- Simon Braun - https://simontbraun.eu -

Ten new options for your company organization using due diligence data room

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board portal [2]

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Has the ECJ just killed the Belgian judicial restructuring procedure by transfer under judicial supervision?

The Belgian judicial restructuring procedure by transfer under judicial supervision (“PRJ 3 / WCO 3”) regulates the transfer of all or part of the debtor’s undertaking under the supervision of a judicial trustee.

One of the main added-values of this Belgian procedure is the “right of option”, which allows the transferee to choose which transferor’s employees it wishes to keep on after the transfer, provided that this choice is dictated by economic, technical or organisational reasons entailing changes in the workforce (article XX.86 §3 of the Economic Code; former article 61 § 3 of the Business Continuity Act).

On 14 August 2017, the Antwerp Labour Court of Appeal referred a preliminary question to the ECJ on the compatibility of the Belgian provision with articles 3 and 4 of Directive 2001/23 relating to the safeguarding of employees’ rights in the event of transfer of (parts of) undertakings (also called “TUPE Regulation”). This question has been raised in proceedings launched by an employee (Mrs Christa Plessers), who has been dismissed further to the transfer of her employer’s company under judicial supervision and is asking for her reinstatement in the transferee’s company.

Condemnation of the Belgian procedure by the ECJ

In order to answer this question, the ECJ had to determine whether:

and if not,

The ECJ decided on 16 May 2019 [3] that the choice granted to the transferee by the Belgian law does not meet the cumulative conditions laid down in Article 5(1) of Directive 2001/23 and that, consequently, transfers carried out in such circumstances must comply with articles 3 and 4 of Directive 2001/23.

The ECJ emphasised that “dismissals which occur in the context of the transfer of an undertaking must be justified by economic, technical or organisational reasons relating to employment which do not intrinsically relate to that transfer”.

Yet, article XX.86§3 of the Economic Code does not impose upon the transferee to justify its choice with regard to the transferor’s employees who are made redundant.

As a result, according to the Court, the application of current article XX.86§3 of the Economic Code could seriously threaten the principal objective of Directive 2001/23, i.e. to protect employees against unjustified dismissals in the event of a transfer of undertaking.

Therefore, the ECJ decided that Directive 2001/23 has to be interpreted as prohibiting the transferee to choose the employees it wishes to keep on after the transfer.

What is the impact of this decision under Belgian law?

Given the ruling of the ECJ, it becomes complicated for the Belgian courts to interpret article 86 §3 of the Economic Code consistently with Directive 2001/23.

However, and as the ECJ pointed out itself, in accordance with EU law, the Belgian courts will not have to discard their own national provisions. As a result, as long as article 86 §3 of the Belgian Economic Code is not amended, it seems that the sole possibility for employees who have been dismissed in the framework of a transfer under judicial supervision will be to sue the Belgian State to claim compensation because (i) it did not correctly implement Directive 2001/23, or (ii) the national courts did not correctly interpret article 86 §3. However, in that second case, the dismissed employees will also have to prove that they suffered damages due to this wrongful behaviour. In other words, they will have to prove that they were not dismissed for economic, technical or organisational reasons, which might be a difficult task.

Conclusion: is it the end of the PRJ3/WCO 3?

By considering that current article 86§3 of the Belgian economic Code does not comply with Directive 2001/23, the ECJ might have sounded the death knell of the PRJ3/WCO3.

As mentioned before, the main advantage of such a proceeding is precisely to allow the transferee not to keep all the transferor’s employees but only the chosen ones. In addition, under this proceeding, the transferee can also modify the working conditions of the transferred employees. Even if this second principle of the Belgian legislation was not referred to the ECJ, one can expect a similar ruling, which would make the PRJ3/WCO3 completely useless.

In any case, the Belgian legislator will have no choice but to modify the Title V of the Economic Code to make it consistent with Directive 2001/23. This modification might be included in the coming (and more significant) reform of the Belgian insolvency law to implement the Directive on preventive restructuring frameworks, second chance and measures to increase the efficiency of restructuring, insolvency and discharge procedures, whose final text has just been approved (15 May 2019) by the Parliament and the Council.

To be continued with our next government…


Fanny Laune & Pierre Van Achter

Simont Braun runs the 20km Brussels to support Arthur Forever ASBL

Congrats to our runners Nikita Tissot, Virginie Bultot, Marc Baetens-Spetchinsky and Christopher Dumont for their performance at the 20km through Brussels!

Simont Braun joined forces with 52 law firms under the Legal Run banner to support the local charity Arthur Forever [4].

Simont Braun headed to Zeeland for the weekend

Simont Braun headed to Zeeland for the weekend: beach, bike and barbecue in the sun… Just enjoying some refreshing moments with the entire team!



teambuilding [5] outofoffice [6]

Jacques Malherbe speaks about tax regularisation and remittances at IFE Belgium

Jacques Malherbe will speak about tax regularisation and remittances at the conference “Lutte contre le blanchiment – Compliance” held by IFE Belgium on 20 & 21 May in Brussels.

The programme is available here [7].


Is Brexit a regulatory opportunity for Belgian InsurTechs and the insurance market as a whole?

In theory, insurance services are harmonised at the EU level. Insurance companies and intermediaries alike may easily ‘passport’ their domestic licences across the entire EEA, thereby servicing the entire European market, either through the freedom to provide services or the freedom of establishment (e.g. through branches).

In practice, however, the insurance market is not (yet?) as harmonised as the banking and investment industries. This is especially true at the distribution level, where various intermediary statuses and licences exist and where practices may vary significantly from one country to another.

For instance, whereas Belgium is often considered as broker-centred, the UK’s insurance market knows alternative distribution channels in which Managing General Agents (‘MGAs’) play a central role in connecting insurers and distributors (such as brokers or agents).

Typically, UK MGAs are backed by one or more insurers and have an underwriting capacity. They can develop their business in niche areas and create specific products. Their business model is not very well-known in Belgium and does not really fit in any of the three Belgian traditional intermediary licences (broker, agent, and sub-agent).

This has been noticed by the Belgian Government.

Brexit as a trigger for regulatory innovations

Willing to make Belgium an attractive Brexit destination, the Belgian Government has adopted a dedicated Brexit Act (Law of 3 April 2019 on the exit of the United Kingdom from the European Union).

Amongst various Brexit-oriented reforms, the Government has created a brand new insurance intermediary licence, more or less mirroring that of the UK MGA’s. The Belgian MGA (known as the “souscripteur mandaté / gevolmachtigde onderschrijver”) is defined as “the insurance intermediary which, in its capacity of proxy-holder of one or more insurance companies, has the power to accept to cover risks and to conclude and manage insurance contracts in the name and for the account of these insurance companies”.

It is not the first time that the Belgian Government adapts the national legislative and regulatory framework to the needs of Brexiteers. The Insurance Law of Control (Law of 13 March 2016 relating to the status and control of insurance and reinsurance companies) goes as far as expressly referring to the Lloyd’s of London (and Brussels?) in its definition of the reinsurance activity – one could even question the constitutionality of a legal provision dedicated to a specific private entity.

Clearly, Brexit has led to Belgian regulatory innovations. Although the new MGA status is first and foremost targeted to existing UK intermediaries willing to anticipate the consequences of a too-hard Brexit, it might also offer opportunities for other insurance actors.

Amongst other changes, the digitalisation of the insurance sector has seen the rise of many insurtechs attempting to disrupt existing distribution channels. The need for these insurtechs to fit in one of the traditional broker or agent licences has sometimes raised regulatory challenges.

The creation of a brand new intermediary status offers new opportunities for these disruptors.

By the same token, it may also represent an opportunity for insurance companies looking for the development of new distribution channels and it will certainly offer comfort to UK insurance companies replicating their business model in Belgium.

The Belgian MGA regulatory status in a nutshell

The Belgian Government has done little more than creating the new MGA status and defining its core activities.

With regards to the rules of conduct, the Brexit Act essentially provides that MGAs are subject to the same requirements as insurance brokers.

On top of that, there are three specific requirements applicable to MGA’s activities:

  1. MGAs must have an appropriate organisation in light of the nature, size and complexity of their activities and associated risks;
  2. Their website must list all the insurance companies which granted them an underwriting power as well as the insurance branches covered by this power; and
  3. They must indicate the name of the underlying insurance companies on every insurance policy concluded on their behalf.

In addition to these legal requirements, the supervisor (FSMA) has also made clear that Belgian MGAs could not cumulate their activities with “traditional” insurance intermediation services. Although the FSMA’s position is not perfectly clear, it seems that the supervisor is of the opinion that direct contacts with policyholders will be reserved to broker and (sub-)agents. However, the FSMA considers (See FSMA’s newsletter of April 2019 [8]) that sister companies from a same group could apply for different insurance intermediary licences (e.g. company A1 being an MGA and company A2 being an insurance broker).

*     *     *

Thomas Derval
thomas.derval@simontbraun.eu [9]
+32 (0)2 533 17 09

The new Code of Companies and Associations enters into force as from tomorrow

The new Code, which was published in the Official Journal on 4 April 2019 [10], will gradually come into force as from tomorrow.

The date of entry into force of the new Code is 1 May 2019. As from this date, each newly incorporated entity will have to comply with all the provisions of the new Code.

For existing companies and associations, the general rule is that the new Code will come into force on 1 January 2020, with a final deadline for adapting the articles of association on 1 January 2024. However, existing entities may choose an early opt-in and thus, through an amendment to their articles of associations, render the new Code fully applicable as from 1 May 2019.

Also to note: the Royal Decree dated 29 April 2019 implementing the new Code has been published today. This Royal Decree merges into a single text the regulatory provisions of various existing Royal Decrees. It contains nine books and is available here [11].

For any query, do not hesitate to contact a member of our corporate team.

La représentation en justice par un agent d’affaires en cas de petit litige

Un passager cherchant à être indemnisé par une compagnie aérienne pour cause d’annulation ou de retard de son vol peut-il être représenté par un agent d’affaires ?

Marc Baetens-Spetchinsky analyse cette question au regard du Règlement européen sur les petits litiges, abordant aussi la notion de « circonstances extraordinaires » au sens du Règlement européen « droits des passagers » que les compagnies aériennes pourraient invoquer pour se défendre contre une demande d’indemnisation.

Publication parue dans le Journal des Juges de Paix, 3-4/2019, p. 152, disponible ici [12].

The “Löber” case in the era of digital banking

In the era of digital banking, does it still make sense to use the localisation of a bank account to settle conflicts of jurisdiction?

In its recent case “Löber”, the ECJ decided that tort claims against the issuer of a misleading prospectus may be brought before the courts of the investor’s domicile provided that his or her investment originated from a bank account localised in the same jurisdiction and that ‘other specific circumstances’ also contribute to the jurisdiction of these courts. A decision which goes against the current digital flow? Discover Thomas Derval‘s opinion on this case in the Journal de droit européen: http://bit.ly/lober-ecj [13] (in French – reserved to subscribers).

UBO Register – Important updates in the FAQ document

An important update of the UBO Register FAQ document has been published by the Federal Public Service Finance on 2 April 2019. It provides a number of clarifications on the scope of the regulations, notably with respect to the notion of senior managing official, the situation in case of a usufruct / bare ownership, co-ownership, shareholders’ agreements… It also confirms that UBOs will have the right to know who consults their data. The updated FAQ document is available here: http://bit.ly/QandA-ubo [14]

For any question, please contact Sandrine Hirsch [15] or Nikita Tissot [16].