing the company does not require the company to file its financial statements.
This filing must occur within 30 days as from the approval of the financial statements by the shareholders and at the latest within 7 months after the close of the business year. For filing purposes, the financial statements must be translated into one of Belgium's official languages, i.e., Dutch, French or German, depending on the Belgian linguistic region where the branch is located. A special form must be signed by the permanent representative for such filing.
3.5 Works Council
A Works Council must be set up if the company has 100 salaried persons or more for the activities of its branch in Belgium. In that case, the company must appoint an auditor in Belgium to review the economic and financial information that must be supplied to the Works Council and to certify that such information is true and complete (Article 15bis of the Law of September 20, 1948).
3.6 Updating of documents and information
The foreign company must disclose any change to the documents and information disclosed at the time of opening of the branch (e.g., amendments to the Articles of Incorporation or to the By-laws), within 30 days as from the occurrence of such changes (Article 198, par. 2 CLCC). This does not apply to the financial statements, which must be filed each year.
In addition, the company must disclose the following information within 30 days:
(a) the winding-up of the company, the appointment, particulars and powers of liquidators, and the termination of the liquidation;
(b) insolvency proceedings, arrangements, compositions, or any similar proceedings to which the company is subject; and
(c) the closing of the branch.
Companies from non-EU Member States must disclose the amount of their subscribed capital once a year if such information is not contained in the Articles of Incorporation or the By-laws (see 2.3.1 (g) above).
3.7 Documents used by the branch
All documents used by the branch (e.g., letters, order forms, invoices) must state:
(a) the name, legal form and principal place of business of the company and, as the case may be, whether the company is in liquidation (Article 198, par. 5 CLCC);
(b) the register with which the company is registered abroad and the registration number (Article 198, par. 5 CLCC);
(c) the local Belgian Commercial Register where the company is registered and the registration number (Article 198, par. 5 CLCC and Article 39 of the Law on the Commercial Register);
(d) the company's VAT number (Article 30 of Royal Decree No. 1 of December 29, 1992); and
(e) the number of a bank account used by the company (Article 39 of the Law on the Commercial Register).
These documents may also contain any other useful information such as the address of the branch and telephone and fax numbers.
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
